PRF Insurance Moves to NCEI Rainfall Data: What It Means for Premiums and Indemnities

Geoffrey Childress, James Keeler and Dylan Turner

No 415937, ARPC Brief from North Dakota State University

Abstract: This brief examines the 2027 crop year, the rainfall index underlying Pasture, Rangeland, Forage (PRF) insurance shifts from NOAA’s Climate Prediction Center (CPC) to NOAA’s National Centers for Environmental Information (NCEI). RMA reports that overall loss ratios remain nearly identical under the new source. We assess this claim by comparing simulated outcomes under each source for a hypothetical policy in every grid-interval, holding the grids, 2027 base values, and coverage fixed at 90% and varying only the rainfall data and premium rates. In aggregate, RMA’s claim holds: the long-run loss ratio is 0.861 under CPC and 0.860 under NCEI, because expected indemnities and total premiums fall by similar amounts (6.1% and 6.0%). The aggregate masks substantial heterogeneity. In the most recent year of observed outcomes, mean indemnity differs by more than $1 per acre in 43% of grid-intervals, and long-run loss ratios change by more than 5% in about 9%. Expected net benefit over 2016-2025 falls by $0.49 per $100 of protection on average, because the fixed subsidy rate shrinks as premiums fall, even though loss ratios are unchanged. Changes are larger in both directions in western states. These results hold participation and interval choice fixed, so program outcomes reported by RMA may differ. Producers should evaluate both recent and long-run records for the specific grids and intervals they insure.

Keywords: Agricultural and Food Policy; Agricultural Finance; Farm Management; Livestock Production/Industries; Risk and Uncertainty (search for similar items in EconPapers)
Date: 2026-10-30
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Persistent link: https://EconPapers.repec.org/RePEc:ags:arpcbr:415937

DOI: 10.22004/ag.econ.415937

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