FSA programs explained: Payments for 2010 crop losses
October 14, 2011
The Farm Service Agency will be taking applications for producers who suffered crop losses in 2010 under the Supplemental Revenue Assistance Payments (SURE) Program beginning Nov. 14, 2011. The SURE program compensates producers who suffered crop losses in Secretarial designated disaster counties or contiguous counties. Producers not located in designated counties may qualify if they suffered at least a 50 percent loss.
In order to be eligible for the SURE program, producers must have purchased at least a catastrophic level of insurance on all crops of economic significance except for crops intended for grazing. A crop of economic significance is defined as providing at least 5 percent of the overall farm’s revenue or has a value of at least $9,090 for non-insurable crops eligible under the Noninsured Crop Disaster Assistance Program (NAP). Insuring all crops is a key requirement of the program because the SURE program guarantee established by the program is calculated by multiplying the insurance coverage by 115 percent. The program guarantee shall not to exceed 90 percent of the expected crop revenue.
Producers receive compensation under the SURE program at a rate of 60 percent of the difference between the SURE program guarantee and the actual farm revenue. Farm revenue is the sum of the crop revenue, marketing gains received, indemnities received, disaster payments received as well as a percentage of direct payments received. Crop revenue is not determined by the actual price received for the commodity, but based upon the National Average Market Price for the commodity.
For example: Producer A raised 800 acres of Hard Red Winter wheat in 2010 and purchased crop insurance coverage with an approved yield of 30 bushels per acre, 65 percent coverage election and 100 percent price election at $8 per bushel. In 2010, Producer A harvested 25 bushels per acre on all 800 acres. Producer A did not receive any direct payments or any indemnities from crop insurance. If Producer A is located in a designated disaster county, Producer A would be eligible for compensation since Producer A suffered at least a 10 percent production loss on their wheat (25/30=16.7 percent loss) and would receive 60 percent of the difference between the SURE program guarantee and the actual farm revenue.
In this example the SURE program guarantee would be $143,520 [800 (planted acres) x 30 (approved yield) x .65 (coverage election) x 8.00 (price election) x 115 percent]. If the National Average Market Price for Hard Red Winter wheat is $5.70 in 2010, Producer A’s actual farm revenue would be $114,000 (800 x 25 x $5.70). In this example, Producer A would be eligible to receive a payment under the SURE program of $17,712 [($143,520 – 114,000) x 60 percent].
In addition to production losses, the SURE program may compensate producers for reduced commodity prices associated with quality reductions. In order for producers to be eligible for quality losses, the producer-elected County Committee must request a quality reduction rate reflective of quality losses suffered as a result of an adverse weather condition for a specified area. If quality reduction rates are approved, producers must certify that they meet or exceed the quality reduction rate on average for their entire commodity.
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The SURE program is a complex program and program guarantees vary depending on the type of insurance purchased. In addition to the insurance purchase requirement, producers are required to comply with Farm Service Agency eligibility rules. For questions about eligibility for the SURE program or program eligibility requirements, you should contact your local Farm Service Agency service center.
james r. neill is the county executive director for the farm service agency of meade county, sd and may be contacted at firstname.lastname@example.org. if you have questions regarding the supplemental revenue payments program, you should contact your local farm service agency service center.