Farm Bill Primer: Disaster Assistance

Several federal programs help agricultural producers recover from the effects of natural disasters, including the Noninsured Crop Disaster Assistance Program (NAP), livestock and fruit tree disaster programs, and ad hoc assistance. With the exception of ad hoc assistance, all programs are permanently authorized and receive “such sums as necessary” from the U.S. Department of Agriculture’s (USDA’s) Commodity Credit Corporation (CCC). As such, these programs require neither reauthorization in a future farm bill nor annual appropriations. Congress authorized ad hoc assistance through supplemental appropriations in six of the seven fiscal years between FY2018 and FY2024, excluding FY2021. These funds assist with natural disaster losses that generally were not covered under the permanent programs. As Congress works on a farm bill, it could consider whether to amend the permanent disaster assistance programs or create new programs to address emerging situations that are being addressed with ad hoc assistance.

This In Focus provides a summary of existing permanent and ad hoc disaster assistance programs that help farmers recover financially from natural disasters. This summary does not cover the Federal Crop Insurance Program (FCIP), which also may provide support to farmers impacted by natural disasters.

Existing Farm Bill Authorized Provisions

The 2014 farm bill (P.L. 113-79) permanently authorized four agricultural disaster programs for livestock and fruit trees—Livestock Indemnity Program (LIP); Livestock Forage Disaster Program (LFP); Emergency Assistance for Livestock, Honey Bees, and Farm-Raised Fish Program (ELAP); and Tree Assistance Program (TAP) (7 U.S.C. §9081). Amendments to these programs were included in Title I of the 2018 farm bill (P.L. 115-334). These programs provide compensation for a portion of lost production following a natural disaster. Producers do not pay a fee to participate. Total payments under these programs vary each year based on eligible loss conditions (see Figure 1).

Payments for individual producers under LFP may not exceed $125,000 per year. There are no limits on the dollar amount of payments received under LIP, ELAP, and TAP. To be eligible for a payment under any of these programs, a producer’s average annual adjusted gross income (AGI) over three recent taxable years cannot exceed $900,000.

Livestock Indemnity Program LIP provides payments to eligible livestock owners and contract growers for livestock deaths in excess of normal mortality or which are sold at reduced price caused by an eligible loss condition (e.g., adverse weather, disease, or animal attack). The LIP payment rate is equal to 75% of the average fair market value of the animal.

Figure 1. Total Payments for Selected Permanent

Agricultural Disaster Assistance Programs

(FY2016-FY2023)

Source: CRS from payments reported in annual budget requests.

Livestock Forage Disaster Program LFP makes payments to eligible livestock producers who have suffered grazing losses on drought-affected pastureland or on rangeland managed by a federal agency due to a qualifying fire. LFP payments for drought are equal to 60% of the estimated monthly feed cost. Depending on the severity of the drought, the monthly payment rate is multiplied by a factor of one, three, four, or five. For producers who sold livestock because of drought conditions, the payment rate is reduced.

Emergency Assistance for Livestock, Honey Bees, and Farm-Raised Fish Program ELAP provides payments to producers of livestock, honey bees, and farm-raised fish as compensation for losses due to disease, adverse weather, feed or water shortages, or other conditions that are not covered under LIP or LFP.

Tree Assistance Program TAP makes payments to qualifying orchardists and nursery- tree growers to replant or rehabilitate trees, bushes, and vines damaged by natural disasters. Losses in crop production may be covered by crop insurance or NAP. Eligible trees, bushes, and vines are those from which a crop is produced annually for commercial purposes. The total quantity of acres planted to trees, bushes, or vines for which a producer can receive TAP payments cannot exceed 1,000 acres annually.

Noninsured Crop Disaster Assistance Program

Producers who grow a crop that is currently ineligible for certain crop insurance policies may apply for NAP. NAP

Farm Bill Primer: Disaster Assistance

https://crsreports.congress.gov

has permanent authority under Section 196 of the Federal Agriculture Improvement and Reform Act of 1996 (7 U.S.C. §7333).

