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GROUP RISK PLAN - RANGELAND (GRP RANGELAND) PILOT [PDF]

 

This fact sheet gives only a general overview of the GRP - Rangeland pilot crop insurance program and is not a complete policyFor further information, including policy provisions and FCI-35 documentation for your county, visit the RMA website (www.rma.usda.gov)Contact a crop insurance agent for a complete evaluation of your risk management needs.

 

Group Risk Plan (GRP) insurance is a Federal risk management program to insure producers against widespread production loss in a county. The policy was developed on the premise that when an entire county’s crop yield is low, most producers in the county will also have low yields. Under the policy, an individual producer may have a low yield and not receive an indemnity because the realized county-wide yield was not low enough to trigger an indemnity. Unlike other GRP programs, the GRP - Rangeland pilot program uses county base production, rather than expected yield, as the basis for indemnity calculations. The current GRP - Rangeland pilot program available in 2005 replaces the GRP - Rangeland pilot program previously available in twelve Montana counties from 1999 to 2004.

 

Availability

GRP - Rangeland insurance is available beginning in 2005 to producers who own or lease rangeland in the following Montana and Wyoming counties.

 

Montana

Wyoming

Big Horn
Blaine
Carbon
Carter
Cascade
Chouteau
Custer
Daniels
Dawson
Fallon
Fergus
Garfield
Glacier
Golden Valley
Hill
Judith Basin
Liberty
McCone
Meagher
Musselshell Park
Petroleum
Phillips
Pondera
Powder River
Prairie
Richland
Roosevelt
Rosebud
Sheridan
Stillwater
Sweet Grass
Teton
Toole
Treasure Valley
Wheatland
Wibaux
Yellowstone
Campbell
Converse
Crook
Goshen
Johnson
Laramie
Niobrara
Platte
Sheridan
Weston

 

 

 

Crop Insured

You can only insure rangeland acreage intended for harvest by grazing, and insured rangeland must be physically located in the county listed on your accepted application to be insured.  You can separately insure rangeland or acreage physically located in another county; however, within a county, you must insure all acres in which you have a grazing interest. 

The insurable number of acres under a lease instrument stating a number of AUMs that may be grazed will be determined by dividing the number of AUMs by the rangeland productivity factor shown on the FCI-35 actuarial documents.  (Example: A lease states that you may graze 500 AUMs; the rangeland productivity factor is 0.33; thus, the insurable number of acres equals 500 divided by 0.33 = 1,515 acres.)

Important Dates

Program Date

Crop Year 2005

Crop Year 2006

Sales Closing Date:

March 15, 2005

September 30, 2005

Acreage Reporting Date:

May 15, 2005

See 2006 Special Provisions

Premium Billing Date:

October 01, 2005

See 2006 Special Provisions

 

Coverage Levels and Price Elections

You must choose a coverage level and a price election percentage for coverage in each county.  For Catastrophic Risk Protection (CAT) policies, the coverage level is 65% of the county base production, and the price election percentage is 45%.  For Additional Coverage policies, the coverage level is selected from 70 to 90% (in five percentage point increments), and the price election percentage is selected from 60 to 100% (in single percentage point increments).

  

Policy Protection

The dollar amount of protection per acre for CAT GRP policies is equal to the county base revenue per acre (published on the FCI-35 Coverage and Rates Documentation) multiplied by the CAT coverage level (65%) and CAT price election (45%) percentages.  The dollar amount of protection per acre for Additional Coverage policies is equal to the county base revenue per acre (published on the FCI-35) multiplied by your selected coverage level (70 to 90%) and your selected price election percentage (60 to 100%).  Your policy protection is equal to your dollar amount of protection per acre times your acres to be insured times your insured share.

Loss (Indemnity) Payments

You receive an indemnity when your county’s net hay production falls below your trigger yield, calculated as county base production multiplied times your selected coverage level percentage.  You will receive any indemnity payment prior to the May 31 following the crop year.

Sample Policy Protection and Loss Payment

As an example, let’s say you insured a 100% share in 1,000 eligible acres in Johnson County, Wyoming at an 80% coverage level with a 75% price election.  From the FCI-35 documentation for Johnson County, we find that county base production is 3,484 tons and county base revenue per acre is $4.15. 

 

Your protection per acre would be county base revenue per acre ($4.15) times your selected coverage level (80%) times your selected price election percentage (75%) or $2.49/acre.  Your trigger yield would be county base production (3,484 tons) times your coverage level (80%) or 2,787 tons.  Your producer premium on the policy would be policy protection (1,000 acres times $2.49/acre or $2,490) times the base premium rate (0.096) less subsidy ($141) or $98 plus a $30 administrative fee to total $128. 

If a drought (or other covered cause of loss) caused Johnson County’s net hay production (payment yield) for the year of insurance to be just 70% of county base production, you would be paid an indemnity of $311, calculated as follows:  Your payment calculation factor is your trigger yield (2,787 tons) less the county payment yield (2,439 tons) divided by your trigger yield (2,787 tons) or .125.  Your payment calculation factor (.125) is then multiplied by your policy protection ($2,490) to determine your indemnity ($311).

 

Policy Protection Calculations

Producer Premium Calculations

Trigger Yield / Indemnity Calculations

$4.15
x  0.80
$3.32
x  0.75
$2.49
x  1,000
$2,490.00
County base revenue per acre
Coverage level % selected
Maximum protection per acre
Price election % selected
Dollar protection per acre
Net insured acres
Policy protection
$2,490.00
x  0.0960
$239.00
–  $141.00
$98.00
  $30.00
$128.00
Policy protection
Base premium rate
Total premium
Subsidy (59%)
Producer paid premium
Administrative fee
Total producer premium administrative fees
3,484
x  0.80
2,787
–  2,439
346
÷  2,787
0.125
x  $2,490.00
$ 311.00
County base production (tons)
Coverage level % selected
Trigger yield (tons)
County payment yield
(Calculated difference)
Trigger yield (tons)
Payment calculation factor
Policy protection
Indemnity

Definitions:

 

County base revenue per acre – FCIC’s estimate, as stated in the actuarial documents, of the productivity of acreage harvested for hay (measured in AUMs) multiplied by the grazing value.

Net hay production (also payment yield) – The estimated quantity of non-irrigated hay produced for the crop year.  The estimated net hay production is computed as the total non-irrigated hay production in a county for any crop year minus the CRP hay and grain hay produced that year, as determined by FCIC, but not less than zero. 

County base production – The sum of the historical net hay production (expressed in tons) for the years in the base period divided by the number of years in the base period, as published on the FCI-35 county actuarial documentation.

 

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Additional References

 

Group Risk Plan Materials

RMA's Group Risk Plan Web Page: http://www.rma.usda.gov/pubs/rme/fsh_4.html;

 

2005 Group Risk Plan Common Policy Provisions: http://www.rma.usda.gov/FTP/Policies/2005/ra/pdf/05102co.pdf.

 

GRP Rangeland Program Materials

 

2005 GRP Rangeland Policy Provisions: http://www.rma.usda.gov/FTP/Policies/2005/grp/05-048.pdf.

 

 
 
 
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