What is a Government Subsidy?

In general, a government subsidy means that the Federal Government is responsible for funding a program in lieu of individuals or firms.

In terms of Pasture, Rangeland, and Forage (PRF) insurance, the USDA has agreed to subsidize part of PRF insurance premiums under Title XI of the Farm Bill. The goal of this program is to keep producers like you profitable in dry conditions.

What Does it Mean For Your PRF Policy?

The government subsidy on PRF insurance makes the US Federal Government responsible for a portion of your insurance premium. However, the various coverage levels associated with PRF insurance are subsidized differently.

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How Do PRF Coverage Levels Affect Your Government Subsidy?

The 90% coverage level has a subsidy of 51%, where the producer is responsible for 49% of the total premium. The 80 & 85% coverage levels have a subsidy of 55%, where the producer is responsible for 45% of the total premium. Lastly, the 70% & 75% coverage levels have a subsidy rate of 59%, where the producer is responsible for only 41% of the total premium.

This means that each coverage level comes with its own level of risk, depending on your premium amount, and the portion of it that you would be responsible for in the event of a wetter-than-average year. Your Redd Summit agent will work with you to build a PRF policy that suits your operation, risk tolerance, and budget.