Using Precipitation Insurance to Manage Forage Production Risk in Nebraska: Insights from Extension Programming

JAY PARSONS, Professor and Farm and Ranch Management Extension Specialist, Department of Agricultural Economics Author

12/14/2021 Added

3 Plays

Description

Pasture, Rangeland, Forage (PRF) insurance and the Annual Forage Insurance Program (AFIP) are indexed precipitation insurance products available to Nebraska livestock producers. This presentation will highlight experiences working with Nebraska producers over the last seven years to better understand and use these products effectively. I will also share several examples performance and historical usage in several regions of the state.

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[00:00:00.770]The following presentation
[00:00:02.220]is part of the Agronomy and Horticulture Seminar series
[00:00:05.800]at the University of Nebraska Lincoln.
[00:00:08.920]All right, welcome, everyone, in the online Zoom room,
[00:00:13.690]as well as here in the physical room.
[00:00:15.970]Thank you for attending today's seminar in the Fall 2021
[00:00:22.450]Agronomy and Horticulture Seminar series.
[00:00:25.570]My name's Dan Uden, and I'm an Assistant Professor
[00:00:28.600]in the School of Natural Resources,
[00:00:30.740]as well as the Department of Agronomy and Horticulture.
[00:00:33.970]And today, it's my great pleasure
[00:00:36.120]to introduce our speaker for this afternoon, Dr. Jay Parsons
[00:00:40.350]from UNL's Department of Agricultural Economics.
[00:00:44.710]Jay has a rich background in production agriculture,
[00:00:48.820]specifically as it relates to risk analysis
[00:00:52.710]and decision analysis.
[00:00:54.350]So for producers, where the rubber meets the road
[00:01:01.180]in making decisions, and navigating complex issues
[00:01:05.140]and environments, that's where Jay does a lot of great work
[00:01:09.070]in research, teaching and Extension.
[00:01:12.740]Yeah, thanks, Dan.
[00:01:13.573]It's great to be able to present to you guys
[00:01:16.460]and show you some of this stuff
[00:01:17.720]with the precipitation insurance
[00:01:21.069]and some of the work that I've been doing
[00:01:22.150]in Extension with it, educating producers.
[00:01:25.560]So anyway, I'll show you some of what I've been doing,
[00:01:27.673]some of the different examples I use with producers,
[00:01:30.150]and advice I give to them,
[00:01:30.983]some of the feedback I'm gettin' from them.
[00:01:34.260]But anyway, so happy to entertain questions.
[00:01:37.920]I can blab more stories than we have time for.
[00:01:40.140]We are gonna talk about the insurance programs
[00:01:42.270]and precipitation insurance.
[00:01:44.710]And I put this slide together
[00:01:46.250]just to give you kind of a perspective
[00:01:48.750]of where we're at on insurance.
[00:01:50.310]I do most of my work with livestock producers,
[00:01:52.650]which is where this precipitation risk insurance
[00:01:54.850]comes into play.
[00:01:56.240]These are generally the three products I talk to them about
[00:01:59.010]in terms of things that are applicable to livestock,
[00:02:02.290]all offered by the USDA Risk Management Agency,
[00:02:05.200]all relatively new in the insurance world.
[00:02:07.700]So I put the dates on here when these things were conceived.
[00:02:10.810]The very first effort to put insurance
[00:02:13.010]into the livestock industry
[00:02:14.270]was the Livestock Risk Protection Insurance Program.
[00:02:17.270]That started in 2002 with swine.
[00:02:19.800]in 2003, it became available for cattle,
[00:02:22.750]and promptly Mad Cow Disease hit
[00:02:25.160]and they suspended it for six months
[00:02:26.600]'cause they were goin' broke payin' indemnities.
[00:02:29.617]And then, in 2007, it became available for lamb.
[00:02:32.340]And they've had a heck of a time with the lamb product
[00:02:34.700]because they don't have a futures contract to tie it to.
[00:02:37.440]And they've now finally given up
[00:02:38.840]and suspended that product completely.
[00:02:40.480]It's been on and off since 2007.
[00:02:43.680]Just this year, they decided to give up on it
[00:02:46.600]and design somethin' new.
[00:02:48.000]But this is relatively new in the world of insurance, right?
[00:02:51.880]Crop insurance has been around for a number of years.
[00:02:54.210]So these are the first ventures into
[00:02:56.440]getting basically USDA-subsidized insurance available
[00:03:01.010]for livestock producers.
[00:03:03.200]The Rainfall Index Insurance PRF,
[00:03:06.500]or Pasture, Rangeland, Forage
[00:03:07.810]first became available in 2007.
[00:03:10.590]It became available in Nebraska.
[00:03:11.960]I think it was 2009, was the first year.
[00:03:14.440]When it first came out, it was not the Rainfall Index
[00:03:17.270]is what they had, we called the Vegetation Index,
[00:03:20.090]and that was available up until 2013.
[00:03:23.230]It all switched over to Rainfall Index everywhere.
[00:03:27.570]At that time, I was in Colorado,
[00:03:29.410]and Colorado was the only state
[00:03:31.020]that actually had both rainfall and vegetation available,
[00:03:34.160]so I had to learn both of 'em at the same time.
[00:03:36.750]And the Rainfall insurance was really popular
[00:03:39.440]on the Eastern side of the state, where it was available.
[00:03:42.131]I think there was only one or two policies sold
[00:03:44.710]the whole time I was there of the Vegetation Index
[00:03:47.680]on the Western side of the state.
[00:03:49.335]So it wasn't just a problem,
[00:03:51.040]that Vegetation Index wasn't just a problem in Nebraska.
[00:03:52.937]It was a problem elsewhere where it was offered,
[00:03:55.140]which is why they eventually quit offering it.
[00:03:59.180]Annual Forage is also a Rainfall Index insurance product,
[00:04:02.970]and I'll say a little bit about that today,
[00:04:05.210]show you an example of that
[00:04:06.680]near the end of the presentation.
[00:04:08.310]That's only been available since 2014,
[00:04:10.547]and it's not available everywhere, okay.
[00:04:12.620]That's pretty much just
[00:04:13.453]a mid-section of the country available product.
[00:04:16.540]Very little use of that in Nebraska, as you'll see,
[00:04:19.501]but it is being used quite a bit elsewhere.
[00:04:22.860]Whole Farm Revenue Protection is also available
[00:04:26.140]to livestock producers.
[00:04:27.650]It's been available since 2015.
[00:04:30.160]Prior to that, it was called
[00:04:31.477]the Adjusted Gross Revenue product, AGR,
[00:04:38.670]but then they switched over to this Whole Farm product.
[00:04:40.890]Initially, it was not friendly at all to livestock producers
[00:04:43.810]because there was all these limits on who could use it.
[00:04:46.930]They had to be diversified into crops
[00:04:48.730]before they could use it, and so on and so forth.
[00:04:50.880]They've since made some changes to it,
[00:04:53.000]and now it is more livestock-friendly.
[00:04:56.550]But you can essentially insure
[00:04:57.950]based off of your expected revenue,
[00:04:59.760]and they use five years of tax returns.
[00:05:01.440]You're gonna shear up to 80%
[00:05:02.590]of your expected revenue off of it.
[00:05:04.840]So it's meant to be, like it is titled,
[00:05:08.690]more of a whole farm policy.
[00:05:10.490]You could still have underlying crop insurance under it,
[00:05:12.367]and it gives you a deep discount on the premiums.
[00:05:17.350]And matter of fact, you could practically get
[00:05:19.040]the entire premium paid for by the government.
[00:05:21.320]As long as you have at least two different enterprises,
[00:05:23.100]you can get up to 80% of the premium paid for
[00:05:25.150]just out of the gate.
[00:05:26.320]If you have insurance on those underneath,
[00:05:28.050]it even becomes more lucrative.
[00:05:29.820]But it was designed to get people
[00:05:32.081]more diversified into other things
[00:05:34.220]beside our traditional corn, soybean, wheat.
[00:05:36.931]And it was primarily used initially by apple producers
[00:05:41.360]up in the state of Washington.
[00:05:43.080]It's since navigated to some of the other states
[00:05:45.485]with some little niche stuff.
[00:05:47.360]Really hasn't caught on much in Nebraska.
[00:05:49.200]I think there's about 10 or 11 policies
[00:05:50.920]sold each year in Nebraska.
[00:05:52.770]I haven't checked into it much
[00:05:54.270]in terms of who's buying those and whatnot,
[00:05:56.778]but it's been pretty consistent
[00:05:58.520]that it's been down in that single-digit range
[00:06:00.550]in terms of popularity.
[00:06:04.290]All right.
[00:06:05.280]So those are all available at USDA, the RMA website,
[00:06:08.540]so the Risk Management Agency
[00:06:09.650]where the insurance products are.
[00:06:10.800]It's not to be confused
[00:06:12.520]with a couple of other livestock policies.
[00:06:15.483]I shouldn't say policies, but disaster programs.
[00:06:18.750]The Livestock Forage Disaster programs
[00:06:20.477]are ones that's most applicable
[00:06:22.140]to what we're talking about today.
[00:06:23.688]Some people describe that as drought insurance.
[00:06:26.270]It's not insurance; it's a disaster.
[00:06:28.760]So if your county is declared a drought,
[00:06:32.848]it's gotta be Level Two up,
[00:06:35.260]and there's different rules behind it.
[00:06:36.700]But you can get up to five bucks
[00:06:38.510]worth of grazing assistance on that,
[00:06:41.330]and it's basically a half of its value kinda thing.
