Mike Fanning, Ph.D., PAS
Mike Fanning, Ph.D., PAS
Jun 16, 2022
The USDA recently announced an updated livestock disaster aid addressing increased supplemental feed cost in 2021. The ELRP payment will be based on data from the 2021 Livestock Forage Disaster Program (LFP). CCC-853 (Livestock Forage Disaster Program Application) AD-2047 (Customer Data Worksheet) CCC-902 (Farm Operating Plan for an Individual or Legal Entity) CCC-901 (Member Information for Legal Entities, if applicable) FSA-510 (Request for an Exception to the $125,000 Payment Limitation for Certain Programs, if applicable) CCC-860 (Socially Disadvantaged, Limited Resource, Beginning and Veteran Farmer or Rancher Certification, if applicable) AD-1026 (Highly Erodible Land Conservation (“HELC”) and Wetland Conservation (“WC”) Certification) Phases of the ELRP payments Phase 1 of the payments is expected to total $577 million, basing the payments on percentage of an eligible producers’ gross 2021 LFP payment — 90% for historically underserved producers and 75% for all other producers. And, the payments will be subject to a payment limit. Phase 2: USDA said it was evaluating impacts of 2021 and wildfires on livestock producers as it develops the Phase 2 component. Phase 1 ELRP eligibility Producer and livestock eligibility for ELRP aligns with the eligibility requirements. Only 2021 LFP participants are eligible for an ELRP payment under Phase 1. Livestock producers must have suffered grazing losses in a county rated by the U.S. Drought Monitor as a D2 (severe drought) for eight consecutive weeks or a D3 (extreme drought) or D4 (exceptional drought) during the normal grazing season of the 2021 calendar year. Livestock producers who were not allowed to graze their permitted federally managed lands due to wildfire are also eligible for ELRP payments. ELRP payment calculation and limitations When calculating an eligible producer’s Phase One ELRP payment, Farm Service Agency (FSA) will use the producer reported (CCC-853 form) livestock inventories and forage acreage or restricted animal units and grazing days for the 2021 calendar year. Payments will be equal to the eligible livestock producer’s gross 2021 LFP payment multiplied by a payment percentage. For historically underserved producers (i.e., socially disadvantaged, limited resource, beginning, and veteran), the payment percentage is 90%, with a payment percentage of 75% for all other producers. Eligible producers with a CCC-860 on file with FSA for the 2021 program year qualify for the 90% payment percentage. Under ELRP, Adjusted Gross Income (“AGI”) limitations will not apply, however there are payment limitations for eligible producers. The payment limitations will be determined by the producer’s or legal entity’s average adjusted gross farm income, which is income earned from their agricultural operation. If an eligible producer or entity, other than joint ventures or general partnerships, has an average adjusted gross farm income of less than 75% of their average AGI for tax years 2017 through 2019, they cannot receive an ELRP payment of more than $125,000. For an eligible producer or entity, other than joint ventures or general partnership, with an average AGI of at least 75% that is derived from agricultural activities, they may be eligible for an ELRP payment of up to $250,000. Eligible participants seeking the increased limitation must: File form FSA-510; Provide certification that their average adjusted gross farm income is at least 75% of their AGI; and Provide certification from a licensed Certified Public Accountant or attorney that the participant qualifies to receive the increased limitation. Additional USDA Assistance Opportunities The announcement also included information on a new crop-related disaster effort named . USDA announced a two-phase approach for diversified, row crop and specialty crop operations affected by an eligible disaster event in calendar years 2020 or 2021. USDA also indicated there will be additional relief through the . The ELAP program provides emergency assistance to eligible producers of , and for losses due to disease (including cattle tick fever), adverse weather, or other conditions, such as blizzards and wildfires, not covered by LFP. The additional ELAP funding will assist producers with the increased cost of hauling livestock to forage. The ELAP compensation is retroactive to 2021 and will also be available for losses in 2022 and subsequent years. The deadline to request all ELAP assistance for 2022 calendar year losses will be Jan. 31, 2023. Important Deadlines The deadline to file for FSA’s LFP program is 30 calendar days after the end of the calendar year the loss occurred (i.e. January 31, 2022 for loss in calendar year 2021). The deadline to file for FSA’s ELAP program is January 30 following the end of the calendar year in which the loss occurred. Producers must file a notice of loss within 15 days after the loss is apparent for honeybee operations and within 30 days for livestock and farm-raised fish operations. More more information on , please contact your local FSA office. To learn more about the Federal Crop/Livestock Insurance programs contact an insurance agent by visiting the or calling 877-204-4645 . Source:
