AoR 66: Livestock Price Risk Management with Jack Field & Shannon Neibergs

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>> Welcome to the Art of Range, a podcast focused on rangelands and the people who manage them. I’m your host, Tip Hudson, range and livestock specialist with Washington State University Extension. The goal of this podcast is education and conservation through conversation. Find us online at artofrange.com.

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My guest today on the Art of Range is Jack Field. Jack and I have known each other for I think about 25 years, going back to college, and our paths have crossed at various points over the last 25 years. One of the things that Jack does now is sell insurance for livestock, and we’re going to talk, we will talk a bit more about that. I want to also mention this is the first sponsored episode that we’ve done. I invited Jack to talk about this because of advances in livestock risk tools, including insurance and because Jack has been involved in, I believe, every industry segment from lots of different angles. Jack has been a cow/calf producer and a yearling producer for years. He has been the executive vice president for the Washington Cattlemen’s Association, and he served as an executive for the Washington Cattle Feeders, and all of those roles have included, you know, numerous species of communication both internal and external, and he has a pretty good handle on what livestock producer’s need. So, I want people to hear somebody who is not an insurance salesman, and Jack, welcome to the show. Thank you, Tip. I appreciate having the opportunity to join you on your podcast today, and as you had mentioned, we’ve known each other for 25+ years, going back to meeting each other at the University of Idaho. Go Vandals and also go Cougs. Today, I’m happy and proud to have the opportunity to visit with you in your audience about some really handy risk management tools, and you had touched a little bit on my past, and I fully understand the hesitancy that livestock producers have when a salesman or an insurance agent or someone says have we got a deal for you. I was that person that was hesitant and not that certain of the product myself. It took a little while for me to understand it, once I had a chance to use it. I’ve seen it work. I know the programs work. That’s why I feel so comfortable in providing it and working with producers throughout the Pacific Northwest. The programs are very strong, and they provide a good quality base of protection that allows producers of all sizes the ability to lock in some certainty in these uncertain times.

>> Yeah, I look forward to it. I want to mention also that we have as another guest, a repeat guest, Dr. Shannon Neibergs. Shannon is the director for the Western Center for Risk Management Education, which also is one of the funders of the podcast, but Shannon is primarily a livestock economist and has a much better handle on some of these things than I do. So, he will function as a bit of a co-host today and help me think through some of this with Jack. Shannon, welcome back.

>> Yeah, thank you, Tip, and I look forward to talking with you and Jack.

>> So, my job is to ask the dumb questions, and my first dumb question is why livestock insurance? I understand crop insurance has been around for a pretty long time and I think has a much longer history of use, but livestock insurance seems new to me. Can either one of you provide a bit of a history on where livestock insurance came from, and maybe it’s been around for a long time, it just hasn’t been widely adopted until recently. Any thoughts there, Jack?

>> I would agree with your latter statement, Tip. The Livestock Risk Protection Program is a product that is offered as part of the USDA’s Crop Insurance Program. It has been around I would think 15+ years. I remember talking about this with the Washington Cattlemen’s executive board many years ago. However, as of late, I would say there’s become a much stronger focus and involvement from producers in the program using the program, and I would credit a significant portion of that up kick in utilization to last year’s, probably the most significant change that USDA made in a number of years to the program was they increased the producer subsidy from 20 to 35%, and they had moved the payment of the premium from day one, when a producer would take the policy out, to the end date. So, in many situations, you didn’t have to tie up your working capital while you still had that protective bubble of a policy. I would say this last year we saw two significant events that really highlighted the importance of having some system of risk management whether you be a cow/calf producer, a yearling operator, or a cattle feeder, and that would have been the Coronavirus issues that we have seen as well as the Holcomb Plant fires and some of the issues that we saw through the livestock markets as a result of some of the recent activities and news. Once we see the slingshot effects in the marketplace, whether it’s corn crops or estimates going up and down and the impacts that those have on our feeder and fed cattle markets, it really highlights the importance for producers of all sizes to really take a close look at how they manage and mitigate the risk. The nice thing about the livestock risk protection program, the product that we’re talking about right now is that it is probably one of the most flexible tools available. A producer can take a policy out on a single head. You don’t have to think about traditional contract loads or large volumes. There’s no margin calls, so a producer knows right up front what his or her entire premium obligation will be. So, it provides a good amount of certainty, and it’s a very simple product when we step back and look at the details.