[00:06:44.720]But that's an after-the-fact program
[00:06:46.800]where the drought has to be declared,
[00:06:48.230]and then you go in and sign up and get it
[00:06:49.883]from the Farm Service Agency.
[00:06:51.500]It's not an insurance program, per se.
[00:06:54.520]A lot of producers get confused.
[00:06:56.160]When you start talking about drought insurance,
[00:06:57.980]they mix Rainfall Insurance
[00:06:59.360]and that Livestock Forage Disaster program together,
[00:07:02.890]and don't realize that the insurance product,
[00:07:05.040]they have to be proactive and go sign up for it.
[00:07:07.570]So we're gonna focus on the Rainfall Index,
[00:07:10.289]and I'll go through this fairly quickly
[00:07:13.640]in terms of how it is.
[00:07:14.560]But I understand some of you might not be familiar with it,
[00:07:16.690]so feel free to make me stop or back up.
[00:07:19.845]But it is based off of a grid.
[00:07:23.220]And so within that grid,
[00:07:25.040]they have data goin' back to 1948 on rainfall.
[00:07:29.020]And that is what you insure off of as an expectation.
[00:07:32.440]So 100% of rainfall in that grid,
[00:07:35.530]and it's roughly, it's 0.25 by 0.25 degrees
[00:07:39.590]longitude and latitude, which, at the equator,
[00:07:42.220]is 17 miles by 17 miles.
[00:07:44.410]In this neck of the woods,
[00:07:45.580]it's about 12 miles wide by 16 miles north and south, okay.
[00:07:49.700]But it doesn't respect county lines, state lines, roads,
[00:07:52.810]or any of that stuff.
[00:07:54.020]It's just based off of longitude and latitude.
[00:07:56.370]It has an index for that entire grid,
[00:07:58.380]so there is some basis risk there for the producer
[00:08:02.510]in terms of what they're experiencing on their operation
[00:08:04.590]versus what's actually happening in the grid as a whole.
[00:08:07.660]And we'll talk about that a little bit,
[00:08:09.270]and I can tell you a few stories when we get to it
[00:08:11.640]if people are interested.
[00:08:13.980]But in a nutshell, it's pretty simple, okay.
[00:08:17.060]So they take that historical average,
[00:08:19.760]and they say that's 100% that's expected.
[00:08:22.480]You can insure anywhere from 70 to 100%.
[00:08:25.360]So for example, if you choose a coverage level of 75%,
[00:08:29.710]and these are on two-month intervals,
[00:08:31.270]and the grid index comes back below that,
[00:08:33.690]they pay you the difference.
[00:08:34.790]So, in this case, I show an actual grid index here of 44,
[00:08:38.750]so the difference is 31.
[00:08:40.240]They'll take the dollar value you had insured times 0.31,
[00:08:43.710]and then that's your indemnity, okay.
[00:08:45.160]It's simple math and we like that.
[00:08:47.821]But anyway, that's the way it works.
[00:08:49.980]And that's the same for the Pasture, Rangeland, Forage
[00:08:53.040]and the Annual Forage.
[00:08:53.930]They just work exactly the same
[00:08:55.250]in terms of a two-month index.
[00:08:57.067]And if it falls short for that index,
[00:08:58.890]they take that shortage times the dollar value
[00:09:01.260]of the coverage.
[00:09:03.500]So for PRF, or Pasture, Rangeland, Forage insurance,
[00:09:06.710]it is for perennial forage, okay,
[00:09:09.390]and predominantly in this state,
[00:09:10.730]it's put on pasture and range, okay.
[00:09:13.060]But it also is available for forage.
[00:09:15.060]So a field of alfalfa, for example,
[00:09:17.530]a field of perennial forage that you have,
[00:09:20.240]could also be insured as hay, okay.
[00:09:22.178]It doesn't have to be used for grazing.
[00:09:24.357]But there are different prices that are attached to that.
[00:09:27.370]They just changed the sign-up deadline.
[00:09:29.030]It used to be November 15th that you had to sign up.
[00:09:31.810]This is available on the calendar year basis,
[00:09:34.690]so you'd have to sign up by November 15th
[00:09:36.490]to get covered for the following year.
[00:09:37.830]They just bumped that back to December 1.
[00:09:40.510]And I gotta give 'em credit.
[00:09:42.516]Over the last two years, USDA has asked
[00:09:46.540]for a lot of input on these livestock products.
[00:09:49.180]The LRP, the Livestock Risk Protection insurance,
[00:09:51.760]for example, they asked for a lot of input on that.
[00:09:54.710]They've had three since major changes to that product
[00:09:57.920]to make it more appealing to producers.
[00:10:01.090]A year ago now, they were asking for input on this product.
[00:10:04.670]The only thing that came out of it
[00:10:05.950]was this change in sign-up date.
[00:10:07.470]There may be some other changes, though, in the works.
[00:10:09.711]I shouldn't say the only major change.
[00:10:11.430]There's another one.
[00:10:12.263]There's somethin' called PRISM
[00:10:13.370]that they're using to divide those grids up even tighter,
[00:10:16.420]but I haven't heard much feedback on that.
[00:10:18.370]So that's kind of a trial thing at this point,
[00:10:21.280]a add-on, I guess, for extra insurance.
[00:10:23.400]But this utilizes that Rainfall Index.
[00:10:26.991]It doesn't measure actual production losses themselves.
[00:10:29.570]So you're hoping that there's a strong correlation there
[00:10:31.760]so that worked well for you, but that's not guaranteed.
[00:10:35.150]And they are two-month intervals that you're insuring,
[00:10:37.430]up to 90% of normal, as low as 70%.
[00:10:40.160]Of course, the higher coverage costs you more
[00:10:43.010]and the lower coverage is pretty cheap.
[00:10:45.060]And then I already mentioned the size of the grids there.
[00:10:47.279]So this is, I'll show you two different examples
[00:10:50.360]from our two ranches.
[00:10:52.130]This is Gudmundsen Sandhills Laboratory.
[00:10:54.240]The pin is roughly where the headquarters are, okay.
[00:10:58.650]And the Gudmundsen ranch actually
[00:11:01.390]has landed three different counties up there,
[00:11:03.330]Cherry, Grant and Hooker.
[00:11:04.700]The reason that's important
[00:11:06.580]is 'cause the county determines what the dollar value is
[00:11:09.444]that you're working with.
[00:11:10.960]It's fortunate with this particular example
[00:11:12.870]that Cherry, Grant and Hooker
[00:11:14.060]all have the same dollar value,
[00:11:15.240]so it doesn't matter which county you're in for it.
[00:11:18.160]And it's also fortunate for this example,
[00:11:20.070]which is why I like usin' it,
[00:11:21.500]that the entire ranch is within this one grid, okay.
[00:11:24.400]So the grid lines are the dark red lines
[00:11:26.290]that you see on the perimeter here,
[00:11:27.970]and all of the Gudmundsen land is within this grid 26515,
[00:11:31.680]so we can look at it all very simply in that way.
[00:11:35.560]If you have land that crosses over the boundary
[00:11:37.928]into another grid, there's a lot of different options.
[00:11:40.130]You could split and put the acres in the respective grids.
[00:11:44.200]You could also just pick one of the grids
[00:11:45.790]and put all the acres in one of those grids.
[00:11:47.770]There's all kinds of different combinations
[00:11:49.280]that can happen there.
[00:11:51.300]Okay, so these are the two main examples
[00:11:53.673]I use with producers.
[00:11:55.598]One of 'em is what I call a base strategy,
[00:11:58.330]which is to take the coverage
[00:11:59.383]and spread it out throughout the year, okay.
[00:12:01.730]There's a number of different ways you could do that.
[00:12:03.747]And this way, I get all coverage in all 12 months.
[00:12:06.842]But so I do January, February, March, April,
[00:12:09.870]just every two months, just put some money in each interval.
[00:12:13.720]So for the Gudmundsen, those counties have $22.60 an acre
[00:12:18.670]base value for the acres of grazing.
[00:12:22.440]That's what they pertain an acre to be worth, okay,
[00:12:26.040]as far as a grazing resource on an annual basis.
[00:12:28.740]If I just put in 90% coverage,
[00:12:30.670]so I'm insuring at the highest level of rainfall,
[00:12:33.450]I use 100% of that productive value.
[00:12:36.270]You can adjust this number, the 100%.
[00:12:38.480]You can adjust it up as high as 150 or as low as 60.
[00:12:42.020]All that does is change the dollar value of coverage, okay.
[00:12:45.520]I tell producers, don't adjust it down, okay.
[00:12:49.440]The reason is, is your premium rates don't change
[00:12:52.330]by making that adjustment.
[00:12:53.910]If you want to put more dollars on it,
[00:12:55.580]to pay to adjust it up,
[00:12:57.300]'cause you're sticking with the same premium rates,
[00:12:58.770]if you adjust it down, your premium rates stay the same.
[00:13:01.330]So it's just as expensive as a per-dollar basis,
[00:13:05.470]but your paybacks go down considerably
[00:13:07.740]as you start to adjust it down.
[00:13:09.600]There's other ways to adjust it down
[00:13:11.030]by simply insuring fewer acres and stuff like that.
[00:13:13.757]But anyway, it seems like it should work similarly,
[00:13:17.270]but I've looked at a bunch of different examples.
[00:13:19.280]And when you start tweaking this down,
[00:13:21.050]they don't look too good, okay.
[00:13:23.099]But 22.60 is the base, so 90% of that is $20.34.
[00:13:28.150]So that's the overall amount of coverage
[00:13:30.230]that we're gonna distribute over these months, okay.
