Design of the Rainfall Index Crop Insurance Program for Pasture, Rangeland, and Forage

Cho, Whoi; Brorsen, B. Wade

doi:10.22004/ag.econ.303607

Cited by 2 publications

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“…The impacts of weather-based pasture insurance is an important and relatively recent line of study, with work primarily focused on the Pasture, Range, and Forage (PRF) insurance program in the United States (Davidson & Goodrich, 2021;Goodrich et al, 2020;Yu et al, 2019). Work to date has showed the importance of the design of the rainfall index (Cho & Brorsen, 2021;Williams & Travis, 2019) and the potential for such insurance to increase the value of pasture land (Ifft et al, 2014). The full impacts of pasture insurance in Brazil, particularly how it impacts fattening and slaughter decisions, should be addressed in future work.…”

Section: Discussionmentioning

confidence: 99%

Outsourcing the dry season: Cattle ranchers' responses to weather shocks in the Brazilian Amazon

Skidmore

2022

American J Agri Economics

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Livestock production plays a vital role in the global economy, yet little is known about how climate change will affect the industry. Studies of crop agriculture may not translate to livestock agriculture due to differences in the set of potential adaptation strategies. Ranchers' responses to changing weather and climate are particularly relevant in the Brazilian Amazon, where the dry season is increasing by as much as 0.6 days per year. A longer dry season increases production risks as animals may succumb to starvation, lack of water, or heat stress. I pair transaction data and weather shocks to show that ranchers strategically sold animals prior to the dry season, in response to two predictors of an extreme dry season: sporadic rainfall and high temperatures prior to the dry season. Ranchers sold animals for both fattening and slaughter in response to sporadic rainfall prior. Nearly half of animals initially sold for fattening were sold for slaughter 90 days later. In contrast, ranchers responded to high temperatures solely by selling for slaughter, suggesting that current on-farm technologies are insufficient to prevent losses from heat stress. The overall supply increased in years with sporadic rainfall and high temperatures, but the supply fell by a greater amount the following year. My results suggest that farmers are currently not fully insulated from the effects of a severe dry season. As severe dry seasons become more frequent, the industry will likely increasingly rely on feedlots and need additional methods to cope with heat stress.

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Section: Discussionmentioning

confidence: 99%

Outsourcing the dry season: Cattle ranchers' responses to weather shocks in the Brazilian Amazon

Skidmore

2022

American J Agri Economics

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Design of the rainfall index annual forage program

ShalekBriski

Brorsen

Rogers

et al. 2020

AFR

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PurposeThe authors determine the effectiveness of the Rainfall Index Annual Forage Program (RIAFP) in offsetting yield risk of winter annual forage growers. The authors also evaluate the effectiveness in reducing risk of potential alternative weather indices.Design/methodology/approachThe RIAFP is designed to compensate forage producers when yield losses occur. Prior research found weak correlation between the rainfall index and actual winter annual forage yields. The authors use long-term small-plot variety trials of rye, ryegrass, wheat, triticale and oats with rainfall recorded on site and measure the correlation of the index with actual rainfall and actual yields. The alternative indices include frequency of precipitation events and of days with temperature below freezing.FindingsThe correlation between actual rainfall and the current RMA index was strongly positive as in previous research. Correlations between forage yields and monthly intervals of the current RMA index were mostly statistically insignificant, and many had an unexpected sign. All indices had some correlations that were inconsistent across time intervals and forage variety. The inconsistent signs suggest a nonlinear relationship with weather and forage yield, indicating that rainfall can be too much or too little. The number of days below freezing has the most potential of the three measures examined.Practical implicationsProducers should view the winter forage RIAFP as a risk-increasing income-transfer farm program. A product to reduce the risk for forage producers may need to use a crop growth simulation model or another approach that can capture the nonlinearity.Originality/valueConsiderably more data were considered than in past research. Past research did not consider alternative weather indices. The program should be continued if its goal is to serve as disguised income transfer, but it should be discontinued if its goal is to reduce risk.

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Design of the Rainfall Index Crop Insurance Program for Pasture, Rangeland, and Forage

Cited by 2 publications

References 0 publications

Outsourcing the dry season: Cattle ranchers' responses to weather shocks in the Brazilian Amazon

Outsourcing the dry season: Cattle ranchers' responses to weather shocks in the Brazilian Amazon

Design of the rainfall index annual forage program

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