Southern Ag Today

Author: Walker Davis

  • Crop and Livestock Income Protection (CLIP) Basics for Spring Crop Producers

    Crop and Livestock Income Protection (CLIP) Basics for Spring Crop Producers

    Authors: Walker Davis and Amy Hagerman

    The Crop and Livestock Income Protection (CLIP) product, first offered in 2026, acts as an umbrella policy layered on top of your existing Revenue Protection (RP) policies, offering a higher coverage level across two or more different spring crops grown in the same county. Producers do still need to enroll in RP for each individual crop to be eligible for CLIP. RP policies trigger as they normally would, where CLIP triggers when combined revenues fall below the CLIP guarantee. 

    In a year with a revenue loss, indemnities trigger in two stages. First, individual crop revenue losses still work as they normally would. Consider a producer who has both corn and grain sorghum in a single county that experiences losses for both crops. The producer would work with his or her crop insurance agent to report the loss for each crop individually. Second, after all RP policy production to count valuations are determined, the combined revenue to count of the CLIP insured commodities is compared to the CLIP guarantee. If there is a shortfall, CLIP pays the difference. Because CLIP can be set at a higher coverage level than your underlying RP, it may trigger even when neither individual RP policy does.

    CLIP coverage levels run from 55% to 85%, capped at 25 points above your lowest individual RP policy coverage election. To show what this means in practice, consider a Garfield County, Oklahoma producer with 500 acres each of corn and grain sorghum, both under RP at 75% coverage—a common coverage level in this area. The producer’s cost of that base coverage and comparisons of three options are provided in Table 1: (1) increase the coverage level of individual RP policies, (2) adding CLIP umbrella policy on top of 75% coverage RP, and (3) adding a Supplemental Coverage Option (SCO) area coverage on top of 75% RP policies. SCO will trigger based on county average revenue, and preference may be heavily influenced by field level performance as compared to the county average. A producer cannot enroll in both SCO and CLIP. This comparison is shown in Table 1. 

    Table 1. Premium Cost Comparison: Revenue Protection Coverage Level Increase vs. CLIP

    ScenarioRP LevelAdd OnTotal PremiumProducer PremiumSubsidy Amount
    Base75%None $56,777  $22,711  $34,066
    RP180%None $66,439  $32,555  $33,884 
    RP285%None $77,330  $45,625  $31,705 
    CLIP175%CLIP 80% $59,467  $23,494  $35,982 
    CLIP275%CLIP 85% $63,006  $25,452  $37,554 
    SCO75%SCO 86% $69,511  $25,258  $44,253 
    Source: USDA RMA Cost Estimator, 2026 crop year.
    Note: Premium estimates were generated using the USDA Risk Management Agency Cost Estimator tool for the 2026 crop year using county transitional (T) yields. Individual producer premiums will vary based on their actual APH yield history, total acreage of commodities insured by CLIP, unit structure, insurable type, production practice, and location (e.g. state, county, and map area if applicable).

    The simple comparison in a single county offers a few insights. 

    1. CLIP offers comparable individual-based revenue coverage at significantly lower producer-paid premium. CLIP1 yields savings of $9,061, or 28% less than RP1 for comparable 80% coverage protection for producers growing multiple spring crops. 
    2. Savings widen substantially at higher coverage levels. Electing 85% RP on both crops individually carries a producer premium of $45,625, while a CLIP 85% umbrella policy achieves comparable protection for a producer premium of $25,452.
    3. SCO offers a comparable producer cost to CLIP but with a fundamentally different trigger. The SCO scenario (86% coverage) has a near-identical producer premium to a CLIP policy with 85% coverage, differing by just $194 for the entire operation. However, these two products behave very differently at claim time: SCO triggers on county-average revenue loss, where CLIP triggers on personal revenue loss. Your crop insurance agent can provide a comparison of SCO with CLIP for an individual operation, including the production history of the fields in question and the county benchmarks. 

    CLIP may provide a viable option to increase protection for a producer growing multiple spring crops. Although it cannot currently be used for winter crops such as wheat or oats, producers do have the option to include under CLIP livestock insured through the Weaned Calf Risk Protection program. CLIP is now available in 13 states. These states include Alabama, Arkansas, Colorado, Georgia, Kansas, Louisiana, Mississippi, Nebraska, North Dakota, Oklahoma, South Dakota, Tennessee, and Texas. It must be purchased by the earliest sales closing date of your eligible crops and is sold exclusively through licensed crop insurance agents. 

    Davis, Walker, and Amy Hagerman. “Crop and Livestock Income Protection (CLIP) Basics for Spring Crop Producers.” Southern Ag Today 6(22.4). May 28, 2026. Permalink

  • Understanding Interval-Based Enrollment Risk in PRF: How Interval Selection Strategies Can Impact Protection Across the South

    Understanding Interval-Based Enrollment Risk in PRF: How Interval Selection Strategies Can Impact Protection Across the South

    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.

    Figure 1. Pasture, Rangeland, and Forage Baseline Loss Ratio Map Across the Southern United States for Policy Years (2017-2024)

    Note: For these values, each of the 11 dual-month intervals held equal weight of the policy for each year (2017-2024) and was averaged at the grid level. 

    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. The mean loss ratios of these grids increased to 0.83 under this strategy, with a standard deviation of 0.33. There is an increase in the average loss ratio, though not massive, and, more interestingly, a big jump in the standard deviation. This tells us that in certain areas, such as grids where rainfall has been especially uncertain, looking at past Rainfall Index values can help you choose a policy aligned with the intervals that provide the most safety net protection for your situation. 

    Regions with loss ratios of 1+ are presented as either white or red grid cells. Compared with Figure 1, there are significant visual changes. Except for Kentucky and Tennessee, most southern states show more grids performing at or above the standard loss ratio of 1, suggesting improved outcomes for producers when using this interval selection strategy. Grids that were performing well across all intervals (Figure 1) also seem to perform even better under this strategy.

    Figure 2. Pasture, Rangeland, and Forage Loss Ratio Map with Enrollment Selected by Increasing Rainfall Uncertainty Across the Southern United States Averages for Each Policy Year (2017-2024)

    Together, these two maps highlight how PRF interval selection is critically important to the insurance outcome and the protection provided to the producer. For producers, the baseline loss ratio map can act as a reference for the expected PRF performance in their grid. However, it is important to investigate the performance of select 2-month intervals and take a more strategic approach, like the example above, to improve the chances of getting dependable coverage. A great place to start is by looking at the PRF Rainfall Index values for your area. Watch for downward trends or times when the index has been more variable.  Of course, it is also important to consider interval selection based on the seasons when rainfall is most critical to your forage production cycle.  Together, take advantage of all the information available to choose the interval combinations that best add to your farm’s safety net.

    References:

    Davis, Walker, Lawson Connor, Hunter Biram, and Michael Popp. 2025. “Performance and Feasibility of Pasture Rangeland and Forage Insurance in the Delta Region.” M.S., University of Arkansas. https://www.proquest.com/docview/3255211943/abstract/752CC539274B4F6FPQ/1.

    Davis, Walker, Lawson Connor, Michael Popp, and Shelby Ryder. 2025. “Is PRF Profitable in a Wetter State?” Journal of the American Society of Farm Managers and Rural Appraisers, 132–46.

    Davis, Walker. Understanding Interval-Based Enrollment Risk in PRF: How Interval Selection Strategies Can Impact Protection Across the South. Southern Ag Today 5(46.1). November 10, 2025. Permalink