[00:13:32.860]And I did it as even as possible
[00:13:35.420]without being funky with the percentages,
[00:13:37.810]and just bumped up May, June, July, August to 20%, okay.
[00:13:41.720]But all that does is take this $20.34
[00:13:44.500]and spread that coverage out over those months, okay.
[00:13:47.850]And then they have premium rates for each of 'em,
[00:13:51.410]and that's just a percentage that ends up
[00:13:53.020]being multiplied by that dollar value
[00:13:55.230]to give you the total premium.
[00:13:56.950]The thing you'll notice in there,
[00:13:58.530]that people catch on to right away,
[00:14:00.720]is the months where we get the most moisture
[00:14:02.880]are the cheapest to insure.
[00:14:04.570]The months where we get the least moisture
[00:14:06.200]are the most expensive.
[00:14:07.810]And that's not rocket science.
[00:14:09.090]That's because this is all based off of percentages.
[00:14:11.960]And it doesn't take much of a deficit in a winter month,
[00:14:16.050]in November/December in particular,
[00:14:18.580]to have a large percentage deficit, okay.
[00:14:22.480]So it's a lot more volatile through time,
[00:14:24.900]so it costs a lot more to insure.
[00:14:27.686]Just so you know, I always tell producers, and it is true,
[00:14:31.800]these are required to be actuarily sound.
[00:14:34.020]So they're going back through history of rainfall data
[00:14:36.640]and they're charging their expected payout, okay,
[00:14:39.470]at that coverage level,
[00:14:41.440]and they are pretty darn close, okay.
[00:14:44.020]Used to be when this product first came out
[00:14:46.250]back in '07, when I was at CSU,
[00:14:49.740]I went through and I did some simulations,
[00:14:51.510]and it was to the penny, right? (laughs)
[00:14:53.343]I mean, it was to the penny.
[00:14:54.850]If you went back to 1948 and calculated the premium,
[00:14:57.310]the expected payout, I mean, it was exact.
[00:15:01.130]I don't think they're using the full 48 years.
[00:15:03.410]They're only so revealing
[00:15:05.470]on how they calculate these things.
[00:15:07.820]Because the other thing that I noticed on 'em
[00:15:09.870]is if you look back through history,
[00:15:11.210]those first 20 years of data
[00:15:13.060]are a lot lighter than they are now.
[00:15:15.490]So I think they've kind of adjusted
[00:15:16.950]and started using more like the weather guys
[00:15:18.590]with the 30-year history, or something like that.
[00:15:21.163]But anyway, it's pretty darn close to bein' exact.
[00:15:24.750]But that's multiplied out into the actual total premium.
[00:15:28.280]And then at this 90% coverage level,
[00:15:30.570]the government's gonna pick up 51% of your premium for you.
[00:15:34.090]If you go all the way down to 70%,
[00:15:36.240]this subsidy goes up to 59%.
[00:15:38.650]There's different breaks on it,
[00:15:39.610]but it's between 51 and 59%.
[00:15:41.890]So the producer in this case
[00:15:43.210]would end up with $1.84 per acre, is what they're costing.
[00:15:47.994]Okay, and that's with it spread out.
[00:15:50.550]If you look at the last 20 years of completed data
[00:15:53.230]that we have for that grid,
[00:15:55.070]this is how the indemnities pay out over that time, okay. `
[00:15:58.530]And if you average all of these up, you get $3.05.
[00:16:02.290]So that $1.84 is returning 3.05.
[00:16:04.680]So in terms of a return on investment,
[00:16:06.750]we're talkin' a 66% return, right, on all you put in
[00:16:11.590]plus another 66%, okay.
[00:16:13.510]So it looks like a pretty good investment.
[00:16:15.180]That's because it's subsidized so heavily
[00:16:17.134]and it's supposed to be actuarily sound to begin with.
[00:16:19.840]And I see these types of numbers pretty consistently
[00:16:22.140]with different examples throughout the state
[00:16:23.830]and different grids, especially if you go out 20 years.
[00:16:27.170]If you cut it down obviously shorter,
[00:16:29.000]you end up with a little bit more volatility on it.
[00:16:31.558]But the other thing that's interesting on this is,
[00:16:33.840]even with this spread out over all of these years,
[00:16:36.700]it only covers the premium eight out of 20 years.
[00:16:39.360]So more than half the time,
[00:16:41.430]you end up owing the government money, okay.
[00:16:44.250]Which is frustrating for producers that are saying,
[00:16:46.747]"Why do I owe money?
[00:16:47.657]"I should get somethin' back out of this," kinda things.
[00:16:50.560]But you gotta condition them and say,
[00:16:52.077]"You know, it's not that so much.
[00:16:54.170]You're buying this for the bad year."
[00:16:55.750]So when you start to look at some of these dry years,
[00:16:57.397]and you see what they're getting back per acre,
[00:16:59.340]that's why they're buying, okay.
[00:17:00.870]And overall, they actually come out ahead,
[00:17:02.290]which is not usually the case in insurance.
[00:17:04.540]'Cause usually you don't have the government
[00:17:06.093]covering half of your premium for you.
[00:17:09.550]So that's one strategy that I talk to about.
[00:17:12.660]The other strategy that's pretty popular
[00:17:14.639]is to insure the growing months.
[00:17:16.737]And so I just call this the Growing Season Strategy.
[00:17:19.311]And you might bump this up and do April, May or whatever.
[00:17:22.050]I just kept my months the same here.
[00:17:24.380]So I insured May/June and July/August,
[00:17:26.187]and just split it 50/50.
[00:17:27.910]I figured that's where we need the rainfall
[00:17:29.310]for the grass production.
[00:17:30.920]Now, in terms of the premiums,
[00:17:32.420]those are the cheapest ones to insure.
[00:17:34.100]So that's nice, 'cause my premium goes from $1.84
[00:17:37.190]down to $1.32 for the producer.
[00:17:39.730]Everything else on this is exactly the same.
[00:17:41.700]I'm just puttin' the dollars in those two months, okay.
[00:17:44.711]So anyway, so it becomes a lot cheaper to do,
[00:17:47.360]but as you can probably guess,
[00:17:48.920]now that I only have the insurance in these two months,
[00:17:51.190]there's a lot more times where you end up with
[00:17:53.480]what I call the goose egg, right?
[00:17:55.350]There's times where those months don't pay back, okay.
[00:17:58.233]It's supposed to be less volatility.
[00:18:00.400]So you end up with a lot more zeros floating around in here.
[00:18:03.760]Surprisingly, though, in terms of the number of years
[00:18:06.410]it covers your premium, it's not that much different
[00:18:08.100]than the example we had before, okay.
[00:18:09.970]It's seven out of 20 years.
[00:18:11.440]It does cover your premium.
[00:18:12.930]But you start to see things like 2012
[00:18:15.180]jump out at you in 2002 and 2003.
[00:18:18.881]These years start to jump out at you
[00:18:21.180]'cause we recognize those as really dry years,
[00:18:23.680]and most of this return happened in those years, okay.
[00:18:26.560]So it looks like a lot better match overall.
[00:18:30.110]And even though we end up with only 2.78 here
[00:18:32.930]for the average indemnity instead of over three bucks,
[00:18:35.630]the actual payout ratio is about two to one, more or less.
[00:18:39.160]Okay, so that comes out a little better.
[00:18:41.680]So I tell producers start with those two strategies
[00:18:44.580]if you don't know what you wanna do,
[00:18:45.823]and then just kinda play with them.
[00:18:47.775]'Cause all of this stuff is available online
[00:18:49.470]at the RMA website, that a person can go on there,
[00:18:51.603]a producer can go on there and find their grid,
[00:18:53.894]see what the history shows, put in examples,
[00:18:56.880]and see how they turn out.
[00:18:59.920]So that's kinda interesting to do it.
[00:19:02.260]The other ranch, of course, the big grass that we have
[00:19:04.100]is Barta Brothers.
[00:19:05.380]So this would be an example for there.
[00:19:07.380]Barta Brothers is Rock and Brown County,
[00:19:10.337]and it's actually up on the northern end of that grid.
[00:19:14.840]So that's kind of important.
[00:19:16.010]In some cases, it crosses over to the north of the grid.
[00:19:21.600]I just did it in the bottom grid here, 26522.
[00:19:26.072]But that's interesting from a standpoint
[00:19:28.490]that you gotta understand that
[00:19:30.260]Barta Brothers is sittin' up here,
[00:19:31.910]but you're dealing with an index
[00:19:34.350]that goes all over that grid.
[00:19:36.110]So you could get more sophisticated on this one.
[00:19:40.190]Maybe the top grid is more representative.
[00:19:42.120]Maybe you wanna split 'em 50/50
[00:19:43.620]to get a better representation.
[00:19:45.960]But just lookin' at this one with the same strategy,
[00:19:48.620]turns out it has the same base value per acre
[00:19:51.789]for those counties, both those counties actually,
[00:19:54.240]is what we had out at Gudmundsen.
[00:19:56.230]So still 22.60.
[00:19:57.700]If I spread that out, I'm spreading $20.34 coverage out,
[00:20:02.010]the only thing that's changed on here
[00:20:03.290]is we have different premium rates, okay,
[00:20:05.400]'cause we're in a different part of the state.
[00:20:07.870]It turns out that the producer premium
[00:20:09.840]is actually a little slightly lower there, okay.
[00:20:13.590]You know, a little bit more rainfall to deal with,
[00:20:15.280]higher deficits are needed to actually have a payout.
[00:20:19.150]So we go from $1.84 over at Gudmundsen for this coverage,
[00:20:22.210]down to $1.71 at Barta Brothers.
