FSA Disaster Relief Programs
The USDA’s Farm Service Agency (FSA) administers a number of programs that provide relief to farmers for livestock or grazing losses resulting from natural disasters. As of the 2014 Farm Bill, eligibility for these programs no longer depends upon a producer having purchased insurance to cover potential losses. FSA administers four disaster-relief programs that may apply to farmers raising agricultural animals—the Livestock Forage Program (LFP), the Livestock Indemnity Program (LIP), Emergency Assistance for Livestock, Honeybees, and Farm-Raised Fish (ELAP), and Emergency Loans.
An individual or entity is not eligible for payment under any of the first three programs if the total average adjusted gross income (AGI) (including both farm and non-farm income) of the individual or entity exceeds $900,000. In addition, no individual or entity (except a joint venture or general partnership), may receive more than $125,000 total in payments (whether direct or indirect) under these three programs combined. The details of these programs are outlined below.
1. Overview of Disaster Relief Programs
i. Livestock Forage Program
The Livestock Forage Program (LFP) provides assistance to livestock producers who have suffered grazing losses on drought-affected pastureland (including cropland planted specifically for grazing), or on rangeland managed by a federal agency due to a qualifying fire. To qualify for LFP, a producer must own, lease, or be a contract grower of eligible livestock during the 60 days before the beginning date of a “qualifying drought or fire” and must provide pasture/grazing land for that livestock that is either (a) physically located in a county affected by a qualifying drought during the normal grazing period for the county, or (b) managed by a federal agency where grazing is not permitted due to a qualifying fire.
Eligible livestock are livestock that have been (or would have been absent the drought/fire) grazing on the eligible land. Eligible livestock may include cattle, goats, sheep, poultry, and swine, among others. To qualify for LFP, a producer must have maintained the livestock for commercial use as part of a farming operation. Feedlot livestock, for example, is ineligible.
LFP eligibility is determined by the drought intensity level for a particular county, and the number of monthly payments a producer is eligible to receive depends upon the severity and length of the drought. All eligible applicants will receive payments from LFP. For each month that a producer is eligible for LFP payments, the producer receives 60% of the estimated monthly feed cost. If a producer is forced to sell livestock due to drought conditions, the payment rate is equal to 80% of the estimated monthly feed cost.
ii. Livestock Indemnity Program
The Livestock Indemnity Program (LIP) provides financial compensation to livestock producers for livestock deaths caused by adverse weather or by attacks by animals that have been reintroduced into the wild by the federal government or are federally protected. Adverse weather includes events such as floods, blizzards, extreme temperatures, and storms; drought is not an adverse weather event under LIP (LFP covers drought-related losses). Unlike LFP, LIP eligibility does not depend on the use of land for grazing. LIP eligibility requires only that a producer have an “interest in producing agricultural products,” meaning that parties who do not necessarily own farms, but who, for example, have an interest in cattle in a feedlot, can qualify for LIP assistance. LIP has unlimited funding, so all applicants who meet the eligibility requirements will receive payments.
LIP payments are equal to 75 percent of the market value of the applicable livestock on the day before the date of death of the livestock. Livestock eligible for LIP compensation include cattle, swine, sheep, goats, and poultry (layers and broilers), among others. As with LFP, LIP eligibility is limited to livestock that were raised for commercial use.
iii. Emergency Assistance for Livestock, Honeybees, and Farm-Raised Fish
The Emergency Assistance for Livestock, Honeybees, and Farm-raised Fish (ELAP) program provides relief to producers for weather-related disaster losses not covered by other disaster assistance programs such as LFP and LIP. Livestock eligible for ELAP compensation include dairy cattle, beef cattle, buffalo, goats, poultry, sheep, and swine, all of which must have been raised for commercial use in order to qualify.
There are four categories of livestock losses covered by ELAP:
Livestock death losses caused by an eligible loss condition (FSA determines the eligible loss conditions for livestock death losses, and these loss conditions cannot be covered under LIP);
Livestock feed and grazing losses that are not due to drought or wildfires on federally managed lands (i.e. feed and grazing losses not covered by LFP);
Losses resulting from the additional cost of transporting water to livestock due to an eligible drought; and
Losses due to the additional costs associated with treating livestock for cattle tick fever.
To qualify for ELAP, livestock owners must have legal ownership of the livestock on the day the livestock died, and contract growers must have had control or possession of the livestock, a contract with the owner, and a risk of loss associated with the livestock. Total ELAP funding is limited to $20 million per year. In the event that eligible applications exceed the $20 million cap, FSA prorates the funds given to each applicant. Thus, as with LFP and LIP, all eligible applicants will receive payments under the program.
iv. Emergency Loans
In addition to the programs described above, FSA offers emergency loan assistance to farmers who have sustained losses due to certain qualifying disaster events (such as tornados, floods, and droughts) or due to government-imposed quarantines. These loans may be used to restore or replace property, pay production costs in the disaster year, pay essential living expenses, reorganize the farming operation, or refinance certain debts. Producers can borrow up to $500,000, but the loan cannot exceed the value of their actual losses. To be eligible for an emergency loan, a producer must own or operate land in a county declared by the federal government as a disaster area or quarantine zone and must have sustained at least a 30 percent loss in crop production or a physical loss of livestock, livestock products, real estate, or chattel. Producers must also be unable to secure traditional commercial loans. Most loans have repayment terms of between 1 and 7 years, though some have terms as long as 20 or 30 years. All emergency loans must be fully collateralized, and the current interest rate is 3.75%.
2. Implications of Disaster Relief Programs
CAFOs are eligible for FSA disaster relief, provided they meet all other eligibility criteria. Because the FSA disaster relief programs guarantee assistance to all applicants who meet the programs’ qualifications—in contrast, for example, to EQIP, which is only able to provide funding to roughly half of qualified applicants—these programs do not raise the same concerns about diverting funding away from more sustainable farms to benefit CAFOs. It is true that, under certain circumstances, CAFOs will receive comparatively larger disaster relief payments than smaller farms (for example, because the sheer number of livestock lost is higher), but there is nothing about the structure of these disaster assistance programs that incentivizes CAFO operations in particular or finances mitigation of their harmful practices.
LIP compensates farmers and ranchers for weather-related livestock losses even if the livestock was not provided protection from inclement weather. The knowledge that they can be compensated for qualifying weather-related losses may disincentivize producers who raise their animals outdoors from investing in adequate shelter. Organizations such as the Humane Farming Association have petitioned USDA to require that farmers and ranchers demonstrate that they provided adequate shelter to their livestock in order to receive LIP payments for weather-related livestock losses.
3. Opportunities for Reform
Advocates focused on improving the welfare of agricultural animals are unlikely to realize much benefit from reforming or repealing the FSA disaster relief programs. As an initial matter, while these payments serve as a helpful risk mitigation strategy for producers, the low annual caps on payments to individuals/entities mean that these programs are unlikely to incentivize any additional animal agricultural production. In addition, LFP actually excludes confined animal operations from eligibility, and, because the other programs focus primarily on drought- and weather-related losses, the primary beneficiaries of those programs are also likely to be farmers who raise their animals out of confinement.
The question of whether LIP payments should be conditioned on provision of shelter is worthy of further exploration. On one hand, animals exposed to extreme weather unquestionably suffer significantly. However, animal welfare advocates should examine whether placing this additional stricture on pasture-based farming may encourage farmers to move their animals toward confinement systems, which would likely decrease the welfare of a considerably greater number of animals.