>> Yeah, maybe as a way of getting too, talking about some of those specific products, Shannon, can you say a bit about what some of the motivations would be from a more generic, you know, farm or ranch specific risk management approach and where does insurance fit into that?

>> Yeah, thanks. And I would start with saying that these programs are evolving, and these insurance programs are being updated as producers provide input and experience with these programs, as Jack mentioned, the increase in subsidy payments on the livestock risk protection, and different other factors across these insurance programs. And so, I think it’s important to keep an open mind on looking at what those improvements are and keeping abreast of those changes. One of the things that people would be interested in purchasing these insurance products is the management of your cash flow risk, because it all boils down to cash flow. And when the shocks occur, the negative cash flow implications can be really significant. So, the motivation to protect that cash flow really stems from your personal situation on how much working capital and equity you have in your operation, but mostly just the protection of cash flow and these risky businesses with slim margins, these insurance products, can really buffer the risk that’s out there.

>> Jack, you mentioned, as we were talking just before we started recording, that there has been a drought declaration. I suspect to many people talking about buying insurance right now after a drought declaration sounds a bit like trying to take out a life insurance policy after you’ve just been diagnosed with stage IV cancer. To what extent is it too late and to what extent are there some useful things that people can still do to try to buffer some risk against forage losses right now?

>> So, to transition it, as we look to protecting one, in regards to forage losses, for livestock grazers and hay producers that are already signed up, there’s a USDA insurance program called the Pasture, Range, and Forage Program. The signup period for that program runs September 1st through November 15th. The crop year would then begin January 1st. So, we’re in the middle of the 20/21 crop year right now. For producers that are not currently covered, they’ll have to wait another two months, or excuse me, another month and a half to two months, that September 1st window, to be able to sign up and then have coverage on their operation next year. However, the Farm Service Agency has declared, and the last time I looked, virtually every county in Central and Eastern Washington at some level of drought, be it D3 or D4, meaning three months or four months of payment for livestock grazers to graze on nonirrigated native pasture. The signup, the requirement to submit your acreage report was Thursday, July 15th. There is an opportunity for producers that have not submitted that signed acreage report, they can pay a late penalty. I believe it’s a $45 per farm late filing fee. You’ll want to double check with your local farm service agency office on that, but producers still would have the opportunity to submit their application and be eligible. So, if you’re anywhere in Central, Eastern, Southeast Washington, I would highly recommend if you have not signed up for the Livestock Forage Program that you contact your county Farm Service Agency and ask some questions about that, or you can look online if you go to the Farm Service Agency website, you’ll look under their tab about, I believe it’s disaster programs, and there’s a really good PDF that pops up along with current mapping. You can click on the most current map of the native pastures throughout the United States, and it will show every county in the United States and whether or not it is listed or at what stage of drought it’s currently in.

>> Yeah, we can put a link to that in the show notes. We’ll talk a little bit then about what specific insurance products are available and how they work.