[00:20:24.600]But other than that, it's the very same coverage.
[00:20:28.020]And this is how it pays out over that time span, right?
[00:20:32.660]So same time span, 2001 to 2020.
[00:20:36.852]Again, this is the coverage spread out.
[00:20:39.590]So we don't see a lot of zeros.
[00:20:40.860]We do see one in 2018 and back in 2001.
[00:20:44.170]This one turned out not to be a big deal.
[00:20:46.400]This one is a little bit, if we look at the data.
[00:20:48.990]But not surprisingly, 2012, 2002 are our big payout years.
[00:20:54.230]Okay, just like what we had before.
[00:20:56.570]Producer loss ratio, if you remember, we were at 1.66
[00:20:59.340]over at Gudmundsen; we're at 1.65 here.
[00:21:03.040]Just different numbers, right,
[00:21:04.157]slightly lower numbers in terms of the coverage.
[00:21:07.270]Big difference that you may have noticed is down here
[00:21:09.890]in how many times the indemnity actually covers a premium.
[00:21:12.620]Where at Gudmundsen, it goes only eight out of 20 years.
[00:21:15.020]Here, it's 70% of the time the producer doesn't owe money.
[00:21:18.860]Okay, the way this product works
[00:21:21.860]is you take the coverage out, like I said,
[00:21:23.820]by December 1 now.
[00:21:25.520]The premium is due in September, okay,
[00:21:27.540]and it's only due if you actually owe them money.
[00:21:29.670]So they take the premium out of any indemnities they pay you
[00:21:33.360]up until September.
[00:21:34.450]If you still owe them money, they say,
[00:21:36.130]hey, you owe us money,
[00:21:37.137]and you have to pay your premium at that point.
[00:21:40.360]This coverage would say that a majority of the time
[00:21:42.574]you don't end up havin' to pay 'em, okay, if anything.
[00:21:48.840]Yes?
[00:21:49.702]So in this grid, for example, you have,
[00:21:52.660]especially at Barta, you have insurance in meadows.
[00:21:57.550]That maybe the difference with Gudmundsen
[00:21:59.868]to renew each share.
[00:22:01.730]And how does this account for those differences?
[00:22:04.860]Okay, so the question was,
[00:22:05.860]how do you account for the different land types,
[00:22:07.550]upland and hay meadows, and interdunes, right,
[00:22:11.700]I gotta get that term right.
[00:22:13.160]Okay, all those different things that are goin' on
[00:22:15.310]at these Sandhills ranches.
[00:22:17.600]So in a nutshell, to answer your question,
[00:22:19.420]this index doesn't account for it at all, okay.
[00:22:22.220]I mean, for that matter, you could have really bad grass.
[00:22:25.450]You could be growing a whole bunch of Canadian thistle
[00:22:27.830]out there as far as this thing is concerned.
[00:22:30.400]'Cause it is an index just based off of presale, okay.
[00:22:34.410]And so what I tell producers,
[00:22:36.160]that's why it's so important for them
[00:22:37.580]to have a starting point, like I'm saying here,
[00:22:40.710]have like either a base strategy or growing season strategy
[00:22:44.150]or something you wanna work with.
[00:22:45.950]And then if, like anything else, they have good records,
[00:22:49.390]they're way ahead.
[00:22:50.860]If they have good records, they can go look at their records
[00:22:53.595]and design somethin' that matches their records, okay.
[00:22:57.150]So if they could go back, and I'll do that here in a second
[00:22:59.140]with this one in particular,
[00:23:00.410]if they can go back and see when they've had grass
[00:23:02.250]or didn't have grass.
[00:23:03.620]Or sometimes what I tell producers a lotta time
[00:23:06.430]is go back and look at your financial records.
[00:23:08.464]If you didn't have the grass records,
[00:23:10.800]go back and look at those years
[00:23:12.360]where you were short of money
[00:23:13.227]and those years that were good, and see how this matches up.
[00:23:17.330]And I did that once with a producer in Virginia.
[00:23:19.710]This is when I was young and foolish, and I just said,
[00:23:22.070]hey, why don't you do this, and it turned out,
[00:23:24.440]we did a workshop, like an all-day workshop.
[00:23:26.490]And then two days later, I had a farm visit with them,
[00:23:28.530]with an Extension educator out there.
[00:23:31.480]And we go to his farm and he goes,
[00:23:32.997]"I was up all night playing with that thing,
[00:23:34.503]"and you know, this is what I think," he goes.
[00:23:36.560]So he had to run it by me what he's planning on doin'.
[00:23:38.390]And in Virginia, it's fall calving
[00:23:40.730]and they're really dependent on August moisture.
[00:23:42.780]So we wanted to insure that.
[00:23:44.290]And then he insured, I forget what the other months were,
[00:23:47.200]but I think they were in the winter months,
[00:23:48.870]if I remember right.
[00:23:49.703]And some people do do that.
[00:23:50.870]They split a major growing period and a winter period.
[00:23:55.510]But he did that, and I was in contact with him
[00:23:57.720]four years later, and he was like, that was cool stuff
[00:24:01.012](laughs) 'cause it's working just like I thought it would.
[00:24:02.780]He'd gotten paid two out of the four years,
[00:24:04.490]and they were years he could use the money.
[00:24:05.623]And the years he didn't get paid from it,
[00:24:08.027]it wasn't that big of a deal.
[00:24:09.790]So there's a lotta different ways to do that,
[00:24:12.090]but it does not account for the makeup of the land
[00:24:15.070]and how productive it really is
[00:24:16.796]year in and year out kinda stuff.
[00:24:18.980]So it's all tied to precipitation, okay.
[00:24:23.300]And I try to get that across to producers,
[00:24:24.737]'cause they get really frustrated sometimes
[00:24:27.100]saying this doesn't match.
[00:24:28.360]I'm like, it's not like "The Wizard of Oz"
[00:24:33.380]and there's somebody behind a curtain back there saying,
[00:24:35.847]"Yeah, he doesn't need the money this year"
[00:24:37.320]or anything like that.
[00:24:38.190]It's all an index.
[00:24:39.023]It's all on precipitation data from NOAA.
[00:24:42.790]So if it doesn't match, that's just the case.
[00:24:46.380]Maybe it doesn't work at all for you,
[00:24:48.028]but don't be afraid to play with it
[00:24:49.510]and see if you can come up with somethin' that works.
[00:24:51.720]Good question, though.
[00:24:53.490]Okay, the Growing Season Strategy up there is even cheaper,
[00:24:56.890]obviously, from what we had before,
[00:24:58.440]'cause we're down to $1.23 here.
[00:25:00.680]But very similar story to what we had
[00:25:03.338]versus Gudmundsen last time.
[00:25:05.399]This one with lots of zeros in here, right?
[00:25:08.410]Lots of times where it doesn't pay at all,
[00:25:10.960]hardly pays the premium; very often, six out of 20 years.
[00:25:14.900]It does have a decent payback,
[00:25:17.080]but if you remember right on Gudmundsen,
[00:25:18.980]this producer, the loss ratio,
[00:25:20.500]when we went to the growing season, bounced up over two.
[00:25:22.760]So it seems like a much better match-up in that regard.
[00:25:25.950]It certainly does hit our 2012 drought pretty well here.
[00:25:30.330]2002 does that, too, maybe not as pronounced as we want.
[00:25:35.208]But I'm gonna take a look at this one a little more closely
[00:25:37.960]in terms of how it actual matches production
[00:25:40.130]from Barta Brothers,
[00:25:40.963]'cause we have production for these years up there, too.
[00:25:43.250]And so I went and I asked Mitch,
[00:25:45.910]well, Mitch actually had sent me the production data
[00:25:48.290]awhile back for a project that my grad student's workin' on.
[00:25:52.820]So I took what was up there for historical production
[00:25:55.890]on Gudmundsen over just these 20 years, okay.
[00:25:59.360]He had data back to 1999 and he had 2021 data,
[00:26:02.870]but I matched it with what I had here.
[00:26:05.070]The average over that time was almost 2,000 pounds an acre.
[00:26:08.730]Okay, and these are percentages deviation from this average.
[00:26:12.650]Okay, so everything black means it was good.
[00:26:15.360]So the first thing you notice on this is these top three.
[00:26:18.040]And these top three are all zeros, no insurance payout,
[00:26:20.770]and over here, they're all above average.
[00:26:22.860]Boy, that sure looks like it matches well.
[00:26:25.160]When we dip down in 2017, we got a $2.17 indemnity
[00:26:30.491]and it was 26% short.
[00:26:32.130]So we start to see some pretty good match-ups here,
[00:26:35.060]a little bit of shortage here, but not much at all.
[00:26:37.410]We didn't get an indemnity.
[00:26:38.720]Keep in mind, the first 10% of presets we're taking,
[00:26:42.060]that's pretty much a deductible anyway,
[00:26:43.247]'cause we can only insure 90%.
[00:26:46.950]But this is actual production numbers.
[00:26:48.810]Here's our big hit in 2012, seems to pay out.
[00:26:53.090]Things are a little sketchier
[00:26:54.254]if you go back earlier than that.
[00:26:56.240]2007, we didn't get anything,
[00:26:58.470]kind of a edgy shortage there maybe.
[00:27:01.600]2006 looks pretty good, 40% shortage and a $9 indemnity.
[00:27:08.100]These four years, though,
[00:27:09.350]I mentioned 2001 was a little bit of an issue, no payout.
[00:27:12.480]Pretty significant shortage in 2001.
[00:27:14.420]That didn't match up too well.
[00:27:16.110]A little better in 2002.
