Vegetation Index (VI)

Whats New? Rainfall Index Vegetation Index

Vegetation Index (VI)Normalized Difference Vegetation Index (NDVI)

11Todays GoalRanchers in New Mexico need an insurance program for their grazing and haying perilsRMA is committed to meeting those needsLimited options Pros and Cons to both programs (RI/VI)Can program improvements be implemented for VILimit available Index Intervals to assure production for the year is captured?What time periods should be offered?Do producers prefer RI?

22Where we are today?Ten Index Intervals during a year ONLY Four intervals have been released to date Latest interval released to date: April-JuneFirst three intervals covered winter and early spring months that normally have very low NDVI readings as plants are dormant or beginning to green upAbove average biomass carry over from 2010Drought conditions in New Mexico, Texas, Oklahoma, etc. with catastrophic impactsImpacts to the industry as a whole33History The Agricultural Risk Protection Act of 2000 (ARPA) mandates programs to cover pasture and rangelandVegetation Index - Pasture, Rangeland, Forage (VI-PRF) Rainfall Index - Pasture, Rangeland, Forage (RI-PRF)44Challenges PRFPasture, Rangeland, Forage CropVarious plant speciesTiming of plant growth Lack of individual/industry data Vast range of management practices across the industryPublicly announced prices not availableCrop continuously harvested via livestock55HistoryStatement of Objectives issued by RMAContractors put together ideas and proposals16 proposals received All were indexes Rainfall IndexVegetation IndexRMA awarded four contracts2 were Rainfall Indexes2 were Vegetation Indexes2 were implemented

66Fact or FictionVegetation Index utilizes remote sensing measures for the grid.All biomass in a grid is includedDoes not measure grass onlyDeviation of normal for the interval (1989 to 2009)

THIS IS NOT DROUGHT INSURANCE (Multi Peril)RMA does not use the term drought for the Vegetation Index program nor for the Rainfall Index program

77Program OverviewArea Plan of insurance Not individual coverageLosses are area based, not producer basedIndex based on NDVI (a proxy for vegetation biomass)Not measuring actual individual productionNo loss adjustments, records, etc.More timely paymentsDoes not reward poor management practices

88Program OverviewRatingEach grid, index interval, and coverage level is individually ratedEncourages producers to select a scenario that best mitigates their operation/production risksCritical that producers select the correct interval for RI or VI

Encourage producers to view rates, BUT that should not be the determining factor in selecting which index interval(s) to insure.99Program OverviewIndex IntervalsMinimizes dependency on subjective pre-determined biomass growing seasonsElevation, climate, etc. found within an area

Maintains consistency across the countryAllows for regional and local varianceAllows individual freedom to select appropriate intervals

1010Program Overview - VIVegetation Index ProgramArea Based PlanApproximately 8 x 8 km grid vs. countyUtilizes satellite remote sensing data Normalized Difference Vegetation Index (NDVI)Deviation from Normal: 1989 to 2009, captures multiple perilsReview of historical indices and how they relate to your ranch is criticalCritical that peak of growing season is insured and not time periods outside those months1111Grid Overview VIArea of insurance = 8 x 8 km (~ 4.9 x 4.9 miles)

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12Program Overview VI (&RI)Coverage Levels Percentages available: 90, 85, 80, 75, and 70Consistent with other area programs

Catastrophic Risk Protection (CAT)Not currently availableProducers are eligible for NAP coverage

1313Program OverviewNot required to insure 100% of acreageForage utilized in the annual grazing or hay cycle can be insured without insuring all acreageAll acres within a property may not be productive, e.g., rocky areas, submerged areas Provides additional flexibility for the rancher to design the coverage to their specific needs Because the program is an area plan, there is no opportunity to move productionProducers cannot affect trigger

1414Index DefinitionsExpected Grid Index: Based on the historical mean accumulated NDVI values, by Index Interval, expressed as a percentage; EGI = 100

Final Grid Index: Based on the current NDVI values for each Index Interval If current data represents a 40% reduction, then FGI = 60