>> So, if we’d like to go back, and we’ll touch on the Livestock Risk Protection Program first. The Livestock Risk Protection Program, the acronym for that is LRP, and that’s a program that cow, calf, yearling, or cattle feeders can utilize to protect themselves from downside movements in the market. The program is based off of the Chicago Mercantile Feeder Index on the feeder cattle and on the five-state weighted average on fed cattle, the grade 65% choice or better. The program is based strictly on price. So, when we think about LRP, every day the risk management agency, every day that they are offering. So, each day, when the market closes, as long as there hasn’t been a limit down or in some situations limit up movements, there may not be offerings, but in a normal trading day, at the conclusion of the market, somewhere between about 1:30 and 2:00 Pacific time we’ll see the offerings that are available for purchase that day. The shortest policy that is offered is 13 weeks, and they increase in four-week increments, going up to a 52-week policy. Depending on the day and on the volume of trades, that has a big impact on how many offerings you’ll see in each four-week interval as well as how many of those offerings will be made. And it’s not a guarantee that every day you’ll see a 52 or, and sometimes if there’s been a lot of activity, if the market’s been up and down, there are some times when there might be a very small number of offerings. The benefit of the program is that as a producer, you’ll see coverage levels as high as in some situations you may see a 99% covering. You don’t have to purchase coverage at the highest level. You might elect to go down, it might be somewhere in the mid-80s. The lower your coverage level, meaning you’re going to have a lower coverage price that you’re ensuring, that reduces your premium. So, with LRP, once you select a price that you’d like to protect, you’re able to lock that in. You’ll be able to see, for example, on yesterday’s offerings, you can ensure a 599-pound steer calf, that would be in weight class one, the highest coverage available for a 13-week policy would take us through the 18th of October, and you could protect yourself at 175/75 hundred weight. That’s going to cost you $4.17 per hundred weight, so $25 a head on a 599-pound steer. So, what does this mean? We’ve ensured one animal. We have a $25 premium. What have we done here. So, now, you have a policy. You’ve protected that 175/75 price. At the end of your endorsement on the 18th of October, if the feeder index — now again, all you’re doing is ensuring against price decline. It doesn’t matter how much you sell your calves for. There’s no requirement that by the end of the policy that you even have to sell your calves. But, ideally, when producers, the producers I work with, when they take a policy out, we try to time the end date of the policy as close to when they’re going to be shipping or marketing their cattle, to maximize the protection, and ensure that the policy doesn’t end, and then a week or two goes by, and then they decide to ship their cattle to make sure that they’re protected from some type of a downward swing in the market. If we get to the 18th of October, and remember, we’re ensured at 175/75, if the feeder index comes in at 170 even, you would have had a $5.75 per hundred weight loss. Now, you would have your $4.17 premium that would get taken out automatically, and you would have a $3.33 net per hundred weight, which would come out to $19.95 per head that you would end up receiving as an insurance indemnity. So, the idea behind that is if the feeder index is derived by looking at, I believe there’s 13 markets throughout the central and southeast portion of the country that report on a daily basis trying to capture and demonstrate the value of every pound of feeder calf that’s marketed to try to tie that back as close as possible to bring futures and cash together. So, with that $19.95 indemnity payment that you would have received from that loss, you would have that to offset because technically speaking if the feeder index dropped, there’s a fairly good likelihood that you might have seen a pullback in the cash market when you marketed your calves. On the flip side, if we had those cattle ensured at 175/75 and when we get to the 18th of October, if the feeder index is 178, the producer would then have to pay their entire premium of $25. However, you would have been able to hopefully see a much stronger result in the market when you sold those cattle and not only you’d have had to pay the premium but you would have seen an increase in the value of those cattle brought on the cash market. Does that make sense?

>> It makes great sense, Jack. How about some comments on the timing, because you mentioned that it’s tied to the futures market, Feeder Cattle Futures Market Index, and what do you recommend producers do relative to the timeliness of executing these insurance contracts?