[00:27:18.610]And in '04, this one's a little off; pretty good indemnity
[00:27:23.980]and pretty low shortage,
[00:27:26.010]but there's a lot of carryover here.
[00:27:28.820]You'd think in terms of the drought carrying on
[00:27:31.180]to the next year, it's not gonna count for that either.
[00:27:33.290]Every year's a new year in terms of presets.
[00:27:35.740]So it's kinda interesting in how that works.
[00:27:38.630]And keep in mind the PRF product is on calendar year
[00:27:43.480]and not a production year.
[00:27:44.530]So there's some issues there
[00:27:47.250]in terms of how that matches up.
[00:27:49.290]But that's how the growing season does.
[00:27:50.960]If you take that base value of 22.60
[00:27:54.110]and multiply it by those shortages,
[00:27:55.930]I took out the ones that were good
[00:27:57.440]and just said how's that look dollar value.
[00:27:59.160]If you make that assumption,
[00:28:00.070]that's probably not the best way to do it.
[00:28:01.619]We could work with that a little bit tighter.
[00:28:04.630]But you could see this here is more than covered
[00:28:08.910]by that indemnity payment.
[00:28:11.650]Keep in mind the premium's gonna come off of that,
[00:28:13.580]but there's still plenty of room to cover that.
[00:28:15.560]2012, not quite so, right?
[00:28:19.050]Pretty big drop in 2012 and only $7 indemnity.
[00:28:23.630]It's the other way around, right?
[00:28:25.100]Indemnity's only covering about half of your losses.
[00:28:27.540]The next year, you make up for it, though, a little bit.
[00:28:30.210]And then some of these others are kind of a wash.
[00:28:32.150]2006 is pretty much matched-up good; 2007, not so.
[00:28:36.530]But you kinda see a pretty decent match there
[00:28:38.710]in terms of basically how it's payin' back
[00:28:41.640]versus what we're experiencing on the ground, okay.
[00:28:46.380]So that was the growing season.
[00:28:48.700]If you go to the base strategy
[00:28:50.370]and do the same thing with it dollar-wise,
[00:28:52.974]you see a lot fewer zeros, obviously,
[00:28:55.870]'cause we spread it out over the year.
[00:28:57.690]The interesting thing is it's a pretty similar story.
[00:29:00.973](laughs) Okay?
[00:29:02.220]If we look at those drought years
[00:29:03.520]where we're actually short,
[00:29:05.340]the numbers aren't that much different, okay.
[00:29:07.100]This is a little bit more modest, right?
[00:29:09.800]We had $13 here when we were covering the growing season.
[00:29:12.930]So a little bit more modest there.
[00:29:14.010]But we're also pickin' up some dollars in some other years
[00:29:17.750]that come into play here.
[00:29:20.140]So anyway, so it's not all that different, okay,
[00:29:24.170]in the Barta Brothers in particular,
[00:29:26.390]how it matches up with the drought years, okay.
[00:29:31.560]All right, so that's PRF.
[00:29:33.260]You might be curious what's happening in the state.
[00:29:35.310]This goes back to when the Rainfall Index first started,
[00:29:39.010]2013 through 2021.
[00:29:42.290]I'm just reporting the policies
[00:29:43.940]that actually earned premiums.
[00:29:46.220]USDA reports policies sold,
[00:29:48.660]which doesn't mean you necessarily paid for it, right,
[00:29:52.480]'cause you just signed up
[00:29:53.380]and never filled out the rest of the paperwork.
[00:29:56.320]But about 1,300 on average.
[00:29:58.210]But you can see that this last year we had a big boost up
[00:30:00.830]from where we had been runnin', about 700 more
[00:30:03.070]than we have been runnin' the last several years.
[00:30:04.707]And the only time it was ever higher was 2013,
[00:30:07.147]which was the first year of the rainfall.
[00:30:10.250]Largely because about 93% of those policies
[00:30:12.950]last year paid off, and our producer loss ratio is $2.88
[00:30:17.730]for every dollar paid in.
[00:30:18.970]Producers learn quickly
[00:30:20.130]when people are gettin' money and they're not.
[00:30:22.030]They say, I'm gonna go sign up for that this year.
[00:30:24.790]So we had a big sign-up for it in 2021,
[00:30:28.960]and we've had a dry year.
[00:30:30.230]Most of 'em have already paid off.
[00:30:31.790]We're already above 1.37 on the loss ratio.
[00:30:35.400]Last I checked, I think they'd only paid out
[00:30:37.810]through September, so we still got the last quarter of,
[00:30:42.420]so anything from September, October on,
[00:30:44.717]if you had that index, it's still to be paid out
[00:30:47.110]and still to be determined.
[00:30:48.950]But overall, since the Rainfall Index has come out,
[00:30:51.990]it's about 1.26.
[00:30:53.910]That includes a few years in there,
[00:30:55.780]'18 and '19 where it's really low,
[00:30:58.120]pretty much right at one for several years before that.
[00:31:04.860]Yeah.
[00:31:06.041]So- On this side?
[00:31:09.011]On, yeah.
[00:31:11.007]So it's deviation of precipitation, right?
[00:31:15.214]Yeah.
[00:31:16.047]Is that deficit or excess?
[00:31:19.318]Or does it account for excess?
[00:31:22.163]Excess, no. Okay.
[00:31:23.959]So one of the things is like in the flood year,
[00:31:27.284]if you've lost grazing 'cause of flood,
[00:31:30.470]doesn't help you at all.
[00:31:31.720]Doesn't help you at all, yep.
[00:31:33.850]So yeah, so the upside is there, okay.
[00:31:37.620]You can benefit from it, obviously, but yeah,
[00:31:41.570]it's only hitting the deficits.
[00:31:44.399]A high rainfall event
[00:31:47.078]could be kind of detrimental to-
[00:31:50.100]Right.
[00:31:51.780]We generally don't see producers praying
[00:31:55.000]that it doesn't rain, okay,
[00:31:57.390]but if they've had a dry two months
[00:31:59.519]and it's the 29th of October, (laughs) insurance,
[00:32:03.210]they really don't want it to rain on the 29th of October.
[00:32:06.240]They would rather it wait a couple of days
[00:32:08.195]and head into November so they could get paid.
[00:32:10.830]And so you hear people frustrated on that, right?
[00:32:13.147]"Aw, I was doin' great."
[00:32:15.870]It's almost like a game to 'em sometimes.
[00:32:17.848]They're like, "Oh, man, I was doin' great
[00:32:19.237]"and then it rained like four inches the last,
[00:32:21.633]"and it screwed me out of my payment."
[00:32:23.500]Well, not much we could do about that, right?
[00:32:26.220]I mean, that's just the way it's designed to work,
[00:32:29.740]the way it's set up.
[00:32:31.792]So anyway, I mean really the only other way
[00:32:34.830]to get around that is to actually go out
[00:32:36.607]and take productions down.
[00:32:38.340]I mean, if you're really gonna get to it,
[00:32:39.770]and that's just not feasible
[00:32:41.260]with what we currently have for resources and stuff, so.
[00:32:46.450]You know, this works
[00:32:47.642]because we'll experience deficit, right.
[00:32:51.496]Yeah.
[00:32:53.150]With the broader issues
[00:32:55.080]of climate extremes, is there any even discussion
[00:32:58.720]about adjusting for excess precipitation or deficit
[00:33:02.860]or any of that?
[00:33:03.993]I have not heard those.
[00:33:05.420]Okay, the question, I'm sorry,
[00:33:06.742]I'm not repeating the question. (laughs)
[00:33:09.514]The question was if there's any discussion
[00:33:11.780]about adjusted for the more pronounced extremes
[00:33:16.540]that we're seein' with the climate situation and whatnot.
[00:33:19.720]I have not heard any of those discussions, okay.
[00:33:23.010]There has been some talk, I shouldn't say talk,
[00:33:25.210]that's a little too strong, just among people I've talked to
[00:33:28.370]just in terms of what I mentioned earlier.
[00:33:30.340]If you actually go back into the data
[00:33:31.597]and look back like, say, 1948, 1968,
[00:33:34.660]there's much higher percentages of rainfall there.
[00:33:38.350]And same grid, and it's consistent, versus now.
[00:33:41.270]It's dryer now, in Nebraska, I'm talking,
[00:33:43.310]the grids I've looked at, much drier now.
[00:33:46.470]So in that case, it's actually,
[00:33:48.690]they're being charged a lower premium
[00:33:50.360]the further back that they use to calculate the premium,
[00:33:53.060]so it's actually to the producer's advantage.
[00:33:55.890]The thing on the excess rainfall, though,
[00:33:57.490]I have not heard any discussions around that
[00:33:59.820]as far as do we need to do something
[00:34:02.210]to adjust for that or not, okay.
[00:34:05.000]The funniest story I have on the,
[00:34:06.570]goin' back to the Vegetation Index,
[00:34:09.810]'cause the Vegetation Index was just measuring the greenness
[00:34:12.380]from satellite imagery and it didn't account for snowfall.
[00:34:15.148]And so at that time, I was workin' on a simulation
[00:34:17.590]for Wyoming, University of Wyoming,
[00:34:19.570]and they literally had a February/March index
[00:34:26.220]that was 2% of normal.
[00:34:28.300]And then the next two months was like 285% of greenness,
[00:34:33.330]right, because they had a big snow pack
[00:34:35.450]that was not green at all,
[00:34:36.620]and then they had a bunch of green grass.
[00:34:39.210]That was shortly before they stopped the product.
[00:34:42.487]I see why they're stopping this.
[00:34:45.019]Great questions, thank you.