There are two types of NAP coverage: basic and buy-up. Basic NAP offers coverage for losses in excess of 50% of normal yield (i.e., catastrophic losses). Producers pay an administrative service fee. The service fee is the lesser of $325 per crop or $825 per producer per administrative county, not to exceed a total of $1,950 for farms in multiple counties. Basic NAP has an annual payout limit of $125,000 per crop year per producer for basic coverage. Producers may purchase higher coverage levels that cover less severe losses (buy-up coverage). Buy-up coverage is available in increments of 5% to cover between 50% and 65% of a crop lost. For NAP buy-up coverage, producers pay the NAP service fee and a premium. Premiums for buy up coverage are based on the value of the potential indemnity. NAP buy-up coverage has an annual payout limit of $300,000 per crop year per producer. For both types of NAP coverage, policies must be purchased prior to a disaster event, and producers must purchase or renew coverage on an annual basis. A producer is ineligible under NAP if the producer’s average AGI exceeds $900,000.

Ad Hoc Disaster Assistance

Over the past 20 years, Congress has authorized permanent disaster assistance programs and has expanded crop insurance and NAP to reduce the need for ad hoc disaster assistance. Following enactment of the 2008 farm bill (P.L. 110-246), Congress appropriated relatively little supplemental disaster assistance for agriculture. This changed in 2018, when Congress authorized supplemental appropriations for additional production losses in 2017 not previously covered by crop insurance or NAP. Congress subsequently appropriated additional supplemental funding for natural disaster-related losses in 2018 through 2024, totaling almost $40 billion. During the first Trump Administration, USDA primarily implemented this funding through the creation of the Wildfires and Hurricanes Indemnity Program (WHIP). During the Biden Administration, USDA primarily implemented this funding through the Emergency Relief Program (ERP).

Issues for Congress

Congressional interest in agricultural disaster assistance appears to have increased in recent years. This is in part due to the funding for ad hoc disaster assistance and questions about the effectiveness of the permanent disaster assistance programs. The farm bill could provide a platform for Congress to debate the federal government’s role in responding to natural disaster-related losses for an industry that is acutely influenced by natural disasters and fluctuations in weather.

Effectiveness of Permanent Programs With the resurgence in ad hoc disaster assistance, Congress might reassess the effectiveness of the permanent disaster assistance programs. In addition to covering losses beyond what may be covered by crop insurance and NAP, the ad hoc programs cover losses not covered by other permanent programs. This may cause some to question whether the permanent disaster assistance programs could or should be expanded to cover losses or events not currently covered

(e.g., loss of quality and on-farm storage losses). Also, Congress may consider whether ad hoc assistance programs create a potential disincentive for future participation in insurance programs because they cover the losses of farmers who chose not to purchase insurance.

Price Tag Some in Congress have expressed interest in establishing a new permanent disaster assistance program similar to what has been provided through ad hoc disaster assistance. Supplemental appropriations for ad hoc disaster assistance have been classified as emergency spending and have not required an offset under budget rules. New mandatory spending, however, may need to be offset. The amount and type of losses covered under such a program could impact the total cost and therefore the level of offsets required. Amendments to permanent disaster programs that increase mandatory spending also could require offsets.

The nearly $40 billion (FY2018-FY2024) appropriated for ad hoc disaster assistance exceeded the $6.8 billion (FY2018-FY2023) expended under the permanently authorized disaster assistance programs. By comparison, it is less than the approximately $76 billion (FY2018- FY2024) appropriated for the FCIP. Congress may debate how much coverage federal programs are to provide for production losses from natural disasters.

Implementation Challenges By nature, ad hoc assistance programs are not permanent, generally requiring USDA to issue program rules and requirements upon passage of each new extension or other amendment. This has resulted in payment delays. Recent supplemental appropriations laws also included provisions targeting specific losses or events, which USDA administers through multiple subprograms. This may create additional complexities for implementation and participation.

Improper Payments Several of USDA’s disaster assistance programs have been identified by USDA’s Office of Inspector General (OIG) as being susceptible to improper payments. In FY2023, NAP and LFP were found to have had improper payment rates greater than 10%. FY2023 is the second consecutive year that OIG found LFP to have an improper payment rate. In addition, OIG rejected the agency’s recommendations for addressing these improper payment rates. Congress may use the farm bill to evaluate these improper payment rates and provide additional oversight.

Additional CRS Resources

CRS Report RS21212, Agricultural Disaster Assistance

CRS In Focus IF10565, Federal Disaster Assistance for Agriculture

CRS Report R48082, Livestock Forage Disaster Program (LFP): Drought and Wildfire Assistance

CRS Report R48245, The Noninsured Crop Disaster Assistance Program (NAP)

Christine Whitt, Analyst Agricultural Policy

IF12101

Farm Bill Primer: Disaster Assistance

Existing Farm Bill Authorized Provisions

Noninsured Crop Disaster Assistance Program

Ad Hoc Disaster Assistance

Issues for Congress

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