“It’s livestock producers who have the greatest need for help in this drought,” says U.S. Secretary of Agriculture Tom Vilsack. Vilsack made his comments at the Iowa Farm Bureau Ag Economic Summit in Ames, Iowa, July 24, where he gave the key note address outlining the USDA’s plans for offering ag producers relief from the drought’s economic effects, and admonishing Congress to get to work on a Farm Bill. “We need a Farm Bill now,” said Vilsack. “People are hurting.”
Funding for emergency programs in the 2008 Farm Bill expired September 1, 2011, leaving the USDA to rely on administrative action to alleviate the effects of drought conditions that have now spread from the Southwest through the Midwest Corn Belt. A July USDA report identified 62 percent of U.S. farms are experiencing drought conditions.
As of August 2, the USDA will allow grazing and haying on approximately 3.8 million acres of CRP land. “This means that all counties in the country which are currently on the drought monitor as being somewhere between abnormally dry to extremely dry will now be included in the emergency haying and grazing effort,” said Vilsack. In addition, the annual rental payment by producers on CRP acres used for emergency haying or grazing will be reduced to 10 percent in 2012, instead of the current 25 percent.
There are some limitations, and producers will need to apply through their local USDA Farm Service Agency office, but the emergency action does also include the option of selling hay from CRP ground, something that is not normally allowed.
“This is something that is not ordinary for us to do, but given the severity of this situation, it may very well be an opportunity for folks to provide help and assistance to their neighbors who are suffering,” Vilsack added. “This assistance will help U.S. livestock producers dealing with climbing feed prices, critical shortages of hay and deteriorating pasturelands.”
Vilsack also announced measures to streamline the process for declaring an official Disaster Area. To date, more than half of all counties in the U.S. have been designated disaster areas, and the new USDA measure is designed to reduce the application time by as much as 40 percent. The process had not been revised since 1988.
The new rule removes the requirement that a request for a disaster designation be initiated by a state governor or Indian tribal council and nearly automatically qualifies a disaster county once it is categorized by the U.S. Drought Monitor as a severe drought for eight consecutive weeks during the growing season.
Among the programs available for those in disaster areas are low interest emergency loans. Access to credit is one of the traditional tools in USDA’s disaster assistance arsenal. Low-interest emergency loans have helped producers recover from losses due to drought, flooding and other natural disasters for decades.
The current 3.75 percent emergency loan interest rate was set in 1993. Since then, commercial farm loan and other FSA farm loan interest rates have dropped, but the emergency rate has remained steady. The new measure reduces the emergency loan interest rate to 2.25 percent, bringing it in line with other rates in the marketplace as well as providing a resource for recovery from physical and production losses due to the drought.
The final part of the USDA action deals with the deadline for crop insurance premiums to be paid by farmers. Under current regulations, premiums were to be paid by Aug. 15 to avoid interest payments on the premium amount. Insurance companies normally allow a 45-day grace period, moving that date to Sept. 30 before interest charges are added.
The USDA is asking agencies to add another 30 days to that grace period, backing up the date to Oct. 31. Companies that honor the request will not be required to pay uncollected premiums during the grace period.
“This gives us and the companies additional time to assess claims and perhaps provides some producers a bit more flexibility in terms of their ability to pay, given the current situation with crops and livestock,” he said.
Vilsack also vowed the USDA will continue to apply pressure for passage of the Farm Bill that would reinstate emergency ag programs such as the Livestock Indemnity Program, Livestock Forage Program and SURE; programs that paid nearly $4 billion last year to farmers and ranchers suffering losses from floods, fires, and drought.
“Our tools are limited,” said Vilsack. “We are continuing to look at ways in which we can provide help and assistance; but there is nothing more important to rural America, nothing more important to the farmers and ranchers of this country than action on this bill. There’s no greater need for this help and assistance than now.”
USDA encourages all farmers and ranchers to contact their crop insurance companies and local USDA Farm Service Agency Service Centers, as applicable, to report damages to crops or livestock loss. In addition, USDA reminds livestock producers to keep thorough records of losses, including additional expenses for such things as food purchased due to lost supplies.
More information about federal crop insurance may be found at www.rma.usda.gov. Other resources may be found at www.usda.gov/disaster.