[00:34:47.080]So just a couple of things on the county data.
[00:34:49.919]Producers often ask me questions about
[00:34:52.470]what level of coverage should I have.
[00:34:54.470]I cannot drill down.
[00:34:55.850]They don't provide us access
[00:34:57.300]to see which months are being insured.
[00:34:59.050]We can't see that level of the data,
[00:35:00.610]but we can see what producers are insuring at
[00:35:03.970]in terms of rainfall.
[00:35:05.270]So I just threw a couple of examples together.
[00:35:07.660]Buffalo County, of course, would be where Kearney's at.
[00:35:10.800]This is what was sold in 2020.
[00:35:12.790]Majority of the coverage, not surprisingly,
[00:35:14.860]was at the highest level.
[00:35:16.380]You might be interested to see the differences among those.
[00:35:20.140]And this is actually fairly consistent for PRF
[00:35:24.380]and for the Livestock Risk Protection insurance
[00:35:26.610]that we see on that data in terms of the price insurance.
[00:35:29.680]And that is as you go down to a lower coverage level,
[00:35:32.640]you get higher premium subsidies.
[00:35:34.460]You get lower premiums 'cause they're less likely to pay out
[00:35:37.070]the higher premium subsidies.
[00:35:38.740]You end up paying very little for that coverage.
[00:35:41.570]And when it does pay off, it comes out to be a big payout.
[00:35:46.110]So, generally, when you look at one year
[00:35:48.280]where you actually have payouts,
[00:35:49.700]the ones that insure at a lower level
[00:35:51.450]for a dollar value of invested
[00:35:53.100]get quite a bit more return on it.
[00:35:54.580]So some producers do take that into account,
[00:35:57.200]and they think of it as how many dollars
[00:35:59.377]do I want to invest in this product.
[00:36:04.051]So they think of as a dollar
[00:36:05.690]in risk management investment.
[00:36:07.210]And in that case, if they're not fully covering
[00:36:09.390]what they think they need to cover
[00:36:10.500]at the full coverage level, it is very sensible for them
[00:36:16.720]to basically insure at a lower coverage level
[00:36:18.780]and look for a higher dollar payout.
[00:36:20.610]Obviously, it's gotta be dryer for that to pay back,
[00:36:22.980]but if that's really what they're after,
[00:36:25.034]there is some sensibility to that.
[00:36:27.030]But a majority of the premiums or policies that we see
[00:36:30.370]are up at that 90% level.
[00:36:32.290]Dawson County right next door,
[00:36:33.910]everything was at the high level.
[00:36:36.520]This would be out in the Panhandle Alliance area,
[00:36:39.280]Box Butte County, a little bit more spread out
[00:36:42.170]in terms of where people insured,
[00:36:43.800]but we see that same pattern emerging
[00:36:45.560]where the ones that insured at a lower level
[00:36:47.680]had a higher producer loss ratio payout.
[00:36:51.380]And this is our big county, right, Cherry County.
[00:36:53.630]And it's interesting there,
[00:36:55.090]again, we see a distribution of where they're insured.
[00:36:57.280]But most of the acres are insured down at the lower level.
[00:37:00.769]Okay, and so I would dictate that as
[00:37:04.080]they're lookin' at, they got a lot of acres.
[00:37:06.160]They don't wanna spend a bunch of money on the premium.
[00:37:08.170]So rather than insure fewer acres
[00:37:10.600]or do somethin' else funky,
[00:37:12.260]they just insure at a lower coverage level
[00:37:13.990]so they get a higher premium subsidy,
[00:37:17.830]'cause the subsidy breaks are 80.
[00:37:19.980]So a 90 is a one level; 80, 85 is the next level;
[00:37:24.239]and 70, 75 is the next level.
[00:37:25.810]So you see a lot of people insure things
[00:37:27.610]at the 85 and 75 level to get that extra premium subsidy.
[00:37:33.430]So those are just some examples.
[00:37:36.390]So I only have about five minutes here
[00:37:38.150]'cause I wanna leave time for questions, is that right?
[00:37:40.750]Okay, but I'll show you a little bit
[00:37:42.260]on the Annual Forage insurance.
[00:37:44.054]As I said, this is fairly new,
[00:37:46.030]and it's for annually planted crops.
[00:37:48.740]Of course, with the stuff that we're doing
[00:37:49.900]about cover crops, this is somethin' I've been talking to.
[00:37:52.400]I didn't know this existed 'cause it wasn't in Colorado
[00:37:54.840]at the time I was there.
[00:37:56.083]When I got to Nebraska, I found out about this.
[00:37:57.827]It was like, does anybody else know about it?
[00:37:59.750]And I went online and Nebraska had
[00:38:01.124]zero policies sold that year, maybe one. (laughs)
[00:38:04.900]Hardly anybody knew about it.
[00:38:06.860]But it's essentially the similar Rainfall Index insurance,
[00:38:10.090]but it's for annually planted crops,
[00:38:11.749]as long as you have the intent to use it for livestock.
[00:38:14.930]Okay, and it could be that you plan to graze it or hay it
[00:38:18.680]or combination, chop it, whatever,
[00:38:20.390]but you're planning to use it for livestock feed.
[00:38:22.780]You could insure it; it's your rainfall on it.
[00:38:25.630]So it's still the two-month intervals.
[00:38:27.890]The difference is, is it's tied to basically
[00:38:30.770]a growing period for that crop.
[00:38:32.850]So you insure the rainfall months
[00:38:35.850]based off of the months you planted it, okay,
[00:38:38.200]and it varies throughout the year.
[00:38:42.870]I'll show you that on the next slide.
[00:38:44.580]The sign-up deadline is July 15th,
[00:38:47.290]and that's by far the biggest misnomer on that.
[00:38:49.327]And when I show you the seasons, you'll see why.
[00:38:52.020]It is available in Nebraska, Kansas, the Dakotas.
[00:38:55.810]It is available in Colorado now;
[00:38:57.690]Oklahoma, Texas, and New Mexico.
[00:39:00.350]The two most recent ones added were Colorado and New Mexico.
[00:39:03.820]And RMA may be regretting that
[00:39:05.800]because they're payin' big bucks out to those states,
[00:39:07.930]as you'll see here in a moment.
[00:39:09.150]But basically, your coverage is from mid-year to mid-year.
[00:39:12.987]And these are the growing seasons, okay.
[00:39:15.640]So if you're gonna plant the forage
[00:39:18.690]between mid-July and mid-October,
[00:39:20.870]you're in growing season one,
[00:39:22.830]and you can insure rainfall from September through March.
[00:39:26.260]But keep in mind, you gotta sign up by July 15th
[00:39:28.730]to get this coverage.
[00:39:30.750]So it works like regular crop insurance in that you sign up
[00:39:33.610]and you pick your coverage,
[00:39:34.900]and then when you plant the acres,
[00:39:36.050]you go in and report your acreage.
[00:39:37.210]So it doesn't obligate you to actually plant the acres,
[00:39:40.110]and then report 'em and insure.
[00:39:41.300]It does not obligate you to actually insure,
[00:39:44.760]for that matter, but it does lock you into
[00:39:47.410]what that insurance will look like
[00:39:48.760]if you report acres of it.
[00:39:51.030]Growing season two then picks up the next three months
[00:39:53.967]and coverage from December through June.
[00:39:56.720]Growing season three, similar.
[00:39:59.120]You just go in one quarter at a time
[00:40:01.170]in terms of when you plant.
[00:40:03.167]As you could probably imagine,
[00:40:04.770]we can get maybe people to think about this one, okay.
[00:40:08.370]In July, think about what they're gonna do in the fall.
[00:40:11.460]But to talk to a producer in July and say
[00:40:13.620]you need to sign up for this
[00:40:14.820]if you're gonna plant somethin' in the spring
[00:40:16.490]is almost impossible, okay.
[00:40:17.723]They're just not thinkin' that far ahead.
[00:40:21.025]So obviously, Nebraska, this is not used a lot,
[00:40:24.280]and I'll show you that here in a moment.
[00:40:26.100]Just one quick example.
[00:40:28.230]This would be near Pleasanton.
[00:40:29.570]I just dropped it on the map just to kinda see.
[00:40:32.880]This would apply to all of Buffalo County, though, okay.
[00:40:35.243]I just did this 'cause I like the name Pleasanton,
[00:40:37.140]and my sister-in-law's from there. (laughs)
[00:40:40.620]But anyway, this would be in Grid 25024 in Buffalo County,
[00:40:45.520]is where these numbers would come from.
[00:40:47.420]And this would be an example
[00:40:48.690]where you planted in the growing season one.
[00:40:51.240]So you planted between mid-July and mid-October.
[00:40:53.620]You can insure coverage actually through March,
[00:40:56.810]which is a seven-month period.
[00:40:58.670]But because these are in two-month breaks,
[00:41:01.600]you gotta leave somethin' uninsured.
[00:41:02.990]So I left March uninsured and put 40% of the coverage
[00:41:06.260]in September/October,
[00:41:07.490]and then 30% on the other two intervals.
[00:41:10.490]The big thing on this that I tell people
[00:41:12.460]is this number right here is astronomically higher
[00:41:16.110]than what you can insure perennial pasture for, okay?
[00:41:20.520]So in this case it's $210 is the base value.
[00:41:23.267]And if you think you can go up to one and a half times that.
[00:41:25.700]So you can insure over $300 an acre, precipitation risk
[00:41:30.960]for annually planted forage in Buffalo County.
[00:41:34.510]If we just did 90% coverage, that'd be $189 an acre.
