Risk Implications from the Selection of Rainfall Index Insurance Intervals

Authors

Ashlee Carlson, University of Nebraska-Lincoln
Cory Walters, University of Nebraska-LincolnFollow
Kathleen Brooks, University of Nebraska-LincolnFollow
Monte Vandeveer, Kansas State University
Jerry D. Volesky, University of Nebraska-LincolnFollow
Walt Schacht, University of Nebraska-LincolnFollow

Date of this Version

11-1-2017

Document Type

Article

Citation

Cornhusker Economics, November 1, 2017, agecon.unl.edu/cornhuskereconomics

Comments

Copyright 2017 University of Nebraska.

Abstract

Since the passage of the 1994 Crop Insurance Reform Act, the federal crop insurance program has grown in both size and scope. The program progressed from generating under $1 billion in premiums in 1994 to generating nearly $9.3 billion in 2016 (USDA-RMA 1994, 2016b). In 2007, the federal crop insurance program introduced the Rainfall Index (RI) and Vegetation Index (VI) Insurance Pilot Program for Pasture, Rangeland, and Forage (PRF) in selected states. In 2016, RI-PRF replaced VI-PRF and was made available in all 48 contiguous states enrolling 28,538 policies and providing over a billion dollars in coverage on more than 52.3 million acres (USDA-RMA 2016b). However, insured acreage represents only about 8% of the total 649.5 million acres of pasture and hay land. This small percent of coverage contrasts greatly to corn, where 87% of acres were insured in 2016 (USDA -RMA 2016c).