Straight from D.C.: Agricultural Perspectives

Disaster Aid is Finally On Its Way

 

For decades, Congress has been trying to bolster the federal crop insurance program and other standing agricultural disaster assistance programs to reduce the need to provide ad hoc disaster assistance packages.  Such packages are often complex and take considerable time for USDA to develop implementation plans on how to deliver the funding, while crop insurance indemnities are generally paid fairly quickly.

 

As of 2018, the federal crop insurance program covered 335 million acres of cropland and pasture, with the total value of the crops covered (in terms of insurance liability) at $110 billion.  USDA’s Risk Management Agency has not yet published complete information about the extent of coverage for 2019, but as of this week, there were 28 million more acres with premiums attached than was the case at this same time in 2018.  USDA’s Farm Service Agency (FSA) also operates several other disaster assistance programs, first established in the 2008 farm bill, that are funded with mandatory farm bill dollars to help livestock farmers, tree crop producers, and producers of farm-raised fish and honey bees.

 

However, farmers around the country have been hit by a variety of massive natural disasters over the last few years, and some of the damages they have experienced are of the type not necessarily covered by existing USDA programs.  These disasters have included hurricanes, flooding, wildfires, and volcanic activity (in Alaska) in 2018, as well as from widespread flooding in the Mississippi River Valley in 2019.

 

A bill to address these needs, at least for damage that occurred during 2018, was initially introduced in February by several Senators from affected states, including Georgia, Alabama, Florida, and Alaska.  It took several months to get passed, due both to concerns about its price tag (ultimately $19 billion in all), and the need to update its language to cover disasters occurring in 2019.  The bill was also stalled by repeated objections on the part of President Trump for providing additional assistance to the people of Puerto Rico, still recovering from consecutive damaging hurricanes late in the 2017 hurricane season.  The bill provides funding not just for agricultural disasters, but to assist in rebuilding damaged infrastructure and facilities operated by the federal government in the affected regions, with provisions affecting nearly every federal department included.  It was ultimately signed by the President on June 6th, 2019.

 

Under this legislation, the U.S. Department of Agriculture will be distributing just over $6 billion to various groups, accounting for just over 30 percent of the total cost of the package.  All of it was deemed by Congress to constitute emergency spending, so no budgetary offsets were required.  The biggest component was a $3.005 billion tranche of funding directly for the Secretary of Agriculture to distribute to farmers who suffered from one of the following types of losses--crop losses, loss of on-farm stored commodities, trees, vines, and bushes, poultry and livestock losses, as well as prevented planting for 2019.   The funding provision was relatively open-ended, leaving the Secretary considerable flexibility in how to carry it out.

It did specify that farmers already receiving payments under the Tree Assistance Program (TAP) for lost fruit and nut trees in commercial operations should receive a top-off payment, in effect lowering the deductible from 15 percent to 7.5 percent.  In addition, payments to farmers with federal crop insurance or NAP coverage should be restricted so that total assistance from all programs not exceed 90 percent of the crop value, and payments to farmers without such coverage should be restricted to payments not exceeding 70 percent of the crop value.

 

In addition, the bill provides $480 million for emergency forest restoration and $558 million for the emergency conservation program, both to be managed by the Farm Service Agency.  The Natural Resources Conservation Service will receive $435 million for watershed and flood prevention activities, and the Rural Development mission area will have $150 million to distribute in grants for rural community facilities.

 

The Forest Service also gets funding under this bill, with $12 million to help with rehabilitating state and private forests, $85 million for the National Forest System, and $720 million to fund wildfire management activities, to be available until fiscal year 2022.

 

Several overseas U.S. territories receive additional funding for their nutrition assistance programs, with the bulk, $600 million, designated for Puerto Rico, but lesser amounts also provided for the Northern Marianas islands ($25 million) and American Samoa ($18 million).

 

At the apparent insistence of Senate Majority Leader Mitch McConnell (R, KY), the bill also contains a provision requiring the Risk Management Agency to make hemp production eligible to be covered under the Whole Farm Revenue Protection program for the 2020 reinsurance year.  Senator McConnell was the primary Congressional advocate for making it legal to grow industrial hemp in the United States again for the first time in several decades.

 

Unlike most past ad hoc agricultural disaster assistance packages, this legislation does not explicitly establish a cutoff date for when 2019 losses due to natural disasters are no longer eligible for assistance under these provisions.  Since flooding is still ongoing in the Midwest and elsewhere in the Mississippi River basin, it will make it more difficult for USDA to design this aspect of how the assistance will be targeted and delivered.