Trigger Grid Index: The selected coverage level multiplied by the Expected Grid Indexi.e. - Coverage Level = 85; then Trigger Grid Index = 85 If the final grid index falls below the trigger grid index, the insured may be due an indemnity1515Program OverviewPayment CalculationsThe only insurable cause of loss is when the final grid index value is less than the trigger grid index, and only when caused by a natural occurrence If the cause is determined by FCIC to be an act of man or intentional, a method of assigning the Vegetation Index value from the nearest unaffected grid will be used to establish a final grid index value for the grid affected16162011 Changes: Filed 6/30/2010Addition of Total Loss Factor (VI ONLY)Accelerates the level of loss at which the maximum indemnity amount would be made allows producers to obtain 100% payouts more frequently

VI Program expanded to balance of counties in Idaho, Oregon and South Dakota and all counties in Arizona, New Mexico, and Utah

NO CHANGES ARE MADE TO THE PROGRAM AFTER THE CONTRACT CHANGE DATE (CCD) (6/30)17171818VI Program OverviewIndex IntervalsCrop Year divided into 10, 3-month index intervalsMust select at least one interval Currently can select up to 4 intervalsCrop Practice = Index IntervalAbility for producers to manage appropriate timing risksCorrelate to individual growth patterns and production seasonsThe 3-month intervals provide for greater reaction to biomass reduction events vs. a yearly average

1919Technology VI (2011)USGS EROS Data:Historical Data can be retrieved from:http://edcsns17.cr.usgs.gov/EarthExplorer/Select the AVHRR composites

Bi-weekly composite http://ivm.cr.usgs.gov/ NDVI is band 6 in the binary imageInformation about the data http://ivm.cr.usgs.gov/Metadata.doc

NDVI images are processed by the EROS data center and are not further processed by RMA

2020Characteristics of the NDVI used for PRFData from AVHRR satellite are processed by USGS EROS and made available from 1989 to present.

AHVRR data is collected daily, however the product used is the 14-day maximum NDVI composite image

Resolution of the data is 1-km, but aggregated to 8 km for the group insurance.211x1 km NDVI Grids Averaged to 8x8 km Grids22

4 km2 = 1.5 sections22Data Processing for PRF Vegetation IndexNDVI data are acquired from EROS Data Center every 14 days

At the end of each indexing interval, the NDVI images are staged for the insurance indexing. The data are screened to remove negative NDVI values (clouds, water, etc).

Negative NDVI values are not used in the index calculations

23Vegetation Index CalculationsCalculation of the Final Grid Index has 3 stages:Calculation of the daily index values

Averaging the daily index to calculate the interval index

Standardizing the current interval index to the long-term average of the historical interval indices

24Daily Index CalculationsA daily vegetation condition index is calculated for each grid

where:Daily Index i = daily vegetation condition index for day iNDVIi = NDVI for day iNDVImini = the minimum NDVI across all years for day iNDVImaxi = the maximum NDVI across all years for day i

Note: 200 is an arbitrary scalar. . . adapted from Kogan (1990, 1995) Vegetation Condition Index25Daily Index Calculation

Historical Maximum NDVIon June 1NDVI on June 1, 2011Historical Minimum NDVIon June 1Daily Indexfor June 1=49.726Daily Index CalculationThe Daily Index equation is basically answering the question of How does todays vegetation compare to the best and the worst conditions for this day historically as seen by the satellite.

Daily Index values near zero indicate relatively poor condition of the vegetation compared to the history for that dayDoes not mean that no vegetation is present!So, if the worst day historically for a given day had evergreen vegetation present such as cholla, creosote bush, and juniper, then this greenness does not influence the daily vegetation condition index because that greenness is the minimum value.

High values indicate relatively good vegetation condition compared to the history on that day

27Final Grid Index CalculationFor each interval, the daily index values are averaged for the interval of interest to calculate the Index Interval.

The Final Grid Index is then calculated by dividing the Index Interval by the long-term average of the historical indices for the interval in question.

