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Monday, February 11, 2013

Agricultural Disaster Assistance

Dennis A. Shields
Specialist in Agricultural Policy

In summer 2012, a major drought spread across much of the United States and adversely affected agricultural production. By the end of 2012, the Secretary of Agriculture had designated 2,245 counties in 39 states as disaster areas due to drought. The drought has fueled 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 and to assist livestock producers who are generally not covered by these programs, 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 livestock assistance programs and a tree assistance program. As of December 4, 2012, cumulative payments were $4.2 billion.

The 112
th Congress considered but did not pass omnibus farm legislation, including extension of certain agricultural disaster programs that expired in September 2011. The Senate passed its version of the omnibus 2012 farm bill (S. 3240, the Agriculture Reform, Food, and Jobs Act of 2012) in June 2012. The Senate bill would have retroactively extended the livestock disaster and tree assistance programs, thereby potentially covering losses associated with the 2012 drought. In the House, on July 11, 2012, the House Agriculture Committee passed its farm bill (H.R. 6083, the Federal Agriculture Reform and Risk Management Act of 2012), which included the same combination of disaster programs as in the Senate bill. The bill did not reach the House floor, and additional attempts to reauthorize disaster programs were not successful in the 112th Congress.

At the end of the 112
th Congress, on January 2, 2013, the five-year 2008 farm bill was extended one year as part of the American Taxpayer Relief Act of 2012 (ATRA; P.L. 112-240), but without funding for any of the 2008 farm bill disaster programs.

Separately, in response to the 2012 drought, USDA took 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: January 22, 2013
Number of Pages: 18
Order Number: RS21212
Price: $29.95

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