and winter months — when rain- fall is less variable — than for the spring months, which have a greater amount of variability because of convectional thunderstorms. Fall and winter months are also
more likely to be affected by El Niño and La Niña events. Premium cost for our area of
Tom Green County is $25 to $35 per $100 of coverage for the November- to-February period compared to $10 to $25 for the May-to-June period. Compared to homeowner’s insur- ance, which is about $1 per $100 of coverage in this area, PRFI is very expensive. This is because we expect drought every few years. In contrast, most people hope they never have to make a claim on their homeowner’s policy.
Can’t outguess the weather If you decide to take out PRFI
you should commit to taking it out every year and not try to outguess the weather. Again, compare this to home-
owner’s insurance. Most people with homeowner’s insurance keep coverage every year even though they may never make a claim. Con- sider how much more important it is to keep PRFI in place for drought, which you do expect to happen. People who dropped their PRFI af- ter paying high premiums in 2010 sorely regretted it in 2011, Texas’ driest year on record.
Important discoveries Two important discoveries were
made based on the study involving the 214,400 scenarios for rainfall insurance. First, averaged across 64 years
there was no difference in net return for taking out PRFI for the differ-
ent combinations of the 2-month intervals investigated. However, averaged across these
same 64 years, net returns varied 4-fold depending upon the coverage level and protection factor selected. On average, higher coverage lev-
els and higher protection factors have a higher net return. This happens even though the
subsidy rate is lower at the higher coverage level. The higher return is a result of leveraging more premium subsidy dollars at the higher cover- age levels and protection factors. But this also exposes the insured to a much higher potential premium if rainfall exceeds the selected cover- age level.
Wise decisions with weather knowledge Precipitation in West Texas is affected by El Niño and La Niña
act like owners – they have a vested interest in the cattle they care for. Get to know the individuals who make Cactus Feeders a success.
Cactus Feedyard Pistol Audrain, Manager Cactus, TX (806) 966-5151
Centerfire Feedyard Martin Daharsh, Manager Ulysses, KS (620) 356-2010
Frontier Feedyard Gilbert Mendoza, Manager Spearman, TX (806) 882-4251
Hale Center Feedyard Kevin Kuriyama, Manager Hale Center, TX (806) 879-2104
Southwest Feedyard Buddy Thomas, Manager Hereford, TX (806) 364-0693
Stratford Feedyard Tres Hess, Manager Stratford, TX (806) 396-5501
Ulysses Feedyard Randy Shields, Manager Ulysses, KS (620) 356-1750
Wolf Creek Feedyard David Watts, Manager Perryton, TX (806) 435-5697
Wrangler Feedyard Walt Garrison, Manager Tulia, TX
(806) 668-4741 At Cactus, our Employee Stock Ownership Plan (ESOP) makes each employee an owner of the company.
When they think like owners, they take care of the cattle as if they own them. That’s the secret to what has made Cactus Feeders a continuing success. Retained Ownership
Call Brent Caviness, Surcy Peoples, Bill Hicks or Dusty Lubbock
806-373-2333 • 877-698-7355
tscra.org
Partner on Cattle • Sell Us Cattle
www.cactusfeeders.com
FEEDERS October 2013 The Cattleman 79 When our employees drive through the gate, they think and
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