By Walker Davis and Hunter Biram
Pasture, Rangeland, and Forage (PRF) insurance continues to be one of the most widely used federal crop insurance plans nationwide, with the most insured acres of any crop insurance plan in the US. While the program’s design has remained the same, the rainfall patterns that determine its performance have not (Davis et al. 2025). A new analysis comparing baseline loss ratios with recent changes in rainfall inconsistency highlights areas where producers may need to reconsider their insured intervals, and why those adjustments matter.
Figure 1 presents the baseline loss ratios of PRF from 2017 to 2024 across the south, demonstrating how the program would perform without interval choice affecting outcomes. This eliminates the human enrollment bias that happens when producers repeatedly select intervals that paid better in the past, do not follow a consistent enrollment strategy, or do not enroll consistently in general (Davis et al. 2025). Results show a mean loss ratio of 0.79 and a standard deviation of 0.20, indicating that, after controlling for enrollment behavior, most grids in the South maintain a relatively stable loss ratio that is below the national standard of 1. Figure 1 demonstrates that baseline performance and protection received by producers varies by location.
Davis et al. 2025 demonstrate that changes in the trend and variance of rainfall over time can be incorporated into an interval selection strategy. With PRF’s Rainfall Index being based on outcomes back to 1948, changes in more recent years in rainfall are less and less impactful on the index. So the strategy is to use the declining impact of each year’s rainfall to identify a gap between the assumed and actual risks, as our research showed. Figure 2 shows the results of such a strategy.
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