>> So, I’ve got producers that will span the gamut on this, and I put myself in this list as well. I start looking, once I am done calving, and I know what I have for a calf crop, I actively start to look and watch the LRP offerings. It seems at times there might be some seasonal spikes. The earlier you purchase a policy, the more premium you’ll pay just due to the increased duration of the policy and the length of coverage. I would say the majority of producers that are going to market their calves in that October to Thanksgiving window, kind of the October/November, they’re going to start looking somewhere around the middle of July, basically from the first week of July until anytime now, and it just depends when they decide to take that policy out, realizing that 13 weeks is the shortest policy you can purchase. A nice thing that USDA and RMA, a change they made last year, was they increased the amount of time that a producer can have to market their cattle before the end of the policy. Now, they will allow you to market your cattle 60 days before the end of the policy and still retain it. So, in a situation like we’re in right now, say you had, whether you’re ensuring yearlings or your cow-calf crop, you might have had, normally you’re going to ship the first of October, and as things are getting dry, it might be a situation where you have to wean in August. You could ship those cattle, if you ship 60 days or less before the end of your policy and still retain your LRP policy in its entirety. Now, you won’t know until the end of your endorsement whether or not you have a loss, meaning it wouldn’t be based on, if you sold your calves, 45 days early, you wouldn’t use that feeder index as your end value. You would still need to wait until the final day of your endorsement to determine whether or not there was a loss. But that little bit of flexibility has been one that unfortunately in this dry weather has been used, and it’s a tool that allows for a lot of folks to have a little bit of pause, because otherwise, the last thing a producer needs is to have the double whammy of a shortened grazing season due to drought and then have a risk management tool that they’re not able to fully utilize because they had to market cattle prematurely.

>> One of the questions I’ve got is that the program, the LRP has been around just long enough, I think, for economists like Shannon to examine the history of how the insurance has worked out for various situations. Shannon, what have you and others found in looking at that?

>> As Jack mentioned, the trigger is the change in the Futures Market Index relative to the level that you insure, and so, the futures market is in theory, it incorporates all the available information into that price that’s posted. And so, historically, the level of changes has not been as dramatic as we saw last year with the COVID price shocks in the spring. And so, the coverage level is an important decision that the producers have to deal with in purchasing the LRP. The higher coverage levels means that you’re likelihood of triggering a payment is higher, but it also costs more, as Jack pointed out, in the added premium cost. So, you have to balance that, but in looking historically on the coverage levels, it was a 90% or greater is needed to historically trigger those payments when they occurred.

>> Maybe a followup on that, Tip. One of the nice things about LRP is that it gives the producers the flexibility to determine that. So, the individual gets to decide at what level do we need the covering. I work with, and I see this more with yearling operators or feeders but where they’ll select a break-even or, for instance, they might look at it, and you know, we’ll price things out on yearling, say an 850-pound steer, and the premium that, the highest coverage might come back with a $35 premium, for example, and they might look at that and think, well, that’s a bit more than we want to ensure or tie up in premium. What can we get for $20 or $22, and we’ve got the flexibility to look at the coverage and just simply by dropping back a few percentage points on your coverage, it gives you a great chance to still have a good bottom side. And for those producers that know what their break-even is, whether it be on a calf or a yearling, you could elect just to lock in and protect your break-even. There is no requirement to buy the highest coverage, and that’s something that gives people a chance to still get some good downside risk protection, like we’ve seen with COVID, the plant fires, etc. You never need insurance until the bottom falls out, and when it does, folks are always glad that they have it. It’s a nice tool with that added flexibility. And one of the other important components with LRP that you do not see with futures contracts is LRP has no margin calls. You know right up front what this is going to cost. When you look at the cost per head, that is your total coast. That’s all in. There’s no added hidden fees. You know if the premium is a $25 or a $20 per head premium, that’s what you’ll be spending. You don’t have to be concerned about four weeks down the road you don’t get a call saying we need some money for the account. There’s nothing due until the end of the endorsement, and at that time, it’s strictly the per-head premium.

>> Yeah. I promised I would ask some dumb questions. We’ve been talking about calves and yearlings. This happens to be a year when a lot of people are trying to sell mother cows. Is there, would this, could this apply to mother cows? Would you have to identify that up front? When would that have had to have been purchased? Or am I barking up the wrong tree?

>> Unfortunately, this is only going to be a feeder or fed cattle tool. We don’t have any products out there to help with slaughter cows or bred cows in that regard.

