Farm Bill Primer: Disaster Assistance Programs

Farm Bill Primer: Disaster Assistance Programs

August 4, 2017
Farm Bill Primer: Disaster Assistance Programs
A number of federal programs help agricultural producers
number of days the producer is prohibited from grazing the
recover from the effects of natural disasters, including
managed rangeland, not to exceed 180 calendar days.
federal crop insurance; the Noninsured Crop Disaster
Assistance Program (NAP); livestock and fruit tree disaster
Livestock Indemnity Program (LIP)
programs; and emergency disaster loans. All programs are
The Livestock Indemnity Program provides payments to
permanently authorized and most receive “such sums as
eligible livestock owners and contract growers for livestock
necessary” through mandatory spending authority. As such,
deaths in excess of normal mortality caused by adverse
these programs do not require reauthorization in the next
weather, or attacks by animals reintroduced into the wild by
farm bill. However, Congress may choose to create
the federal government or protected by federal law. The LIP
additional programs, or amend or replace existing programs
payment rate is equal to 75% of the average fair market
to address emerging issues.
value of the animal.
Federal policies that respond to agricultural loss from
Emergency Assistance for Livestock, Honey Bees,
disasters have changed over time. Direct payments for
and Farm-Raised Fish Program (ELAP)
production loss were authorized by Congress in an ad hoc
The Emergency Assistance for Livestock, Honey Bees, and
fashion through emergency funding measures until 2007.
Farm-Raised Fish Program provides payments to producers
With additional support through federal crop insurance
of livestock, honey bees, and farm-raised fish as
policies and the creation of more permanent disaster
compensation for losses due to disease, adverse weather,
support programs in the 2008 farm bill (P.L. 110-246), and
feed or water shortages, or other conditions (such as
continued in the 2014 farm bill (P.L. 113-79), Congress
wildfires) that are not covered under LIP or LFP.
shifted policies away from ad hoc assistance toward more
permanent forms of assistance. Now, nearly all parts of the
Tree Assistance Program (TAP)
U.S. farm sector are covered by a standing program.
The Tree Assistance Program makes payments to
qualifying orchardists and nursery tree growers to replant or
2014 Farm Bill Disaster Programs
rehabilitate trees, bushes, and vines damaged by natural
Title I of the 2014 farm bill permanently reauthorized three
disasters. Losses in crop production are generally covered
disaster programs for livestock and one for fruit trees (7
by federal crop insurance or the Noninsured Crop Disaster
U.S.C. 9081). Producers do not pay a fee to participate. All
Assistance Program (NAP), see below. Eligible trees,
programs except the Emergency Assistance for Livestock,
bushes, and vines are those from which an annual crop is
Honey Bees, and Farm-Raised Fish Program (ELAP)
produced for commercial purposes. Nursery trees include
receive uncapped mandatory funding through the U.S.
ornamental, fruit, nut, and Christmas trees produced for
Department of Agriculture’s (USDA) Commodity Credit
commercial sale. Trees used for pulp or timber are
Corporation (CCC); that is the programs receive “such
ineligible. The total quantity of acres planted to trees,
sums as necessary” to reimburse eligible producers for their
bushes, or vines for which a producer can receive TAP
losses. Funding for ELAP provided much the same way,
payments cannot exceed 500 acres annually.
but is capped at $20 million per year.
Federal Crop Insurance
For individual producers, combined payments under all
The federal crop insurance program is permanently
programs (except the Tree Assistance Program, TAP) may
authorized by the Federal Crop Insurance Act, as amended
not exceed $125,000 per year. For TAP, a separate limit of
(7 U.S.C. 1501 et seq.) and is administered by USDA’s
$125,000 per year applies. Also, to be eligible for a
Risk Management Agency. The program is designed to
payment, a producer’s total adjusted gross income cannot
protect crop producers from unavoidable risks associated
exceed $900,000.
with adverse weather and weather-related plant diseases
and insect infestations. Eligible producers can also purchase
Livestock Forage Disaster Program (LFP)
revenue insurance, which makes payments when farm
The Livestock Forage Disaster Program makes payments to
revenue falls below a target level, regardless of whether the
eligible livestock producers who have suffered grazing
cause was a natural disaster. Amendments to the federal
losses on drought-affected pastureland (including cropland
crop insurance program generally occur under a separate
planted specifically for grazing), or on rangeland managed
title within farm bills, most recently under Title XI of the
by a federal agency due to a qualifying fire.
2014 farm bill.
LFP payments for drought are equal to 60% of the monthly
Crop insurance is available for most major crops and many
feed cost for up to five months, depending upon the severity
specialty crops (including fruit, tree nut, vegetable, and
of the drought. LFP payments for fire on federally managed
nursery crops), as well as forage and pastureland for
rangeland are equal to 50% of the monthly feed cost for the
livestock producers. A producer who chooses to purchase
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Farm Bill Primer: Disaster Assistance Programs
an insurance policy must do so by an administratively
disaster response and therefore not included in this
determined deadline date, which varies by crop and usually