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NDVI Conditions December 2010NDVI Image for December 14 28, 2010EROS Data Center Indicates the gradation of greenness across New Mexico Greener areas indicate higher levels of photosynthesizing leaf area

NDVI Departure from Long-Term AverageUS Forest Service - Wildland Fire Assessment System Compares current NDVI to long-term average Greener areas indicate NDVI is greater than long term average. Yellow to Red areas indicate the opposite29

NDVI Conditions February 2011NDVI Image for February 8 to 21, 2011EROS Data CenterGreen area has declined compared to December

NDVI Departure from Long-Term Average Feb 21US Forest Service - Wildland Fire Assessment SystemMajority of New Mexico for this period is showing above average NDVI conditionsSome of the forested areas showing below average conditions

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NDVI Conditions April, 2011NDVI Image for April 5 to 18, 2011EROS Data Center

NDVI Departure from Long-Term Average April 18US Forest Service - Wildland Fire Assessment SystemMajority of New Mexico for this period is showing average to above average NDVI conditionsEastern New Mexico is showing declining NDVI conditions

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NDVI Conditions June 2011NDVI Image for May 31 to Jun 13, 2011EROS Data Center

NDVI Departure from Long-Term Average June 13US Forest Service - Wildland Fire Assessment SystemMajority of New Mexico for this period is showing below average NDVI conditionsEastern New Mexico is showing large departures from average

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NDVI Conditions August 2011

NDVI Image for August 8 to 23, 2011EROS Data Center

NDVI Departure from Long-Term Average August 1US Forest Service - Wildland Fire Assessment SystemMajority of New Mexico for this period is showing below average NDVI conditions

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Daily NDVI Trends Union County New Mexico Grid 34

70%75%80%85%90%Interval 645Jan 1 to Mar 31Final Index = 155.1Interval 646Feb 1 to Apr 30Final Index = 174.6Interval 647Mar 1 to May 31Final Index = 159.7Interval 648Apr 1 to Jun 30Final Index = 102.2Interval 649May 1 to July 31Final Index = 40.95

35Daily NDVI Trends Torrance County New Mexico Grid

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70%75%80%85%90%Interval 645Jan 1 to Mar 31Final Index = 160.5

Interval 646Feb 1 to Apr 30Final Index = 165.58

Interval 647Mar 1 to May 31Final Index = 144.8

Interval 648Apr 1 to Jun 30Final Index = 9.06

Interval 649May 1 to July 31Final Index = 53.61

37Daily NDVI Trends Chaves County New Mexico Grid

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39Daily NDVI Trends Grant County New Mexico Grid

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42Program Overview - RIRainfall Index ProgramArea Based Plan0.25 degree grid vs. countyUtilizes NOAA daily reported weather data NOAA: Climate Prediction Center (CPC)Deviation from Normal: 1948 to 2009Review of historical indices and how they relate to your ranch is criticalCritical that critical precipitation periods are insured and not time periods outside those months4343Program Overview - RICrop Year divided into 11, 2-month index intervalsMust select at least two intervals Currently can select up to 6 intervalsCrop Practice = Index IntervalAbility for producers to manage appropriate timing risksThe 2-month intervals provide for greater reaction to biomass reduction events vs. a yearly average

4444Grid Overview - RIArea of insurance = 0.25o grids 45

45Technology - RINOAA CPC dataNOAA wants to use the best data available for their programs tooNOAA rainfall data based on the Optimal Interpolation (OI) methodologyHistorical data (1948 to 2006) currently can be retrieved from NOAA at the following website: ftp://ftp.cpc.ncep.noaa.gov/precip/CPC_UNI_PRCP/GAUGE_CONUS/V1.0/ Near real-time data (2006 to present) is currently accessed from ftp://ftp.cpc.ncep.noaa.gov/precip/CPC_UNI_PRCP/GAUGE_CONUS/RT/4646Technology - RIFor 2011 results: the historical period for calculating the long term average is Jan.1, 1948 through Dec. 31, 2009Precipitation is interpolated to the grid and not measured within a gridProducers MUST understand that even if there is a weather station that reports daily to NOAA CPC inside their grid, the results will NOT equal that weather stationSimilar to NASS data used for GRP crop policiesProducers reporting to NASS unknownSurveys NASS eliminates in their quality control unknown4747What we hear - RIRanchers believe RMA is using a single point specific weather stationRanchers provide NWS, NCDC, WFO, or other NOAA/USGS/NASA data sets, airport weather reports, etc.Ranchers use their own rain gaugesRanchers believe grid results will always reflect exact conditions on their ranchPurpose: to provide general rainfall conditions in a grid, not measure a single gauge4848NAP and PRF ClarificationFSA NAP Coverage and RMA PRF Pilot Insurance Program Coverage Policy