>> Got it. We discussed, Shannon and I were talking with Matt Reeves in episode 63 about forage monitoring and offered some additional thinking on ecological risk management. Are there insurance products out there for forage that are not specific to cattle?

>> Well, we would certainly, the Pasture, Range, and Forage Program, PRF, is a product that is available to livestock grazers or hay producers, and that’s for producers that run on either irrigated or nonirrigated ground. On grazing, there isn’t any difference between ensuring an acre of irrigated versus nonirrigated ground. On the hay side of things, there are different premiums. The nonirrigated premiums are higher than the irrigated premiums, and they vary location by location. The RMA utilizes a grid system that cuts the country up into rectangles, and within each grid, the ground that a producer either owns or rents would be eligible to ensure. The program utilizes the NOAA weather stations, and they look at the four closest NOAA weather stations that record precipitation on a daily basis and average the readings from those weather stations each day and use that to create a record of precipitation. That precipitation is then measured against a dataset that starts back in 1948 and runs through the last completed crop year. So, in this case, 1948 through 2020, and with the Pasture, Range, and Forage Program, it gives a producer similar to LRP the ability to select a coverage level. The highest covering level with the Pasture, Range, and Forage Program is the 90% level. So, what that means is if you ensure your ground, for example, let’s just say right now in June/July, and at the end of July, if 90% of that historic rainfall and precipitation had been recorded, you would not receive any payment. If less than 90% is recorded during your ensured period, that triggers a loss, and that would mean that you would receive some amount of indemnity payment, and the amount of payment is going to be based upon two factors, the number of acres that you have ensured, and the deviation from basically the difference between what was recorded and what that historic average was. The PRF program is one that has become a very important risk tool for producers of all sizes as we look throughout the western United States, especially right here in the Pacific Northwest. It’s something that has seen a huge level of interest and utilization since it’s become available here in Washington state since I believe 2016. The program is very simple. It does not require any record keeping or loss reporting from the producer. You simply select the timeframe in which you would like to ensure the acreage that you’re ensuring, and at the end of each respective interval, that’s the two-month consecutive window in which producers ensure, if it’s less than your covering level, that’s going to trigger a loss. Producers are able to participate in the Pasture, Range, and Forage program as well as the Livestock, excuse me, the Livestock Forage Program, LFP, the FSA program, so it gives, in some situations, producers the opportunity to participate in a federal disaster program as well as being ensured where they might have a chance to receive an indemnity payment as well. So, the biggest thing is, and what I’ve found in talking with producers throughout the tristate area is even in the years when they may receive a very large payment from their Pasture, Range, and Forage policy, many, many, many times, that kind of goes in one hand and out the other because it’s utilized to purchase additional feed or offset the losses that individuals are incurring when you think about dry conditions and what happens, if you might have to wean early, light, or weaning weights, etc. But the PRF program has become a very important tool and one that I’ve seen a dramatic increase, especially here in Washington State as of late and certainly looking to Oregon, Idaho, and western Montana with a great level of interest from producers.

>> Great. I don’t remember for sure whether at the beginning of our interview I said that you’re with CKP Insurance, and do I understand right that CKP Insurance is a larger insurance company that provides, you know, all the normal lines of insurance but that you only sell pasture, range, and livestock policies?

>> Correct, correct. I just do the pasture, range, and forage as well as the livestock risk protection and a couple other more tailored livestock policies on breeding bulls and some equine policies, but it gives me the opportunity to work with cattlemen and hay producers throughout the west and provide a really valuable management tool, and it’s one that I’m not just selling it, I use it, and I’ve seen first-hand how the program works. I’ve been able to use my policy to help offset shortages of forage production, to buy extra feed. It’s a very good tool, and it’s one that I would encourage producers of all sizes, irrigated or nonirrigated, to consider. Especially as we look right now with the importance of being able to secure enough feed, many people I’ve talked to are thinking about supplemental feed, feeding throughout late summer and into the fall much earlier than they would in a normal year. If folks have insurance, in many cases, you might have some insurance indemnities to help offset that increased feed expense.

