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Monday, August 27, 2012

Agricultural Disaster Assistance

Dennis A. Shields
Specialist in Agricultural Policy

In summer 2012, drought has spread across much of the United States and has adversely affected agricultural producers. As of mid-August 2012, the Secretary of Agriculture has designated more than 1,600 counties as disaster areas. 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 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 Senate passed its version of the 2012 omnibus farm bill (S. 3240, the Agriculture Reform, Food, and Jobs Act of 2012) in June 2012. The Senate bill retroactively extends the livestock disaster and tree assistance programs, thereby potentially covering losses associated with the drought currently affecting a large portion of the country. These losses are generally not covered by crop insurance or other assistance. In the House, on July 11, 2012, the House Agriculture Committee passed its version of the farm bill (H.R. 6083, the Federal Agriculture Reform and Risk Management Act of 2012), which includes the same combination of disaster programs as in the Senate bill. Floor action is pending. Separately, on July 27, 2012, the House Agriculture Committee released H.R. 6228 to extend several disaster programs as part of a one-year extension of the farm bill. Subsequently, on July 31, 2012, the bill was pulled from consideration, and H.R. 6233 was introduced to provide livestock and tree assistance disaster programs for FY2012 (i.e., no farm bill extension). On August 2, 2012, the House passed H.R. 6233 by a vote of 223-197.

Meanwhile, in response to the drought, USDA has taken a number of steps. For example, USDA reduced the interest rate for emergency loans from 3.75% to 2.25% and authorized emergency haying and grazing on Conservation Reserve Program acres. USDA also announced plans to purchase $170 million of meat (pork, lamb, chicken, and catfish) to mitigate downward pressure on livestock prices resulting from producers selling livestock for slaughter during the drought.

Date of Report: August 14, 2012
Number of Pages: 17
Order Number: RS21212
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