April 18, 2014
Editor’s Note: We want to thank James Robinson of the Rural Advancement Foundation International-USA (RAFI) for this guest post on disaster assistance programs that were restored in the 2014 Farm Bill. RAFI works to cultivate markets, policies, and communities that sustain thriving, socially just, and environmentally sound family farms. As RAFI’s Research and Policy Associate, James manages research projects that focus on conducting risk analyses of sustainable farming practices.
On April 15, 2014, eligible farmers and ranchers were able to start signing up for disaster assistance programs restored by the 2014 Farm Bill. Funding for disaster assistance programs established by the 2008 Farm Bill had expired in October 2011. Programs restored by the 2014 Farm Bill include:
The 2014 Farm Bill provided retroactive coverage for LFP and LIP eligible livestock losses. Farmers and ranchers can apply for payments that cover losses occurring on or after Oct 1, 2011. This retroactive coverage ensures no gap between the expiration of prior disaster assistance programs and those authorized in the 2014 Farm Bill.
While retroactive payments ensure no gaps in coverage, it is important to note that these disaster payments are the first for livestock farmers after two consecutive years of extreme weather events. The 2012 drought, one of the worst in recorded history, resulted in USDA disaster declarations for over 2,000 US counties and poor or very poor ratings on over half the pasture and rangeland in the country. In addition to the 2012 drought, South Dakota livestock farmers lost tens of thousands, perhaps hundreds of thousands, of animals during an early October blizzard in 2013. LFP and LIP are the primary programs designed to address these 2012 and 2013 losses, so lack of funding for the programs threatened the livelihood of livestock farmers across the country.
Livestock farmers eligible for LFP and LIP payments as a result of these weather events have been dealing with the economic impact with little assistance for the better part of two years. Conversely, compensation for commodity losses that resulted from the drought would have been paid a year and half ago through crop insurance or the Noninsured Crop Disaster Assistance Program (NAP).
Allowing a lengthy gap in program funding followed by retroactive coverage to close the gap is not a new practice. For this reason, livestock farmers should always document losses before beginning recovery after a natural disaster. Even if disaster programs have expired, retroactive coverage may compensate farmers for losses at a much later date. If farmers are to receive assistance for 2012 and 2013 losses, they will need to have maintained proper documentation of those losses.
Covering prior disasters does begin the process of making livestock farmers whole, but retroactive payments are not the end of the story. Both LIP and ELAP coverage for livestock mortality compensate farmers at a fixed price per animal. This price is set by the USDA based on conventional wholesale markets, meaning animals produced for specialty markets will be covered at less than the anticipated price. LIP also provides reduced-rate compensation to farmers who produced poultry or swine under production contracts and did not own the animal. The amount of payment these livestock farmers receive is based on their contractual risk as determined by the Farm Service Agency (FSA).
While the livestock programs cover similar losses, the criteria are distinct and a farmer cannot receive compensation for the same loss twice. For instance, while LFP provides compensation for lost forage in the field, ELAP provides compensation for feed that is lost in storage. So, if the destroyed hay was in the field, the losses come under LFP. But if it was in the barn, it is under ELAP.
Both LIP and ELAP cover livestock mortality, but ELAP has a general criterion that to be eligible, livestock cannot be covered under LIP. All programs have specific requirements for both producer eligibility and covered losses.
Applying for Disaster Assistance Programs
Livestock farmers will have between three and nine months to apply for disaster assistance programs, depending on the program and year of the loss. Farmers applying for assistance must do so through their local FSA agent. Local FSA offices will provide farmers information about the records needed for their application and application deadlines.
As farmers begin the application process with their local FSA agent, there are three major changes in the 2014 Farm Bill that producers should keep in mind.
First, the 2014 Farm Bill removes the requirement that farmers obtain a Risk Management Agency (RMA) policy or NAP coverage for all crops as an eligibility requirement for LFP, ELAP, or TAP payments. Removing this requirement is expected to increase the number of applicants, which could in turn increase the processing time for applications.
Second, an applicant’s adjusted gross income (AGI) cannot exceed $900,000 for the benefit year and distinctions between farm and non-farm income have been removed.
Third, the total payment made to any farmer cannot exceed $125,000 in any crop year for LIP, LFP, ELAP, or TAP.
Farmers are encouraged to discuss additional eligibility requirements and program specific application requirements with their local FSA agent prior to submitting an application to ensure timely processing of their application.