>> Shannon, I want to come back to you for a minute. For a lot of farmers and ranchers, financial struggles are one of the main things that cause them to lose sleep at night, and for many of them, lost sleep is just the tip of an ugly iceberg. This is a pretty big deal for a lot of people, and I’m curious what your, I wouldn’t be interviewing Jack here if I didn’t think there was some usefulness to this, but I’m curious from somebody who’s spent an entire career in livestock economics and financial risk management what some of your observations are about the extent to which this can help people mitigate some of that uncertainty and therefore pretty significant anxiety, marital stress, family stress, you name it.

>> Yeah, one of the things I used to work for the farm credit banks, and one of the things that they taught me was that on a couple cases there were some health issues from the borrower, and I thought that the health issues led to the financial struggles. But the bank management informed me that it’s the other way around. It’s the financial stress that leads to the health problems. And so, this financial stress can be pervasive, and it can be unyielding. As you’re facing these risks and you’re worried about cash flow, you’re worried about your family living expenses, that’s a critical priority issue facing farmers and ranchers as they address these cash flow problems and profitability problems. So, what these insurance products can do is that they can put the floor under the bottom, and then you have that solid floor from which you can plan on and build from, and so that you have ability to borrow better. You have the ability to meet your cash flow obligations better, and it just takes some planning. It takes some investigation. It takes a phone call to Jack. He’ll help you walk through those products and also the mechanics of getting the contracts in place. So, it’s a really critical tool that provides a valuable support system.

>> And maybe to follow up to that, Tip, and Shannon did open a really big door there, a couple nice things to think about with providing some certainty is that once a producer has some coverage, and you have the opportunity to look at what a policy might be able to provide, that certainly gives producers some level of certainty. However, I have worked with a number of producers that that first year had a fairly large premium, and they had quite a bit of anxiety, but if folks are able to get through the first year with success, I’ve definitely seen the Pasture, Range, and Forage program provide a very valuable and much needed cushion and level of support that will help many, many operations. The nice thing about the Pasture, Range, and Forage program is that roughly 60 days after the end of an interval, once the RMA, the Risk Management Agency and NOAA have posted the official numbers, those numbers get sent to the respective insurance carriers and claims are processed. So, I work with customers, again, throughout the tristate area, for producers that have early intervals, such as January/February, February/March, March/April, that first part of the year, they by, in some cases, by as early as May, they might start to see some of the insurance indemnities rolling in. So, the programs are set up to be able to very quickly turn payments around. The carriers have all been very good to work with. The risk management agency has been very helpful. The program is designed to provide support to forage and livestock producers and, as well as when we look at the Livestock Risk Protection Program to provide risk protection to livestock producers, and these products deliver on that. This isn’t something that producers don’t need to be uncertain or have anxiety of, well, if we have a loss, will it be paid? Yes, it will be paid, and they’re paid very quickly. And that’s something that’s been very helpful and has given people a chance to step back, take that deep breath. Another item, and on both the Livestock Risk Protection Program as well as the Pasture, Range, and Forage program, producers can, if they elect, assign their indemnities to their lender. I work with some customers that have their respective lending facility or entity listed on there, meaning that once that premium is satisfied, any of those indemnity payments automatically can be sent to your lender. They can be put against the operating line or whatever agreements you have. In some cases, that’s been a very valuable component, and every major ag lender out there is familiar and knows about the Pasture, Range, and Forage program as well as the Livestock Risk Protection Program, because they’re two widespread, widely utilized and proven programs that have helped producers throughout the country.

>> I’m curious, given some of the questions I was asking at the beginning, what percent of livestock operations in our region are using this? I realize there’s all kinds of definitions for livestock operation, but among the people who receive a significant percentage of their family income selling livestock, any idea in the ballpark of what percent of those significant operations are utilizing this kind of insurance products?

