FSA programs explained: Don’t drop your coverage
I have always been amazed by the number of farmers and ranchers that choose to drop their coverage under the Noninsured Crop Disaster Assistance Program (NAP) when the weather turns in their favor. I would caution anyone who chooses this option to rethink their decision. Failure to purchase at least a catastrophic level of crop protection, even on your pasture, can have a significant effect on your eligibility for certain disaster programs.
Certain disaster programs authorized in the 2008 Farm Bill require the purchase of at least catastrophic coverage on all crops in order to be eligible for assistance. This provision is called the Risk Management Purchase Requirement (RMPR). The RMPR is different for each program. Disaster programs that have this requirement are the Livestock Forage Disaster Assistance Program (LFP), the Emergency Assistance for Livestock, Honeybees and Farm-raised Fish Program (ELAP), and the Supplemental Revenue Assistance Payments Program (SURE).
LFP is a livestock disaster program designed to provide compensation to producers who suffer a grazing loss during periods of drought or suffer grazing losses due to fire on federally managed land. Livestock producer’s payments are based upon the severity of the drought and triggered by the drought monitor. The drought monitor can be accessed at http://www.drought.unl.edu/dm/monitor.html. Payments are calculated based upon the lesser of a set value per head of livestock versus the value of the insured pasture. If you choose not to purchase NAP or any other type of coverage on your pasture, you will be ineligible for compensation. You are not required to insure all acres of your crops intended for grazing, but only those insured acres will be eligible in the calculation of payments.
ELAP is a disaster program that provides compensation for livestock death losses not covered under the Livestock Indemnity Program and provides compensation for grazing losses not covered under LFP. This program can provide compensation for a broad range of events ranging from livestock feed destroyed by a lightning strike to expenses associated with snow removal in order to access feed. In order to be eligible for this program, producers are required to insure all crops in all counties in which you have an interest (except for crops intended for grazing).
SURE is a crop disaster program that provides compensation to producers who suffer crop revenue losses due to adverse weather events. The SURE Program establishes a revenue guarantee by increasing the crop insurance guarantee and pays sixty percent of the difference between the guarantee and the actual farm revenue. The RMPR for this program is very similar to the requirement under ELAP in that you are required to insure all crops in all counties for which you have an interest (except crops intended for grazing). However, this program has provisions that allow for crops that are not economically significant to be exempt from the Risk Management Purchase Requirement.
Paying the $250 per crop service fee for non-insurable crops is a small price to pay for eligibility in these programs. These programs can provide you with needed revenue during a time when you may need it the most. If you are contemplating the choice of whether you are going to insure or purchase NAP, consider the programs that I have detailed and decide if you are willing to forgo eligibility in those programs. The deadline in South Dakota to purchase NAP on your perennial grass and spring seeded crops in March 15. Please check with your local Farm Service Agency Service Center for deadlines in other states. However, it is never a bad idea to contact your local Farm Service Agency and ensure that you are covered for the 2011 crop year.
james neill is the county executive director for the farm service agency in meade county, sd and can be contacted at firstname.lastname@example.org. questions about the risk management purchase requirement or any other farm service agency program should be directed to your local farm service agency service center.
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