On Aug. 24, 2007, the U.S. Department of Agriculture announced the sign-up periods for several disaster assistance programs made available through legislation signed by President Bush in May 2007. This legislation made upwards of $3 billion available to agricultural producers who had sustained losses due to natural disasters in 2005, 2006 or 2007. The legislation authorized the following disaster programs: 1) Crop Disaster Program, 2) Livestock Compensation Program, 3) Livestock Indemnity Program, 4) Emergency Forestry Conservation Reserve Program, and 5) Dairy Disaster Assistance Program. In addition, the legislation extended the Milk Income Loss Contract program through September 2007 and provided additional Emergency Conservation Program funding for 18 states. Louisiana was not one of the states in which funds were made available.
The following provides a brief update on the status of the five major programs listed above. Sign-up dates for all of the programs with the exception of the Dairy Disaster Assistance Program have begun or will begin shortly. All of these programs are administered through the Farm Service Agency (FSA), so producers interested in finding out more information about these programs or wanting to enroll in these programs should contact their local FSA office.
Crop Disaster Program Sign-up To Begin Oct. 15
The sign-up period for the Crop Disaster Program (CDP) will begin on Oct. 15, 2007. While all program details have not yet been released, there are some general program parameters known at this time. The CDP provides assistance to those producers who suffered quantity and/or quality losses as a result of natural disasters. Producers will be able to choose between three crop years (2005, 2006 and 2007) as to the year they wish to base program benefits. For the 2007 crop year, only those crops planted before or would have been planted (prevented planting) before Feb. 28, 2007, are eligible. Unlike with previous disaster programs, for producers to be eligible to receive benefits under this program, they must have had crop insurance coverage or coverage under the Noninsured Crop Disaster Program (NAP) during the year for which they are applying for assistance.
Producers will be able to apply for assistance for both the quantity and quality losses experienced. In addition, producers can apply for assistance for more than one crop as long as the losses occurred during the same crop year. For the quantity loss portion of the program, producers must have suffered at least a 35 percent loss to be eligible. Quantity losses will be paid at a payment rate of 42 percent of an established program price. The established program prices have not yet been released. For the quality loss portion of the program, the loss must be at least 25 percent of the value that all affected production of the crop would have had if no quality issues existed. Quality losses will be paid on a quantity that is the lesser of 1) actual production or 2) the expected production of the crop (typically a historical production level).
As with most disaster assistance programs, there are limits to the total amount of benefits that a producer is eligible to receive. Producers may receive a maximum of $80,000 in CDP benefits. In addition, benefits are limited so that the program benefits plus the value of crop production not lost and any crop insurance or Noninsured Crop Disaster Program payments received does not exceed 95 percent of the total projected value of the crop assuming that no damage had occurred.
Livestock Indemnity and Livestock Compensation Programs Sign-Up To Begin Sept. 10
The sign-up periods for the Livestock Indemnity Program (LIP) and the Livestock Compensation Program (LCP) will begin on Sept. 10, 2007. The LIP will provide program benefits to livestock producers located in primary or contiguous counties declared Secretarial or Presidential disaster areas between Jan. 1, 2005, and Feb. 28, 2007, for livestock losses resulting from natural disasters. Producers incurring a loss in more than one of the 2005, 2006 or 2007 calendar years must choose only one year for which they want to receive benefits. Benefits will be based on not less than 26 percent of the market value of the livestock on the day before the date of death.
The following classes of livestock will be eligible for payments under the LIP:
Dairy Cattle, Beef Cattle, Buffalo, Beefalo, Catfish, Crawfish, Equine, Sheep, Goats, Swine, Deer
Total program benefits from the LIP will be limited to $80,000 per producer. At the time of this writing, the market values and payment rates to be used in calculating program benefits have not yet been released by USDA. Information regarding additional program benefits and payment levels will be provided as soon as they become available.
The LCP provides assistance to livestock producers located in primary or contiguous counties declared Secretarial or Presidential disaster areas between Jan. 1, 2005, and Feb. 28, 2007, for feed losses resulting from natural disasters. Producers incurring a loss in more than one of the 2005, 2006, or 2007 calendar years must choose only one year for which they want to receive benefits. Benefits will be based on 61 percent of a national payment rate that will be established for each class of livestock.
The following classes of livestock will be eligible for payments under the LCP:
Dairy Cattle, Beef Cattle, Buffalo, Beefalo, Equine, Poultry, Elk, Reindeer, Sheep, Goats, Swine, Deer
As with the LIP program, total program benefits from the LCP will be limited to $80,000 per producer. Also, the payment rates to be used in calculating program benefits under the LCP have not yet been released. Information regarding additional program benefits and payment levels will be provided as soon as they become available.