>> That might be a question for Shannon based on the latest economic impact study that WSU did when we looked at the beef community. My guestimate would be when you look at the large entities or large operations, I would say somewhere maybe in that 20 to 25% range. There’s still an awful lot of folks out there that have not done it or are not doing it, which when you sit down and explain the program to them, I’ve yet to have somebody say, well, that’s a dumb idea. I mean everybody when they have a chance to look at it sees it as a valuable tool, but I think one of the challenges is that it does take some due diligence from the producers to be able to follow it, and one of the drawbacks to LRP, there would be two drawbacks that have not been addressed yet, but we might see something in the future, one is we’re on a very compressed timeframe. So, when the LRP offerings come out each day, so let’s just say somewhere between 1:30, 2:00, I try to get them out to my customers as quickly as possible. We only have until 9 a.m. Central, so 7 a.m. Pacific time the next day to be able to lock covering in. So, and that means on Friday they need to call me no later, I have to have it keyed into the system with an approval number from RMA by 7 a.m. Saturday morning. This isn’t something where the Friday offering you get to wait until Monday. So, unless people have been really thinking about it, it can be a little stressful in trying to make that decision, do we do this or do we wait. And that’s one of the nice things when you look at LRP is that you don’t have to do the whole herd. I mean if you have 100 head, that $25 premium might be, you might not want to tie $2500 up in insurance. The beauty of the program is you don’t have to. You can look at it, and if you wanted to insure one animal, you could insure a single animal. On the other side of things, for the year, the maximum number of animals a producer could insure is 12,000. So, they’ve increased the number of head that you can insure for the year, and it’s something that will satisfy, I think, virtually every cow/calf producer out there and a large number of yearling operators. It’s a great tool for smaller feeders and one that will hopefully see some increased participation. The other, the second drawback is the fact that the duration of the policy, and the fact that we’re looking at a 13-week policy, for some people, that’s a little too long. They’d like to see something shorter. That hasn’t been something that’s gotten any traction yet. The one good thing about that is you have a 13-week minimum endorsement length. You can sell those and market those livestock 60 days before the end of it. So, effectively, you could shave off close to eight weeks, but still, you’re in that window of having an endorsement in place for 13 weeks until you have settlement and determine whether or not you pay the premium or the producer receives some amount of loss payment.

>> That’s good to know. I’m impressed that there’s 20 to 25% potentially of livestock operations using this.

>> And I think that’s a real exciting point on this podcast is there’s room for growth of use in these products, and the increased usage won’t cost any more in the premium. It’s just a matter of making the products known and providing the planning to make these work. Because I think for PRF, as Jack mentioned, you have to start thinking about signing up as early as September and then a few months to make that decision. So, you really do have to plan in advance to take advantage of these tools.

>> That’s correct. The benefit to, so to contrast that with the Livestock Risk Protection Program, that’s a tool that a producer can, once they fill out an application, they can purchase coverage any day that there is an offering. So, as long as they own the livestock. And that’s the other requirement. You have to own the livestock. The LRP is a tool for actual producers. It’s not a speculation tool. It’s not something that if you, you know, for example, if you live in an apartment in Seattle or New York City or LA and you don’t own any livestock, you can’t participate in LRP. You need to actively own and be running those livestock to be eligible to participate. That gives you the opportunity to take that policy out any time throughout the year. When we look at the Pasture, Range, and Forage program and the drawback to that is that signup window is September 1st through November 15th for a policy that goes into effect on January 1. A challenge that I run into almost, I can guarantee I’ll run into it again this renewal period, is that I’ll have customers that aren’t sure if they’re going to have a lease in place by the 15th of November. They’re not required to submit leases, but you have to have a lease on the ground, either own it or lease it, to be able to ensure it. So, in some situations, that can be a challenge, but I would say the majority of folks have been able to get that figured out and dialed in. I think with as, now that the program has been around a while, people are beginning to understand that, and I’m hoping that they can make some adjustments or work with landlords to be able to address that, because it can be a very valuable tool for livestock raisers and forage producers if it’s dry during the period of time that they ensure.

