Farm Disaster Assistance
Ralph M. Chite

Background

A series of late summer hurricanes damaged or destroyed significant portions of Florida's agricultural production, particularly citrus, vegetables, and nursery products. Various other parts of the nation also have suffered farm production losses over the past year caused by prolonged drought, floods, freezes, and other weather-related disasters. Generally, farm production losses are not eligible for FEMA assistance, but instead are covered under an assortment of ongoing programs administered by the U.S. Department of Agriculture (USDA). These include disaster loans, the federal crop insurance program, and the noninsured crop disaster assistance (NAP) program. (For more information on these and other USDA disaster assistance programs, see CRS Report RS21212(pdf), Agricultural Disaster Assistance.)

Congressional and Administrative Actions

To assist farmers with more recent production losses, congressional and administrative action has taking place on two fronts: (1) the USDA announced a new $500 million Florida Hurricane Disaster Assistance Program, and (2) Congress approved a $3.5 billion emergency supplemental appropriation for agriculture disaster assistance in the FY2005 military construction appropriation bill (H.R. 4837). The conference report on the supplemental appropriation (H.Rept. 108-773) was approved by the House on October 9 and by the Senate on October 11. It includes $608.5 million for damages caused by hurricanes and other storms in 2004 and about $2.9 billion in general crop and livestock disaster assistance.

USDA's Florida Hurricane Disaster Assistance Program. On September 24, 2004, the Administration announced a new agricultural disaster program designed to assist any Florida county that was declared a disaster area as a result of either Hurricane Charley, Frances, or Jeanne. The new Florida Hurricane Disaster Assistance Program uses existing USDA Section 32 funds (estimated by USDA at more than $500 million) to provide direct disaster payments to producers of citrus, vegetables and nursery crops based on estimated losses. Sign-up for the program began in early October. Recipients are subject to an $80,000 payment limit, and must have gross income under $2.5 million (which is lifted if more than 75% of income is derived from farming or forestry).

General Crop and Livestock Disaster Assistance. The disaster supplement includes $2.9 billion in crop disaster payments, livestock feed assistance, and tree planting assistance. Much of this disaster assistance is expected to benefit Western states that have experienced multiple years of drought, and other regions that were affected by a late summer frost and other disasters.

Fiscal conservatives had insisted that the cost of any agricultural assistance for disasters, other than the 2004 hurricanes, be offset with reductions in other USDA programs. Supporters of farm and conservation programs were opposed to reducing spending for any farm bill programs to pay for disaster assistance, and contended that all natural disasters should be treated equally. Congress did adopt a $2.9 billion reduction in spending authority for the Conservation Security Program, but the offset will not take effect until 2008, after lawmakers write a new farm bill.

The bill uses USDA's Commodity Credit Corporation (CCC) to fully fund payment formulas for three disaster programs -- crop loss assistance, livestock assistance, and tree assistance. CBO estimates the cost of these three programs at $2.5 billion for crop losses, $475 million for livestock assistance, and $20 million for tree replantings. If these estimates fall short of program needs, CCC funds would be available for any shortfall.

Crop loss payments are to be implemented in the same fashion as the 2000 crop disaster program. A crop producer would be eligible for assistance if crop losses due to any natural disaster were in excess of 35% in either 2003 or 2004 (but cannot receive assistance for both years). For losses in excess of the 35% threshold, an eligible producer would receive a payment of up to 65% of the relevant price for the commodity. Payments would be made to all eligible producers regardless of whether a farmer was in a declared disaster area. Recipients would be subject to an $80,000 per person payment limit.

Also included in the total is necessary funding for a Livestock Assistance Program (LAP), which would provide direct payments to eligible livestock producers who suffered grazing losses due to a natural disaster. The bills require the program to be modeled after the LAP implemented in 2000. Under this proposed program, a livestock producer would be eligible for LAP benefits when a natural disaster caused the producer in an approved county to suffer a 40% or greater loss of grazing for three or more consecutive months during either 2003 or 2004. Like the crop loss program, the livestock producer would be eligible for payments for either year, but not both.

Finally, necessary funds are provided to fully fund the Tree Assistance Program (TAP), which was authorized by the 2002 farm bill (P.L. 107-171) but did not receive any regular appropriations for FY2004. TAP provides financial assistance to orchard growers to help them replant eligible trees, bushes, and vines that are damaged or destroyed by a natural disaster. A grower who loses more than 15% of eligible trees to a natural disaster can be reimbursed for 75% of the cost of replanting eligible losses. Payments are limited to 500 acres and no more than $75,000 per person.

Supplemental Hurricane Loss Assistance. An additional $608.5 million in agricultural assistance was made available in H.R. 4837 for regions that were severely affected by the series of 2004 hurricanes and tropical storms. Included in this amount is $250 million to repair waterways and watersheds; $100 million for debris clean-up and repairs on farms; $68 million for rural community water and waste disposal facilities; $90 million for the section 32 Florida Hurricane Disaster Assistance Program for citrus, vegetable and nursery crop losses; $40 million for sugarcane payments; $10 million for dairy production losses; $10 million for cottonseed producers and first handlers; $10 million for private forest landowners; $8.5 million for pecan producers; and $4 million is for additional Farm Service Agency administrative expenses associated with the hurricane assistance.

CRS Products

CRS Report RS21212(pdf), Agricultural Disaster Assistance.

CRS Report RL31095, Emergency Spending for Agriculture: A Brief History of Supplemental Appropriations, FY1988-FY2003.

CRS Report RL32581, Assistance After Hurricanes and Other Disasters: FY2004 Supplemental Appropriations.

CRS Report RL30739(pdf), Federal Crop Insurance and the Agriculture Risk Protection Act of 2000 (P.L. 106-224).

Other Resources

USDA Disaster Assistance homepage

National Drought Mitigation Center

National Climatic Data Center (NOAA)

CRS Contact: Ralph M. Chite (7-7296)

Page last updated October 13, 2004.

Return to CRS Briefing Books. | Return to CRS Agriculture Policy Briefing Book.