Producers can obtain both a PRF policy (VI or RI as applicable) and NAP coverage on the same acres for the same intended use

Eligible to earn a PRF indemnity payment and NAP benefit on the same acres for the same intended use

4949Web Based Tools

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5555Historical Indices and DSTActuarial information will not changeActual Final Grid Index for past years Tools are designed to be fluid and will changeUpdated annually Final Grid Index values will reflect the change in average

5656Summary:Technology & Questions RI & VICritical that agents and producers understand the Historical and Decision Support ToolsMust spend time reviewing the historical records and comparing those results to past production experienced by the producer FOCUS MUST BE ON GROWING SEASONDecision to purchase MUST be based on an analysis comparing the historical results of the grid to a producers experience for past years productionAs with any area plan results may not track 100% of the time5757Growing SeasonsIt all comes back to growing seasons!When is grass normally grown in a specific area?Many policies purchased in intervals that may not be conducive to optimum forage growthDoes NRCS ecological site information help?5858Growing Seasons NRCS ExampleEcological Site CharacteristicsSite Name: Limestone Hills (R070CY107NM)Major Land Resource Area: 070C-Central New Mexico Highlands HCPC Mixed grassland/shrubland with scattered trees59Percent Forage Production by Month (%)JanFebMarAprMayJunJulAugSepOctNovDec005710152525850059Growing Seasons NRCS ExampleEcological Site CharacteristicsSite Name: Sandy Plains (R070BY055NM)Major Land Resource Area: 070B-Upper Pecos River Valley HCPC Warm-season tall and mid-grassland mixed with shrubs and forbs60Percent Forage Production by Month (%)JanFebMarAprMayJunJulAugSepOctNovDec003551025301570060Growing Seasons NRCS ExampleEcological Site CharacteristicsSite Name: Shallow Upland(R070AY003NM)Major Land Resource Area: 070A-Canadian River Plains and ValleysHCPC Mid-grassland with minor components of shrubs and forbs61Percent Forage Production by Month (%)JanFebMarAprMayJunJulAugSepOctNovDec0035101025301250061Growing Seasons NRCS ExampleEcological Site CharacteristicsSite Name: Pine Grassland (R039XA012NM)Major Land Resource Area: 039-Arizona and New Mexico Mountains HCPC Grassland with ponderosa pine overstory and scattered forbs62Percent Forage Production by Month (%)JanFebMarAprMayJunJulAugSepOctNovDec0035101025301250062Growing Seasons NRCS ExampleEcological Site CharacteristicsSite Name: Draw (R042XC008NM)Major Land Resource Area: 042-Southern Desertic Basins, Plains, and MountainsState Containing Historic Plant Community Swale Type63Percent Forage Production by Month (%)JanFebMarAprMayJunJulAugSepOctNovDec00338718282562063Growing Seasons2011 Insurance ExperienceJan-Mar (645): 14% of acresFeb-Apr (646): 03% of acresMar-May (647): 03% of acresApr-Jun (648): 29% of acresMay-Jul (649): 06% of acresJun-Aug (650): 08% of acresJul-Sep (651): 24% of acresAug-Oct (652): 03% of acresSep-Nov (653): 01% of acresOct-Dec (654): 09% of acres6464RI 2010 IntervalsWhat preceded 2011?652010 Jan/Feb66

2010 Feb/Mar

RI662010 Mar/Apr672010 Apr/May

RI672010 May/Jun682010 Jun/Jul

RI682010 Jul/Aug692010 Aug/Sep

RI692010 Sep/Oct702010 Oct/Nov

RI702010 Nov/Dec71

RI71RI 2011 Intervals722011 Jan/Feb732011 Feb/Mar

RI732011 Mar/Apr742011 Apr/May

RI742011 May/Jun752011 Jun/Jul

RI75VI 2011 Period 645January, February, March Interval -Results Released76

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79VI 2011 Period 646February, March, April Interval -Results Released