Livestock Compensation Program – Catfish Production
While not listed, catfish producers will also be eligible for feed loss assistance. Unlike for the other classes of livestock, the catfish assistance will not be administered through the Farm Service Agency. Rather, block grants will be provided to states that have catfish producers who suffered feed losses. An agency within the state (likely the Louisiana Department of Agriculture and Forestry) will administer this program and will announce sign-up periods and application procedures. At the time of this writing, the Louisiana Department of Agriculture and Forestry had not released details of this program and had not established a sign-up period. Catfish producers interested in participating in this program or finding additional information about the program are encouraged to contact the Louisiana Department of Agriculture and Forestry. The contact information for the department within the Louisiana Department of Agriculture and Forestry that has administered similar block grant programs is 225-922-1277.
Sign-up Continues for Emergency Forestry Conservation Program
The Emergency Forestry Conservation Program (EFCRP) provides funding for private landowners who experienced timber losses due to the hurricanes in 2005. Only owners of private non-industrial forestland who sustained at least a 35 percent loss in merchantable timber are eligible for assistance. For purposes of the EFCRP, merchantable timber is defined as timber with a pre-hurricane trunk diameter of at least 6 inches measured at a point at least 4.5 feet above the ground. In addition to the physical loss requirements, the participant’s forestland must be located in one of the counties designated as a primary or contiguous disaster area. For Louisiana, all 64 parishes are eligible.
Signup for the EFCRP began Aug. 6, 2007, and will run through Dec. 31, 2007. Landowners interested in participating in the program must submit offers to participate in the EFCRP at their local FSA office. Once the offer is completed, a forester will collect eligibility and other data and provide that information to FSA. Then FSA will rank offers based on a benefit index. The index will be based on:
Equal weight will be provided softwoods and hardwoods in the ranking process. Additional points will be awarded for tree species and planting densities that benefit wildlife. FSA will start to evaluate these offers starting on Sept. 30, 2007, and then will evaluate quarterly after that time. If a landowner’s offer is not selected in the initial evaluation period, then that landowner’s offer will be rolled over to the next evaluation period.
Once the landowner’s offer has been selected by FSA, foresters will work with the landowner to develop a forestry conservation plan. The plan will have to include provisions to:
The plan will also include maintenance requirements such as weed control, tree thinning and prescribed burnings. Timber may not be harvested in land enrolled in EFCRP during the contract period unless it is permitted by FSA as part of normal forest maintenance. Once enrolled, the land must stay in the EFCRP for 10 years. The contract period begins the first day of the month following the month in which the contract was approved by FSA.
Program benefits associated with the EFRCP include both a cost share payment and a rental payment. The cost share payment is based on up to 50 percent of the costs associated with site preparation and planting or restoring tree stands. The rental payment is based on payment levels established for Conservation Reserve Program (CRP) contracts in the county in which the landowner’s forest land is physically located. If no CRP contracts have been established in that county, then the CRP contract rate in a nearby similarly situated county would be used.
In terms of the rental payment component of the EFRCP benefits, the landowner must choose between receiving 10 yearly payments or one lump sum payment at the beginning of the program. If the landowner chooses the yearly program payments, the first payment will be made one year after the effective date of the contract and then 12 months thereafter for a total of 10 years. If the lump sum payment is chosen, the payment will be made within 30 days after the effective date of the contract. The lump sum payment will be equal to the net present value of the 10 years of the rental payments at a 5 percent discount rate.
Here is an example of the program benefits of the EFRCP: Assume a landowner has a 20-acre tract of forest land that is eligible for the program and is accepted to participate in the program. Also assume that the average CRP rate in the parish in which the forestland is located has been $40 per acre. Therefore, the example landowner would be eligible for the following payments:
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Up to a 50 percent cost share for costs incurred by the landowner in site preparation and replanting costs.
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Annual payments of $800 per year if the annual payment option is selected.
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A lump sum payment of roughly $6,177.
Therefore, in addition to the cost share component, the landowner would receive $8,000 over the 10-year period if the yearly payment option is selected or roughly $6,177 if the lump sum payment is received. Therefore, while the lump sum payment allows the landowner to receive all of the payments up front, it is roughly 77.22 percent the value of the sum of annual payments over the 10-year period.
Total EFCRP program benefits are limited to a maximum of $50,000 per person per year. Landowners cannot receive EFCRP cost-share funding for land on which they have or will receive funding from any other federal program that covers the same expenses. Acreage enrolled in EFCRP does not, however, count against the number of acres eligible for CRP in the county or against the total amount of acres authorized for the CRP.
No Sign-up Period Established Yet On Dairy Disaster Assistance Program (DDAP)
The Dairy Disaster Assistance Program will provide $16 million for producers who sustained production losses due to natural disasters and were located in a county designated as a disaster area from Jan. 1, 2005, through Feb. 28, 2007. At the time of this writing, no specific program information has been released on this program and the sign-up date has not yet been announced. Producers are encouraged to stay in contact with their local FSA office for information regarding this program.