>> Before we move to closing pleasantries, I’ve got a couple things to say about the new Art of Range website. In the meantime, you guys can think through whether there’s something that you want to add that we haven’t covered yet. A lot of people listen to the podcast through a podcasting app on a mobile device, but there’s quite a few also that listen through the sound cloud website or the main Art of Range website, and we recently launched a redesigned website with the same web address, artofrange.com, that is mobile browser friendly, but more importantly is easier to search. The links to additional information are more visible and accessible, and we can provide more information on the website than we can in the podcast show notes. And it’s a lot easier way to look at previous episodes. Not many of the episodes are time sensitive, so episode four with Fred Provenza on animal behavior and rangeland pharmacies is as relevant today as it was two years ago. So, I would encourage listeners to take a look at artofrange.com and feel free to send suggestions either for topics or for website improvements to my email address. Jack, here with CKP Insurance, what’s the best way for someone to get ahold of you if they want to think through whether to try out livestock insurance?

>> Well, they can certainly call me on my cell phone, which is 509-929-1711, or reach me with an email, which is jfield, F-I-E-L-D, at CKP Insurance dot com, and I’d be happy to help anybody and answer questions or give them some different scenarios to look at and consider.

>> Great. Shannon, thanks for joining us. Do you have any parting words of wisdom?

>> Only to take a long-term focus on this. It’s not a jump-in-jump-out-type of tool. Your strategy has to span multiple years, and through that then those programs really become effective as a risk management tool.

>> I would echo Shannon’s closing comments and hope that folks would look at that, and whether it’s the Pasture, Range, and Forage Program or the Livestock Risk Protection Program, consistency in being in the program, make sure you select a level that you’re comfortable with and a premium you can manage, but to have that consistently over a three to five or 10-year period, the longer you’re in it, the better it will serve and protect you.

>> Just before we quit here, I want to say that one of the features of most Northwest rangelands and grazing lands is that there can be significant variability from year to year, even before people were talking about climate change in the amount of rangeland forage production from year to year. And there are some ways that people contract this on their own that’s pretty useful, something as simple as taking a repeat photograph from the same spot like a corner post on a fence line or a known location within a pasture, maybe a watering site, to get some idea of how that changes over time, both the seasonality of forage production and also the relative amounts of forage production. But a little bit of information can go a long way in helping to interpret how things are changing over time and what that kind of variability looks like, and this may also be a bit of a teaser for a future episode with Dr. Jeff Herrick, who is one of the creators of Land PKS or rangeland monitoring app, there’s a broader suite of applications that are there, but we’re going to visit pretty soon about some more structured approaches to monitoring rangelands both for near term within year date as well as more long-term data, getting at ecological health and rangeland forage production. So, I would encourage folks to come back and listen to that in the near future. And Jack and Shannon, thanks for joining me today, and I look forward to our next conversation.

>> Thank you, gentleman.

>> Yep, very good.

>> Thank you for listening to the Art of Range podcast. You can subscribe to and review the show through iTunes or your favorite podcasting app so you never miss an episode. Just search for Art of Range. If you have questions or comments for us to address in a future episode, send an email to show@artofrange.com. For articles and links to resources mentioned in the podcast, please see the show notes at artofrange.com. Listener feedback is important to the success of our mission, empowering rangeland managers. Please take a moment to fill out a brief survey at artofrange.com. This podcast is produced by CAHNRS Communications in the College of Agricultural, Human, and Natural Resource Sciences at Washington State University. The project is supported by the University of Arizona and funded by the Western Center for Risk Management Education through the USDA National Institute of Food and Agriculture.

>> The views, thoughts, and opinions expressed by guests of this podcast are their own and does not imply Washington State University’s endorsement. [music]