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Monday, November 8, 2010

Agricultural Disaster Assistance

Dennis A. Shields
Specialist in Agricultural Policy

Ralph M. Chite
Section Research Manager

The U.S. Department of Agriculture (USDA) offers several permanently authorized programs to help farmers recover financially from a natural disaster, including federal crop insurance, the Noninsured Crop Disaster Assistance Program (NAP), and emergency disaster loans. The federal crop insurance program is designed to protect crop producers from unavoidable risks associated with adverse weather, and weather-related plant diseases and insect infestations. Producers who grow a crop that is currently ineligible for crop insurance may be eligible for a direct payment under NAP. Under the emergency disaster (EM) loan program, when a county has been declared a disaster area by either the President or the Secretary of Agriculture, agricultural producers in that county may become eligible for low-interest loans.

In order to provide a regular supplement to crop insurance and NAP payments, the Food, Conservation, and Energy Act of 2008 (P.L. 110-246, the 2008 farm bill) included authorization and funding for five new disaster programs to cover losses through FY2011. The largest of the new programs is the Supplemental Revenue Assistance Payments Program (SURE), which is designed to compensate eligible producers for a portion of crop losses that are not eligible for an indemnity payment under the crop insurance program.

The 2008 farm bill also authorized three new livestock assistance programs and a tree assistance program. The Livestock Indemnity Program (LIP) compensates ranchers at a rate of 75% of market value for livestock mortality caused by a disaster. The Livestock Forage Disaster Program (LFP) assists ranchers who graze livestock on drought-affected pastureland or grazing land. The Emergency Assistance for Livestock, Honey Bees, and Farm-Raised Fish Program (ELAP) compensates producers for disaster losses not covered under other disaster programs. Finally, the Tree Assistance Program (TAP) provides payments to eligible orchardists and nursery tree growers to cover 70% of the cost of replanting trees or nursery stock following a natural disaster. For individual producers, combined payments under SURE, LIP, LFP, and ELAP may not exceed $100,000. For TAP, a separate limit of $100,000 per year per producer applies.

The new programs are designed to address the ad hoc nature of disaster assistance provided to producers during the last two decades. Since 1988, Congress has regularly made emergency financial assistance available to farmers and ranchers.

Following widespread crop losses in 2009 due to excessive rain, legislation was introduced in late 2009 in both chambers (S. 2810 and H.R. 4177) to make emergency payments to producers for losses in calendar year 2009. Agricultural disaster provisions were eventually included in a “tax extenders” package both chambers passed but failed to reconcile. Subsequent efforts to include disaster provisions in other legislation were unsuccessful. However, after discussions with Senator Lincoln—who had led efforts to secure additional disaster assistance—the Administration announced on September 15, 2010, that it would implement a 2009 disaster assistance package estimated at $630 million under “Section 32” authority to reestablish the purchasing power of farmers. On October 22, 2010, USDA said it would begin issuing payments to producers of rice, soybeans, sweet potatoes, and cotton who suffered at least a 5% loss in certain counties. Critics in Congress and elsewhere say it could result in a windfall to some producers and possibly result in unequal treatment of producers, particularly those who suffered losses but produce a non-covered crop or are not located in a designated county.

Date of Report: October 25, 2010
Number of Pages: 12
Order Number: RS21212
Price: $29.95

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