Design of the rainfall index annual forage program
ISSN: 0002-1466
Article publication date: 10 July 2020
Issue publication date: 21 January 2021
Abstract
Purpose
The authors determine the effectiveness of the Rainfall Index Annual Forage Program (RIAFP) in offsetting yield risk of winter annual forage growers. The authors also evaluate the effectiveness in reducing risk of potential alternative weather indices.
Design/methodology/approach
The RIAFP is designed to compensate forage producers when yield losses occur. Prior research found weak correlation between the rainfall index and actual winter annual forage yields. The authors use long-term small-plot variety trials of rye, ryegrass, wheat, triticale and oats with rainfall recorded on site and measure the correlation of the index with actual rainfall and actual yields. The alternative indices include frequency of precipitation events and of days with temperature below freezing.
Findings
The correlation between actual rainfall and the current RMA index was strongly positive as in previous research. Correlations between forage yields and monthly intervals of the current RMA index were mostly statistically insignificant, and many had an unexpected sign. All indices had some correlations that were inconsistent across time intervals and forage variety. The inconsistent signs suggest a nonlinear relationship with weather and forage yield, indicating that rainfall can be too much or too little. The number of days below freezing has the most potential of the three measures examined.
Practical implications
Producers should view the winter forage RIAFP as a risk-increasing income-transfer farm program. A product to reduce the risk for forage producers may need to use a crop growth simulation model or another approach that can capture the nonlinearity.
Originality/value
Considerably more data were considered than in past research. Past research did not consider alternative weather indices. The program should be continued if its goal is to serve as disguised income transfer, but it should be discontinued if its goal is to reduce risk.
Keywords
Acknowledgements
This research was made possible in part by data collected by and funding provided by the Noble Research Institute, LLC in Ardmore, Oklahoma. Similarly, some of the data were collected by and funding provided by the Oklahoma Agricultural Experiment Station. Shalekbriski was funded through a fellowship provided by the Noble Research Institute, LLC. Brorsen receives funding from the Oklahoma Agricultural Experiment Station, USDA National Institute of Food and Agriculture, Hatch project number OKL03170, and the A.J. and Susan Jacques Chair.
Citation
ShalekBriski, A., Brorsen, W., Rogers, J.K., Biermacher, J.T., Marburger, D. and Edwards, J. (2021), "Design of the rainfall index annual forage program", Agricultural Finance Review, Vol. 81 No. 1, pp. 114-131. https://doi.org/10.1108/AFR-11-2019-0120
Publisher
:Emerald Publishing Limited
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