Published: September 09, 2008 03:39 pm            

Farm Programs: SURE disaster program needs immediate attention

Originally published in the September 5, 2008, print edition.

The new farm bill, which was passed by Congress and enacted into law in June, is now being implemented by the U.S. Department of Agriculture.

One new program included in the 2008 farm bill is the Supplemental Agriculture Disaster Assistance Program, or so-called “permanent disaster” program, which is being initiated for the 2008 crop year. The new disaster program is intended to replace the need for passage of frequent “ad-hoc” disaster programs after a natural disaster occurs. This new disaster program includes five separate programs.

• Supplemental Revenue Assistance Payments Program

This program will be available to all eligible producers in any county that was declared as a disaster county by the U.S. Secretary of Agriculture, including contiguous counties.

The SURE program covers all crops, whether insurable by Federal Crop Insurance or the Noninsured Assistance Program, and covers both production losses and crop quality losses. The qualifications for SURE and payment calculations are similar to previous ad hoc disaster programs.

• Emergency Assistance for Livestock, Honey Bees and Farm-Raised Fish

This program provides emergency financial assistance to producers of livestock, honey bees and farm-raised fish for losses from hurricanes, blizzards, wildfires or other adverse weather disasters.

Eligibility for the ELAP program will be determined by the U.S. Secretary of Agriculture.

• Livestock Forage Disaster Program

This program is available to eligible livestock producers who have suffered grazing losses due to drought, flooding or other natural disasters. Again, the U.S. Secretary of Agriculture will determine eligibility for the LFP.

• Livestock Indemnity Program

This program is available to livestock producers who have suffered losses from high incidence of animal death loss, resulting from hurricanes, floods, blizzards, wildfires or other natural disasters. The U.S. Secretary of Agriculture will also determine LIP eligibility.

• Tree Assistance Program

This program provides assistance to eligible orchard owners and nursery tree growers who have suffered excessive financial losses resulting from natural disasters. The TAP is at the discretion of the U.S. Secretary of Agriculture.

Details of the SURE program

Many crop producers in the Upper Midwest will be eligible for SURE for the 2008 crop year, due to the fact that most counties in Iowa, and several counties in Minnesota, Wisconsin, Illinois and other states were declared as “disaster counties” earlier this year due to spring flooding.

According to the language in the new farm bill, the first payments under the SURE program will not occur until after Oct. 1, 2009. Payments under the new disaster program will not be finalized until 30 days after the completion of the 2008 crop marketing year, which is Aug. 31, 2009.

The farm bill does not authorize the USDA to issue advance disaster payments after the 2008 harvest, and only allows a final payment after Oct. 1, 2009. Here are the details of the SURE program.

• Producers in eligible counties must meet SURE program eligibility requirements to be eligible to receive SURE payments on their 2008 crop production. Producers must carry crop insurance (minimum of CAT insurance coverage) on all eligible crops for 2008, and must carry NAP insurance coverage on all non-crop insurance crops for 2008, in order to be eligible for SURE program payments for 2008.

About 90 percent of producers carry crop insurance coverage on their corn and soybean acres; however, a much smaller percentage of producers carry crop insurance on wheat, barley, oats and other small grain crops, or on minor crops. A relatively small percentage of producers also carry NAP insurance on alfalfa and other forage acres, and on pasture land. All crop acres and forage acres, including pasture acres, must be insured by crop insurance or NAP coverage for 2008, in order to be eligible for SURE payments on corn and soybeans.

• A one-time crop insurance and NAP buy-in for 2008 is available until Sept. 16 at county Farm Service Agency offices. Due to the fact that the new farm bill was enacted in June, after the 2008 crop insurance and NAP enrollment deadlines, producers are being given a one-time opportunity to pay the NAP program fee for all crops to become eligible for SURE program payments for 2008.

The one-time NAP fees for 2008 are $100 per crop, up to $300 per producer per county, or $900 total per producer for all counties.

Any previous fees paid for CAT insurance or NAP coverage will be deducted. The NAP buy-in requirement is waived for all eligible socially disadvantaged or limited resources producers, as well as beginning farmers, as determined by FSA definitions. Payment of this NAP fee for 2008 does not provide insurance coverage for 2008, and just provides for SURE program eligibility.

• For 2009-12, producers must purchase crop insurance (a minimum of CAT coverage) for all eligible crops, and NAP insurance coverage for other crops, in order to be eligible for the SURE program for a given crop year.

In Minnesota, the deadline to purchase 2009 crop insurance for corn, soybeans, wheat, peas, sweet corn and other crops is March 15. However, the deadline to purchase 2009 NAP insurance for existing alfalfa stands and other hay ground is Sept. 30, 2008. So, any producers who have hay acres on their farms, and want to be eligible for the SURE program in 2009, will have to purchase NAP insurance on their hay acres at their county FSA office by Sept. 30, 2008, as well as purchase 2009 crop insurance on their other crop acres after Jan. 1.

• SURE program payments

The SURE program is a revenue guarantee program, similar to many crop insurance revenue products, without the increasing “harvest revenue,” if crop prices increase during the growing season.

If a given eligible farm’s actual crop revenue is less than the guaranteed revenue, the SURE program will pay 60 percent of the difference. The actual crop revenue includes the value of the crop harvested, crop insurance indemnity payments and other USDA payments. All payments under the SURE program are based on the sum of the total revenues for all crops in all counties for an FSA farm unit.

º SURE program guarantee equals the sum of all crop insurance guarantees x 115 percent

(For example a producer with 75 percent coverage on all crops would have a coverage level of 86.25 percent for SURE.)

º SURE program yields equals the higher of the crop insurance Actual Production History Yield or the FSA Counter-Cyclical Program payment yield.

º SURE Program Actual Revenue equals the actual harvested bushels of each crop x the 12-month USDA average market price of the crop (Sept. 1 to Aug. 31 for corn and soybeans.)

plus

Crop Insurance Indemnity Payments (including prevented planting payments)

plus

15 percent of USDA Direct Payments, CCPs and loan deficiency payments (only Direct Payments likely for the 2008 crop year.)

º SURE Program payment example = (See attached table.)

Bottom line

If you are in a county that has already been declared a “disaster county” for 2008 by the U.S. Secretary of Agriculture, and you know you will have significant corn and soybean yield reductions, it will likely be worth your effort to be certain that you are eligible for the SURE program for the 2008 crop year.

If your only crop acres are corn and soybeans, and you purchased crop insurance on all acres for 2008, you are already eligible for the SURE program. However, if you have other crop acres that are not insured, or hay and pasture acres, you will need to pay a 2008 NAP fee at your county FSA office by Sept. 16, in order to become eligible for the SURE program for the 2008 crop year.

For producers who are not facing crop losses in 2008, it may not be as necessary to become eligible for the SURE program for 2008.

Producers who want to be eligible for the SURE program for 2009 need to pay attention to the crop insurance purchase deadlines for all planned crops to be raised in 2009. If there are alfalfa or hay acres on any farms, NAP insurance for 2009 must be purchased by Sept. 30, 2008, at county FSA offices. Check with county FSA offices for more details on SURE program details and eligibility.

        

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