document.
coincides with the planting season. The producer selects a
level of coverage and pays a portion of the premium—or a
Issues for Congress
fee in the case of catastrophic coverage—which increases
Over time, farm policy has shifted away from ad hoc
as the level of coverage rises. The federal government pays
assistance to permanently authorized programs that receive
the rest of the premium (on average, 63% in the 2016 crop
mandatory funding for natural disaster losses. This may
year). Policies are sold and serviced through approved
result in less focus on disaster assistance relative to other
private insurance companies.
forms of production support programs in the next farm bill.
While potentially less controversial than in previous farm
Noninsured Crop Disaster Assistance
bills, Congress may choose to consider broad issues related
Program (NAP)
to agricultural disaster assistance, some of which are
Producers who grow a crop that is currently ineligible for
identified below.
crop insurance may apply for NAP. NAP has permanent
authority under Section 196 of the Federal Agriculture
Method of Assistance
Improvement and Reform Act of 1996 (7 U.S.C. 7333) and
Farm policies have shifted over time between direct
is administered by USDA’s Farm Service Agency (FSA).
assistance, subsidized insurance products, and a mix of
Recent amendments to NAP were included in Title XII of
both. Questions arise about what is the best mix of
the 2014 farm bill.
assistance programs for agriculture in the event of a natural
disaster. Should federal programs emphasize insurance or
Eligible crops under NAP include any commercial crops
insurance-like products, or are direct payments a better
grown for food, fiber, or livestock consumption that are
form of support?
ineligible for crop insurance. Trees grown for wood, paper,
or pulp products are not eligible. To be eligible for a NAP
Type of Production
payment, a producer first must apply for coverage by the
Livestock producers traditionally have not been covered by
application closing date, which varies by crop but is
crop insurance or other forms of federal support. The farm
generally about 30 days prior to the final planting date for
bill disaster programs have been designed to reimburse
an annual crop. Like catastrophic coverage under crop
them for some of their production losses due to weather
insurance, NAP applicants must also pay an administrative
events. This was also true for select specialty crops like
fee at the time of application. The NAP service fee is the
orchards, which may have had coverage for the loss of the
lesser of $250 per crop or $750 per producer per
fruit under insurance programs, but not the loss of the tree
administrative county, not to exceed a total of $1,875 for
itself. The permanent disaster assistance programs created
farms in multiple counties.
under the 2014 farm bill address some of these same losses,
but it is unclear whether the level of assistance is sufficient
Emergency Loans
to adequately protect producers, particularly when
When either the President or the Secretary of Agriculture
compared with that available for traditional row crops.
declares a county a disaster area or quarantine area,
agricultural producers in that county, and contiguous
Caps and Limits
counties, may become eligible for low-interest emergency
The federal crop insurance program does not have acreage
disaster loans available through FSA. The emergency loan
enrollment caps, premium subsidy and indemnity payment
program is permanently authorized by Title III of the
limits, or income limits, while the 2014 disaster assistance
Consolidated Farm and Rural Development Act (P.L. 87-
programs and NAP do have such limits. Since the
128), as amended, and is subject to annual appropriations.
availability of these programs is related to the type of
Emergency loan funds may be used to help eligible farmers,
production, it’s unclear whether the caps and limits under
ranchers, and aquaculture producers recover from
certain programs affect one type of production, or group of
production losses (when the producer suffers a significant
producers, more than others.
loss of an annual crop), or from physical losses (such as
repairing or replacing damaged or destroyed structures or
CRS Reports
equipment, or for the replanting of permanent crops such as
For additional information on these and other USDA
orchards). A qualified applicant can then borrow up to
assistance programs, see Disaster Assistance (General)–
100% of the value of actual production or physical losses
CRS Report RS21212, Agricultural Disaster Assistance and
(not to exceed $500,000).
CRS In Focus IF10565, Federal Disaster Assistance for
Agriculture; Land Rehabilitation–CRS Report R42854,
Other Disaster Assistance Programs
Emergency Assistance for Agricultural Land
USDA has other permanent disaster assistance programs
Rehabilitation; Crop Insurance–CRS Report R40532,
and administrative flexibilities that help producers recover
Federal Crop Insurance: Background; and USDA Loans–
from, or respond to, a natural disaster. Broadly, these
CRS Report RS21977, Agricultural Credit: Institutions and
include programs that repair damaged land, payment
Issues.
authority through CCC and other funding mechanisms for
losses, and adjustments to conservation and loan programs.
Megan Stubbs, Specialist in Agricultural Conservation and
These programs and flexibilities are generally authorized
Natural Resources Policy
and funded outside of farm bills or outside the context of
IF10698
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Farm Bill Primer: Disaster Assistance Programs

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