[00:41:38.470]So we'd spread that out.
[00:41:39.720]Again, big bucks here, but, of course,
[00:41:41.410]the premium is pretty high, too.
[00:41:42.790]We're not talkin' a dollar or $2.
[00:41:44.440]We're talkin' $22 an acre by this coverage.
[00:41:48.430]How would that have paid out over those 20 years?
[00:41:50.710]This is what that would've looked like.
[00:41:52.870]Same song, second verse, right?
[00:41:54.808]$1.66 for a dollar paid in.
[00:41:57.870]And in this case, eight out of 20 years,
[00:42:00.030]which isn't surprising in the big picture,
[00:42:02.150]'cause we can only do two or three intervals with it here.
[00:42:06.430]So it's gonna look more like that growing season example
[00:42:09.480]that I had for perennial grass.
[00:42:12.060]But it's very similar type of product.
[00:42:13.910]It's just designed for that annual forage.
[00:42:17.782]One big change that they made on that recently
[00:42:20.450]that is of interest to the wheat producers
[00:42:22.700]out in the Panhandle in particular,
[00:42:24.650]and maybe even in Eastern Nebraska if they're growing wheat,
[00:42:28.060]is they've changed to where you can actually do
[00:42:30.240]a dual use option.
[00:42:31.750]And this is just through the last two years
[00:42:33.590]that they did this.
[00:42:35.110]So you could insure winter wheat
[00:42:37.300]on that annual forage policy
[00:42:38.970]with the idea that you're gonna graze it at some point.
[00:42:41.370]And as you could imagine, the people in Oklahoma
[00:42:43.270]were the ones that lobbied for this.
[00:42:45.590]And then you could still carry your grain policy
[00:42:48.610]in the spring for grain production, okay.
[00:42:51.140]The caveat is, is you can only insure
[00:42:53.120]40% of its grazing value with this product.
[00:42:56.200]So that $210 gets multiplied by 0.4.
[00:42:59.337]That's your base value that you're workin' with.
[00:43:02.360]It is available in all of those states I said
[00:43:04.650]except for the Dakotas.
[00:43:06.170]That was too far north for it.
[00:43:07.300]But Nebraska is included in that.
[00:43:09.010]I'm not aware of anybody in Nebraska that has used this,
[00:43:12.120]but it's only been available for a year or two.
[00:43:14.800]Of course, predominantly people out west
[00:43:16.668]would be interested.
[00:43:19.170]This is annual forage use over time, okay.
[00:43:23.210]So we had a little bit of use back in 2014.
[00:43:27.520]Very little use throughout the years, though.
[00:43:30.610]There was a few more policies in those first two years.
[00:43:34.020]I think I took credit for this in my education program;
[00:43:36.810]I'm not sure. (laughs)
[00:43:39.710]I don't think I had that impact, but whatever.
[00:43:42.530]But anyway, it's been very lightly used.
[00:43:45.210]Last year, though, 11 out of 12 of the policies
[00:43:47.560]paid back pretty high producer loss ratio.
[00:43:50.720]Of course, that generates interest this year.
[00:43:52.550]We're back up to 25.
[00:43:53.830]All of them have paid in indemnity at this point
[00:43:57.010]and the producer loss ratio is two to one, basically.
[00:44:00.710]There's not much left on this one to be determined,
[00:44:03.870]because it goes from mid-year to mid-year.
[00:44:06.110]But if you did insure that last growing season,
[00:44:08.350]there's still another month or two
[00:44:09.590]they haven't reported rainfall on.
[00:44:11.070]So this is almost complete here.
[00:44:13.050]But 1.3 payout here compared to 1.26, very similar numbers.
[00:44:21.210]This is just some examples in Nebraska last year.
[00:44:26.380]This is the coverage level.
[00:44:27.500]Almost everybody was up at the top level.
[00:44:29.540]Similar pattern, now we see higher producer loss ratios
[00:44:32.420]if you move down the category.
[00:44:34.750]Nationally, this is how that is distributed, okay.
[00:44:38.149]Most everybody insuring at the top level.
[00:44:41.437]Probably the most interesting thing here is
[00:44:43.790]if we look at the national coverage,
[00:44:46.400]you see Nebraska is not, (laughs)
[00:44:51.270]not in the norm with the rest of the nation.
[00:44:53.974]About 4,600 policies, 4,400 paid out, three to one.
[00:44:58.160]This is payin' out big bucks places.
[00:44:59.807]And if you're interested,
[00:45:01.060]this is where it's being used, predominantly in Texas.
[00:45:03.960]Almost all of 'em paid back about a three to one ratio.
[00:45:07.430]We're talkin' pretty big bucks here
[00:45:08.870]in terms of how it's being used in Texas in particular,
[00:45:11.580]and Colorado is the other big one using it.
[00:45:15.140]New Mexico, when they came online,
[00:45:17.740]I think their loss ratio was seven to one that year.
[00:45:21.380]It's since come down a little bit.
[00:45:23.690]But those are the big states
[00:45:24.940]that we see people actually usin' it in is Colorado
[00:45:28.090]and New Mexico, and Texas, and then secondarily, Oklahoma.
[00:45:31.340]But it's not payin' off near as well in Oklahoma
[00:45:33.360]as it is in the other states.
[00:45:35.191]And, again, that's one of those states
[00:45:36.910]I can't get in to see what months are insured.
[00:45:39.120]That could have something to do with it.
[00:45:40.684]We can't get it.
[00:45:41.980]I haven't dug into the other states
[00:45:43.420]to see where people are insured,
[00:45:44.920]but I assume they're almost all assuring at 97% level
[00:45:47.710]based off of the numbers that I see.
[00:45:50.040]So that's what I have.
[00:45:51.740]Go ahead.
[00:45:53.440]I'm curious how
[00:45:54.830]you obtain the rainfall data.
[00:45:57.910]Is that from specific weather stations
[00:46:04.880]that are scattered around, like in that Barta ranch example,
[00:46:11.950]they have a bunch of rainfall measurements there.
[00:46:18.820]Yeah, so the question was where does
[00:46:21.216]the rainfall data come from?
[00:46:22.230]The rainfall data actually comes from NOAA.
[00:46:24.490]They provide it.
[00:46:25.640]It is from weather stations.
[00:46:28.300]My understanding is they require
[00:46:29.870]at least three weather stations to report
[00:46:32.420]to get data for a particular grid.
[00:46:34.720]Some grids, all three,
[00:46:36.033]they have plenty of weather stations within the grid
[00:46:38.502]to come up with the data.
[00:46:40.400]Some places don't have any weather stations in the grids.
[00:46:43.420]They're pullin' from all the weather stations
[00:46:45.090]that are several miles away.
[00:46:46.730]And that's, by far, the biggest complaint from producers is,
[00:46:49.890]is that I don't have a weather station in my grid
[00:46:52.800]and they're pullin' it from over here,
[00:46:54.050]and it's nowhere like mine.
[00:46:55.690]I don't have a solution to that
[00:46:59.170]other than to say that they're not pullin' the,
[00:47:01.970]they're not saying,
[00:47:02.803]"Oh, that weather station gives too good a data.
[00:47:04.707]"We don't wanna pay that out; let's move to this one."
[00:47:06.393]They're all predetermined by NOAA,
[00:47:08.600]separate from the people doin' the insurance.
[00:47:10.520]So NOAA does it, they report it,
[00:47:12.660]the insurance people use the data.
[00:47:15.550]I used to say producers can't manipulate that,
[00:47:18.330]but there was a producer put in jail in Colorado (laughs)
[00:47:21.100]for messing with the weather station.
[00:47:24.800]They were gettin' zero readings. (laughs)
[00:47:28.300]Found out that he did put it.
[00:47:30.245]But for the most part, it's all separately reported by NOAA.
[00:47:34.680]And there is some issues
[00:47:35.900]with not havin' weather stations nearby
[00:47:37.730]so you end up with a huge basis risk
[00:47:39.490]of what happens on your ranch
[00:47:40.630]versus what the actual index says.
[00:47:44.060]But that's also the case within grids some place.
[00:47:46.680]So even, I'm tryin' to think where that was.
[00:47:50.300]That was in Virginia, it was Central Virginia.
[00:47:52.810]And there was a grid that had a ridge through it,
[00:47:54.867]and a producer was on the wrong side of that ridge.
[00:47:57.140]So about three-quarters of the area of the grid
[00:48:00.710]was on the other side.
[00:48:02.200]It dominated the weather data.
[00:48:04.010]It didn't match his at all.
[00:48:05.950]And he looked at it and said, this doesn't make sense.
[00:48:09.230]And if I recall correctly, he was on the edge of it,
[00:48:13.320]and enough of his land went into another grid
[00:48:15.250]that he was able to insure at least some acres
[00:48:19.130]in the other grid, if not most of 'em.
[00:48:20.571]It's gotta be one continuous plot.
[00:48:24.650]So if you have a big separation,
[00:48:26.210]you can't move all of it to another grid,
[00:48:27.940]but he had some of it.
[00:48:28.913]Kind of those waves of,
[00:48:30.760]you know you have the drought here,
[00:48:33.060]and then you said you have, it generates interest.
[00:48:37.200]Is that, in your experience,
[00:48:39.520]do you see that as kind of ephemeral that it, you know,
[00:48:42.290]that interest that evaporates over a few years?
[00:48:45.560]Or does it persist until the next drought event?
[00:48:51.020]Yeah, I need good panel data
[00:48:53.161]but I'd probably say producer. (laughs)
[00:48:56.030]Just a general yes would be the answer to that question.
