Due to persistent drought conditions and volatile markets, Forage Production insurance has become an important risk management tool for forage producers who rely on alfalfa and other perennial forages. Historically, Forage Production insurance primarily covered yield losses. However, changes for the 2027 crop year will make revenue coverage available in some states, including South Dakota. Formally, these changes extend Yield Protection (YP) and Revenue Protection (RP) coverage to alfalfa, like the coverage on corn, soybeans, and wheat. The sales closing date to enroll in Forage Production insurance is September 30 in most states, making late summer an ideal time for producers to learn about the program and determine whether it fits into their operation.
Eligible crops for Forage Production insurance include perennial forage stands, such as alfalfa, after the establishment year. Annual forages are generally covered under different insurance products. To qualify for coverage, producers must have a share in the crop, and there must be an adequate forage stand at the beginning of the insurance period. Biodiverse stands, or those that exceed the eligible stand age listed in the Special Provisions, are generally not eligible for Forage Production insurance. For more information on what crops are eligible and how to enroll in Forage Production insurance, producers should work with private crop insurance agents.
Changes to the 2027 Crop Year
The new forage coverage utilizes the proven relationship between corn, soybean meal, and Class III milk futures to determine representative insurable values and provide in-season risk protection. While the relationship between these markets and forage may sound unusual, they are closely related to forage demand and livestock feeding economics.
The new price provisions tie the insurance price to the underlying futures prices. The discovery period does not end until mid-September, but the early indication is that the alfalfa price for a 90-100% stand would be $165-170 per ton for South Dakota. Comparing the implied prices for insurance to marketing year average alfalfa prices from 2011-2025, gives moderate positive correlations of 0.42 for projected and 0.63 for harvest prices. Thus, the insurance and observed prices have moved together through time. A producer would not have to insure the full price amount.
For perspective, South Dakota producers intend to harvest 2.5 million acres of hay in 2026. Of that, 1.4 million acres are of alfalfa, while 1.1 million acres are of other types of hay. For the 2026 crop year, fewer than 0.5 million acres of hay were insured with Forage Production insurance in South Dakota. In addition, less than one-fourth of the insured acres had a yield election level above 60%. Thus, alfalfa coverage was minimal compared to most other crops, and most producers were insuring at lower coverage levels than they could. There were also 0.7 million acres insured with Pasture, Rangeland, and Forage insurance, which can be used for different hay types.
The addition of Revenue Protection generally allows producers growing forage for on-farm use access to a higher indemnity payment if yield losses occur. A higher indemnity payment allows more available funds to purchase replacement hay or forage in the case of loss. For producers that raise hay to sell to others, Revenue Protection would allow protection of revenue streams when forward selling hay rather than relying on yield insurance alone.
County Reference Yields
Figure 1 shows county reference yields for South Dakota. Surprisingly, the map does not follow the accustomed pattern of alfalfa yields across the state that gradually decrease from southeast to northwest or from east to west. Instead, reference yields are relatively similar across most counties east of the Missouri River, with greater variation occurring in other areas of the state. Producers should review the reference yield for their county and discuss with their crop insurance agent how it relates to their own production history and available coverage.
The county reference yield serves as the foundation for determining the amount of production that can be insured within a county. Because of this, differences in county reference yields can directly affect the level of production available, and the premium associated with that coverage. Counties with higher reference yields will have greater opportunity for higher insured production levels, while counties with lower reference yields may offer less overall protection. Therefore, two producers with similar forage production histories may have different coverage level options simply because they farm in different counties. As the 2027 changes to the insurance product are implemented, producers should utilize this information and their own forage yields and discuss with their crop insurance agent how the reference yield affects their coverage level, guarantee, and premium. Understanding this relationship can help producers determine whether the policy provides meaningful protection for their operation.
Important Deadlines
Producers interested in purchasing coverage for the 2027 crop year should keep several dates in mind. The sales closing date for South Dakota and most participating states is September 30. Following enrollment, acreage reports must be filed. In South Dakota, the acreage reporting deadline is November 15.
If coverage losses occur, producers should notify crop insurance agents as soon as possible. Generally, the policy requires notification of loss within 72 hours of discovering damage and no later than 15 days after the end of the insurance period. Additional notification may be necessary before grazing begins or after harvesting. After a reported loss, producers should work closely with their crop insurance agents to determine these requirements.
Summary
The updated pricing structure allowing for revenue insurance is the most significant change to the policy in recent years. Knowing how these changes affect an operation can help producers make informed decisions before the enrollment deadline arrives. Producers should contact their local crop insurance agent well before the September 30 sales closing date to determine if Forage Production insurance is a good fit for their operation. Additional information is available through USDA Risk Management Agency resources.
For more information on Forage Production Insurance, view the USDA Risk Management Agency’s Forage Production publication.
