sequences of the many decisions one must make in deciding on rain- fall insurance. I based my research on historic index values for the area where the Texas A&M AgriLife Re- search and Extension Center is in northwest Tom Green County. To do this I calculated the net re-
turns for all possible combinations of 5 coverage levels, 10 protection factors and 56 combinations of the 11 intervals for a 64-year period be- ginning in 1948, the year for which historic index values are available from RMA. This resulted in a total of 214,400 outcomes. Before describing the results of
this study I would like to describe some of the complexities of PFR insurance. Premiums and indemni- ties are based in part on the county base value per acre of pasture. For Tom Green County that amount is $8.25 per acre.
If the lease rate for an animal
unit month of grazing is $13.50, as estimated by Extension budgets, this would be equivalent to an an- nual stocking rate of 20 acres per animal unit. If you insure for the actual long-
term sustainable stocking rate and that stocking rate is higher or lower than the county average, then the protection factor can be adjusted to refl ect this. For instance, if the long-term
carrying capacity for your ranch is 30 acres per animal unit, then a protection factor of 66 percent would be appropriate if you insure for the actual carrying capacity of the ranch. Thus the protection fac- tor is similar to the value placed on your home for a homeowner’s insurance policy. The coverage level is like the de- ductible on an insurance policy. The
more risk you are willing to assume the lower the premium. There are 5 coverage levels between 90 and 70 percent, in increments of 5 percent. The level of subsidy declines as the coverage level increases. At 90 percent coverage the in-
sured will receive an indemnity if the rainfall is less than 90 percent of the long-term average and RMA pays 51 percent of the premium. At the 75 and 70 percent cover-
age levels, an indemnity is paid if the rainfall is less than 75 or 70 percent, respectively, and RMA pays 59 percent of the premium. The premium is also higher for the 75 percent coverage level compared to the 70 percent coverage level because the actuarial probability of falling below 75 percent is greater than falling below 70 percent of long-term average precipitation. Premiums are highest for the fall
PO Box 307 Friona, Texas 79035 Phone: (806) 295-6905 Fax: (806) 295-6907
HEC FEED YARD OFFERS Cattle Procurement
Yearlings, two- and three-year-old mares and geldings for sale by Doc Acre Glo, Roosters Willy, Sonitalena Glo, Payasos Last Buck and Frenchmansaceofspade by Frenchmans Guy.
2013 foals for sale by Roosters Willy, Doc Acre Glo, Sonitalena Glo, Heeza Blazin Colonel by Les Glos Colonel, Moore Skip- astarsky and Frenchmansaceofspade by Frenchmans Guy.
105 HEAD of BREEDING STOCK TESTED NEGATIVE FOR PIRO March 22, 2010
Rosemary J. Harrison, General Manager Contact:
Barbara Livingston 713-632-1331 Offi ce 832-265-2673 Cell
blivingston@harrisoninterests.com www.harrisonquarterhorseranch.com
78 The Cattleman October 2013
Experienced Management and Ownership Extensive Fat Cattle Sales & Sorting Experience Full Line of Marketing Options Available Joint Venturing
Limit Feeding & Grower Rations Pasture & Grass Programs Retained Ownership Programs Risk Management Advice
Pat Halverson 806-592-1946 General Manager
Lee Plummer 806-592-1944
Cattle Superintendent
Oscar Vasquez 806-265-5638
Yard Superintendent
thecattlemanmagazine.com
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