[00:48:58.607]The question was, does the interest basically wane
[00:49:02.240]over the years as we see these cycles happen?
[00:49:06.245]I do hear in general from producers that, you know,
[00:49:09.030]I've been doin' that for the last three years
[00:49:10.510]and haven't gotten any payout, so I decided not to do it.
[00:49:13.510]But I always hear that when they wish they would have
[00:49:16.130]the fourth year kinda thing.
[00:49:17.750]They say, yeah, I did it then I didn't.
[00:49:19.465]So I always emphasize to people, check this out,
[00:49:23.750]make sure you're lookin' at how you wanna incorporate it
[00:49:26.580]and commit to doing it as a part of your business.
[00:49:29.130]Don't bounce in and out.
[00:49:30.590]Don't say I'm gonna try this year,
[00:49:31.900]I'm gonna try somethin' else next year.
[00:49:34.420]You'll get totally frustrated and you'll get mad,
[00:49:36.630]because you'll wish you would've done last year,
[00:49:40.092]you'll wish you would've done it this year
[00:49:41.100]'cause it would've paid off and you get frustrated.
[00:49:43.504]So if you wanna do that, fictitiously,
[00:49:46.460]do it fictitiously with their tool online
[00:49:48.320]and pretend you're doing the insurance first.
[00:49:50.516]But once you get it into, map it into your plan
[00:49:53.165]and just make it a part of doing this.
[00:49:55.130]You know, we talk a pasture, a dollar or $2 an acre
[00:49:59.210]doesn't sound like much, but a lot of those places,
[00:50:01.028]if you did the pasture rental per acre basis,
[00:50:03.380]isn't all that high,
[00:50:04.230]so that actually brings that up quite a bit.
[00:50:07.160]But still, it's doable, right?
[00:50:09.800]If you're trying to protect against a 30, 40% loss forage
[00:50:14.437]and the carryover effect that might have
[00:50:16.233]would be a big deal.
[00:50:19.810]Install is on,
[00:50:23.660]or engages to influence this at all.
[00:50:26.740]I mean, the reason I'm asking is that
[00:50:29.770]our vineyard people are very concerned about temperatures.
[00:50:33.850]You mentioned the ridge running through that area.
[00:50:37.870]Frost probability becomes extremely important.
[00:50:43.870]And having the measurements at an official station
[00:50:50.170]that just happens to be across the ridge
[00:50:53.760]or up or down from the grower's property,
[00:51:02.830]then the temperature differential can be quite extreme.
[00:51:07.430]And I realize I'm talking about
[00:51:10.190]temperatures versus moisture,
[00:51:11.550]but I can see how that could be manipulated.
[00:51:14.540]But you were saying there's still a way they allow that
[00:51:17.840]because it's all NOAA measurements, right?
[00:51:22.880]Correct, so the question was whether you could get
[00:51:26.534]basically rainfall data from your own farm in some fashion
[00:51:29.670]and have that be used.
[00:51:30.961]No, they have not entertained that.
[00:51:33.160]Matter of fact, when these were coming out, I mean,
[00:51:36.030]they call this an index policy for a reason
[00:51:38.260]and they emphasize that.
[00:51:39.481]The main purpose, I shouldn't say the main purpose,
[00:51:41.930]but one of the primary purposes
[00:51:43.648]of having index insurance policies
[00:51:46.600]is it takes away the moral hazard.
[00:51:48.540]You're familiar with that term?
[00:51:50.120]Moral hazard is that I take the insurance out
[00:51:52.530]and then I do somethin'
[00:51:53.530]that influences the indemnity payment.
[00:51:55.150]So an example would be a crop producer
[00:51:56.840]that doesn't put on fertilizer or uses a low seeding rate.
[00:52:00.810]They're supposed to use standard practices, right?
[00:52:03.550]But how on earth are you ever gonna know, right,
[00:52:06.160]that they use low seeding rate
[00:52:07.570]or that they didn't go out and spray
[00:52:09.060]when maybe they should have, or something like that.
[00:52:11.580]So that's a moral hazard, right?
[00:52:13.040]A producer collecting insurance based off of their actions
[00:52:16.090]as much as anything else,
[00:52:17.420]deviating from normal production practices.
[00:52:20.270]When they first were coming out with these policies,
[00:52:22.410]that was one of the big things they said,
[00:52:24.000]is we wanna take away the moral hazard
[00:52:26.120]'cause it allows us to make this actuarily sound
[00:52:29.570]and charge everybody fair rates.
[00:52:31.890]What moral hazard does is it causes the rates to go up
[00:52:35.230]even for the good people, right?
[00:52:36.750]'Cause they just end up paying out more,
[00:52:39.300]and so they have to charge more to make it all work,
[00:52:41.990]you know, make the numbers match.
[00:52:43.840]And so they're trying to get away from that.
[00:52:45.580]So that's a long answer to your question,
[00:52:48.990]but I don't see them moving towards trusting producers
[00:52:52.170]to collect or have some collection thing on their site
[00:52:55.860]to get onsite rainfall data, in particular.
[00:53:00.220]Who knows, maybe someday they'll have somethin'
[00:53:02.210]where they have an independent third party collect somethin'
[00:53:05.180]on an actual ranch, production data in particular
[00:53:07.820]or something like that.
[00:53:08.847]But I don't see it in the near future
[00:53:10.700]with what I've seen so far.
[00:53:12.060]I think if USDA had their way,
[00:53:15.320]they would find a way to get rid of moral hazard altogether
[00:53:18.340]and index everything.
[00:53:20.190]But there's not a great tool yet on a crop site for that.
[00:53:23.510]But they would much prefer that.
[00:53:27.991]Yeah, so thanks for the question.
[00:53:30.025]That's a good question.
[00:53:33.040]I was curious about
[00:53:36.290]any observation on multi-year droughts,
[00:53:39.200]maybe thinking in Texas back in early 2010,
[00:53:44.490]and the impact on the viability of operations
[00:53:47.980]where you have instead of a drought year
[00:53:50.540]every six or seven years, you have multi-year drought?
[00:53:56.724]Yeah, that's a good question.
[00:53:57.930]So Dan asked a question about multi-year drought
[00:54:00.407]and how this would match up and maybe help mitigate
[00:54:02.720]some of that impact that comes into play.
[00:54:06.780]I have not looked into it at the level
[00:54:09.100]that your question implies from seein' different areas
[00:54:12.880]that have had multi-year droughts.
[00:54:14.346]2012 and '13 is probably the most that I've looked at
[00:54:18.030]in terms of just carryover effect.
[00:54:20.020]'Cause the drought in 2012
[00:54:23.010]really hit pretty late in the year, kinda stuff,
[00:54:25.460]and they had carryover in 2013.
[00:54:28.330]I haven't looked into it enough
[00:54:29.600]to feel educated to answer your question.
[00:54:32.490]The one story that came to mind, though, was, this is true.
[00:54:35.640]It might sound like I made it up.
[00:54:37.245]But I go to the American Beef Industry Convention
[00:54:39.980]pretty much every year,
[00:54:40.813]'cause I've been doin' work with them
[00:54:41.710]for close to 20 years now.
[00:54:44.270]But the convention was in Charleston, South Carolina
[00:54:47.350]one year and we had like a two-hour bus ride out for a tour
[00:54:50.110]on some farms and stuff.
[00:54:51.460]And on that bus ride, this young producer from California,
[00:54:54.770]he said somethin' about Rainfall Insurance, or I did,
[00:54:56.603]I don't remember how it came up, but I said something
[00:54:58.850]and anyway it came up.
[00:54:59.683]I always carry my laptop with me for stupid reasons.
[00:55:02.698]But anyway, two-hour bus ride, I have my laptop.
[00:55:04.970]He asked me about PRF, you can guess what I did.
[00:55:06.740]I pull out a PowerPoint and explained it all to him.
[00:55:09.145](laughs) And he came back, it was two years later
[00:55:13.147]and we were at the same conference, different location.
[00:55:16.810]But I was, oh, I walked into a room
[00:55:19.540]and he was sittin' in there, and his eyes lit up
[00:55:21.420]and he gave me a big old wave.
[00:55:22.840]And I'm like, what's he so happy to see me for?
[00:55:25.550]So he caught me in the hall
[00:55:27.210]and he was a young producer starting out.
[00:55:28.967]And that was when California was like pure red.
[00:55:32.410]Like, what is that, four years ago or whatever.
[00:55:34.060]It was entirely red.
[00:55:36.050]But he'd gone home and took out the insurance.
[00:55:39.410]And he goes, "That saved my butt."
[00:55:41.620]'Cause, basically, he would've been out of business.
[00:55:43.180]He could not have made the payment without it.
[00:55:45.000]But it was so funny, 'cause he was sittin' there,
[00:55:46.897]he was like doing the insurance and his wife was sayin',
[00:55:49.237]"Do you know what you're doing?
[00:55:50.160]"I don't think we should do this."
[00:55:51.263]He goes, "It's okay, I took a class on a bus; I'm fine."
[00:55:55.271](laughs) But anyway, so it does, even in the short-term,
[00:55:58.210]it does, especially for young producers,
[00:55:59.950]you can really bail 'em out of some tight situations.
[00:56:03.310]I should take more time to dig into more examples
[00:56:06.090]around the country where we've seen multi-year effects
[00:56:08.440]and see how it actually impacts, but I haven't done that.
[00:56:13.010]Well, thanks, everybody.
[00:56:14.330]Thanks, everybody, online for comin' in.
[00:56:16.473](audience applauds)

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Using Precipitation Insurance to Manage Forage Production Risk in Nebraska: Insights from Extension Programming

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