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83VI 2011 Period 647March, April, May Interval -Results Released

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87VI 2011 Period 648April, May, June Interval -Results Released

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91VI 2011 Period 649May, June, July Interval

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95VI 2011 Period 650June, July, August Interval

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99VI vs. RI? an example 01Roosevelt County (Grid 143144): 90% CL: 150% PFAcres: 1,000Dollar amount of protection/ac: $10.06Premium:RI: $1,260VI: $1,093Indemnity:RI: $7,421Grid: 16607Intervals: Feb-Mar (FIV: 17.9); Apr-May (FIV: 01.6); Jun-Jul (FIV: 51.3)VI: $10,060 (100% payment)Interval: May-Jul (FIV: 18.9) (Note: 650 FIV: ~38.7)100100VI vs. RI? an example 02Torrance County (Grid 135650): 90% CL: 150% PFAcres: 1,000Dollar amount of protection/ac: $10.06Premium:RI: $1,141VI: $ 906Indemnity:RI: $7,675Grid: 17496Intervals: Feb-Mar (FIV: 43.8); Apr-May (FIV: 06.6); Jun-Jul (FIV: 13.6)VI: $5,603Interval: May-Jul (FIV: 56.6) (Note: 650 FIV: ~40.5)101101VI vs. RI? an example 03Lea County (Grid 151175): 90% CL: 150% PFAcres: 1,000Dollar amount of protection/ac: $10.06Premium:RI: $1,354VI: $1,096Indemnity:RI: $9,234Grid: 15406Intervals: Feb-Mar (FIV: 05.3); Apr-May (FIV: 00.0); Jun-Jul (FIV: 16.8)VI: $9,426Interval: May-Jul (FIV: 33.8) (Note: 650 FIV: ~7.6)102102VI vs. RI? an example 04Harding County (Grid 125917): 90% CL: 150% PFAcres: 1,000Dollar amount of protection/ac: $10.06Premium:RI: $1,131VI: $1,193Indemnity:RI: $3,986Grid: 19004Intervals: Feb-Mar (FIV: 80.8); Apr-May (FIV: 26.5); Jun-Jul (FIV: 55.7)VI: $7,495Interval: May-Jul (FIV: 45.3) (Note: 650 FIV: ~11.9)103103VI vs. RI? an example 05Union County (Grid 119038): 90% CL: 150% PFAcres: 1,000Dollar amount of protection/ac: $10.06Premium:RI: $967VI: $817Indemnity:RI: $4,023Grid: 20207Intervals: Feb-Mar (FIV: 49.1); Apr-May (FIV: 22.9); Jun-Jul (FIV: 96.2)VI: $10,060 (100% payment)Interval: May-Jul (FIV: 28.6) (Note: 650 FIV: ~20.9)104104Facts to RememberPossible to be indemnified for your full guarantee under VIPreliminary results for May, June, and July period would show 100% indemnities in many grids

Full guarantees (annual) would be very rare under RI due to the requirement that ranchers must insure more than one interval

Dual track processes to assure data is correct prior to releasing results105105Feedback and Suggestions forPossible changesIndex Interval selection (VI product)Need to insure period of MAXIMUM growthDo we need to limit index intervals offered in NMRegional differences?County differences?Elevation influences?Shorten the Index Interval periods from 3 month to 2 months?Masking?Other ideas?

106106Feedback and Suggestions forPossible changesOffer Rainfall Index instead of Vegetation Index?Rainfall Index issues to think aboutPotential arid region issuesCould limit available index intervalsSpotty rainfall impactsSingle peril lack of rainfall only Vegetation Index issuesAll biomass impacts when crops & trees are prevalent in the gridHitting the growth season

107Point out that the RI should not be referred to as drought insurance.Feedback - - early intervals? Thinking matching rainfall/precipitation?

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Vegetation Index (VI)