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Friday, July 27, 2012

Agricultural Disaster Assistance

Dennis A. Shields
Specialist in Agricultural Policy

In summer 2012, drought has spread across nearly two-thirds of the United States and has adversely affected agricultural producers. As of mid-July 2012, more than 1,000 counties have been designated as disaster counties by the Secretary of Agriculture. The designation makes qualified farmers and ranchers eligible for low-interest emergency loans. The drought is also fueling congressional interest in what programs are currently available and what more can be done to assist producers.

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 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 from weather events, beginning with 2008 crops and ending September 30, 2011. The 2008 farm bill programs were designed to address the ad hoc nature of disaster assistance provided to producers during the last two decades. The largest of the now-expired programs under the 2008 farm bill 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. Cumulative payments for losses under these programs through FY2011 total more than $4 billion.

The 112th Congress is currently considering omnibus farm legislation, including extension of certain agricultural disaster programs that expired in September 2011. The legislation would reauthorize several livestock disaster programs, thereby potentially covering losses associated with the drought currently affecting a large portion of the country. Meanwhile, in response to the drought, USDA has reduced the interest rate for emergency loans from 3.75% to 2.25%. Also, USDA is authorizing emergency haying and grazing use of Conservation Reserve Program (CRP) acres for 2012 due to drought conditions. USDA announced a smaller reduction (10% instead of 25%) on rental payments made to producers on CRP lands used for emergency haying and grazing in 2012.

Date of Report: July 18, 2012
Number of Pages: 13
Order Number: RS21212
Price: $29.95

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