The grass isn't always greenest in Missouri

Feeding hay in August is never a good sign. 

However, in a drought year like 2018, many cattle producers in Missouri could be seen unrolling hay, getting water to pastures where ponds dried up and putting out abnormal amounts of feed. To make matters worse, the available hay was scarce and low quality after the subpar forage crop. To survive the winter, many growers were forced to dip into their “fence line stockpile” of bales, and some even pur­chased poor-quality, high-priced hay from southern states, such as Oklahoma and Texas.

Farmers are accustomed to facing adversity. If it’s not drought, it’s flooding. If not insects, it’s disease. Every year, there is always that one variable that throws a wrench in the gears. Just look at 2020. There were monsoon rains in parts of the Missouri, and drought conditions in other areas. Meanwhile, places in between are on track to have a bumper crop.

A backstop for forage

When it comes to forages, particularly those produced for grazing, standard crop insurance products are generally not an option due to difficulties of quantifying price and yield. That’s where Pasture, Rangeland, and Forage (PRF) insurance comes in play. This federally reinsured product allows producers to insure acreage used for grazing and haying. PRF provides pro­tection against a single peril—lack of precipitation.

Producers may select from various coverage levels, produc­tivity factors and two-month index intervals to personalize their plan (they are required to select at least two 2-month intervals). The Rainfall Index program uses data from the Na­tional Oceanic and Atmospheric Administration to determine precipitation levels. When the final grid index falls below the trigger grid index, producers may receive an indemnity.

Protecting price

This year, we may not have experienced murder hornets as warned, but most farmers—big and small—felt the sting of COVID-19. Livestock producers were left with declining markets or the lack of a market to sell their animals, especially late winter and early spring. Many sold their livestock as scheduled, taking a substantial loss at the sale barn. Others kept their livestock to feed out to sell at a later date, increasing feed expenses and foregoing revenue their lenders and pocketbooks were expecting.

These challenges highlight the importance of Livestock Risk Pro­tection (LRP), which insures your herd against a decline in market price. This federally reinsured product provides protection when the national cash price index, as reported by the Chicago Mercan­tile Exchange (CME), falls below the price coverage level. Produc­ers may select from a variety of coverage and insurance periods to match the time animals would normally be marketed.

This insurance may be purchased throughout the year. Pre­mium rates, coverage prices and actual ending values are posted online daily. LRP does not insure against death, loss or poor performance. At the end of the insurance period, if the actual ending value is below the coverage price, an indemnity will be paid for the difference.

Examples of livestock that can be protected under LRP are feeder cattle, fed cattle and swine.

Farmers never know what challenges they will face. This leads to an important question: Is your operation financially prepared for 2021? If you raise forages and livestock, these insurance options should be consid­ered along with other risk management strategies.

Contact your MFA location or visit online at mfa-inc.com/Services/MFA-Crop-Insurance to find your local MFA Crop Insurance agent.