The USDA RMA Suspends the Livestock Risk Protection (LRP) 60-day Ownership Requirement Due to Severe Drought
Jun 08, 2022
In response to the severe drought conditions in many parts of the United States, the USDA RMA is suspending the Livestock Risk Protection (LRP) 60-day ownership requirement. The lack of rainfall is causing producers to sell cattle earlier than they normally would due to the difficulty in finding adequate forage. The USDA Risk Management Agency (RMA) has released a stating, for Specific Coverage Endorsements (SCEs) they are suspending the Livestock Risk Protection (LRP) rule requiring livestock owners to own their livestock up to the last 60 days of the endorsement (coverage) period. This is in effect as of . What it means for producers With producers facing a shortage of available forage due to drought conditions, the suspension of the LRP 60-day ownership rule allows producers options to consider. These options include feeding additional hay/supplement to maintain the cows and growth of the calves or selling calves before the expected sale date. Selling the calves “early” will also allow producers to reduce grazing pressure on the remaining forage and to maintain their existing cow herd genetic base. The SCEs are still subject to verification of proof of ownership. Proof of ownership can include sales receipts, kill sheets, or other documentation that verifies ownership during the insurance period showing the date the livestock were sold or slaughtered. If you have questions, please reach out to your agent or contact at 877-204-4645 .
May 20, 2022
The Rainfall Index - Annual Forage (RI-AF) Insurance program allows livestock and hay producers to purchase an insurance policy designed to provide coverage against the lack of precipitation on acreage planted annually to forage, used for grazing or as hay for livestock. RI-AF is currently offered in Texas, Oklahoma, New Mexico, Colorado, Kansas, Nebraska, South Dakota and North Dakota. While similar in design to the Rainfall Index Pasture Range and Forage (RI-PRF) Insurance, based off of the rainfall index data provided by the National Oceanic and Atmospheric Administration (NOAA) Climate Prediction Center (CPC), the difference lies in the type of commodity covered. The insured crop under RI-AF is ALL annually planted acres grown for forage or fodder with the intended use including, but not limited to grazing, haying, green chop or silage, which includes commodities such as, but not limited to, wheat, triticale, oats, Sudan haygrazer, etc. In contrast, RI-PRF encompasses perennial grasses, rangeland, and hay types such as alfalfa that are not planted on an annual basis. How does it work? A producer would have to sign up by July 15, 2022 to be eligible to participate. There are four (4) different growing seasons (Insurance periods) which are determined by dates the acres were planted. Producers are able to divide their liability into two-month index intervals targeting when precipitation is important for the crop being planted. Each grid covers an area equal to 0.25 degrees in latitude by 0.25 degrees in longitude. NOAA creates the grids, which do not follow state, county or national boundaries. Each grid is individually rated based on the data for that grid. The program is designed to insure against a decline in an index value that is based on the long-term historical average precipitation for the same area for the same period. Dual use option RI-AF does offer a Dual Use Option allowing a small grains producer to insure under Annual Forage for grazing in the winter/early spring and then insure their grain crop with a separate MPCI policy and would be eligible to maintain both benefits. The “Dual Use” coverage option is available in counties where grain/grazing is considered a good farming practice and is available for select counties in Texas, Oklahoma, Kansas, Nebraska, New Mexico and Colorado. The dual use option is only available for Growing Season One and primarily used for wheat, some counties may include barley and oats. Your agent should check the Annual Forage and small grains special provisions of insurance. After the two-month interval ends, the United States Department of Agriculture’s (USDA) Risk Management Agency (RMA) will release a Final Grid Index value representing how much precipitation was recorded for the Grid to compare against the producer selected coverage level. There is no loss adjustment. If there is a loss, the indemnity is automatically calculated and then paid. The Annual Forage program has been a very good risk management tool for producers, especially in the last few years during times of drought. Take control of your risk and gain greater peace of mind Your Insurance agent can tailor an Annual Forage insurance policy to meet the specific needs of your operation. Learn more about this program or connect with an agent by visiting the Annual Forage page or calling 877-204-4645 .
Nov 03, 2021
The USDA Risk Management Agency launched the Rainfall Index Pasture, Rangeland and Forage (PRF) insurance program to provide coverage against the lack of rainfall. The PRF insurance program was developed because ranchers and hay producers historically have not been able to insure their forage grown for grazing and haying. The PRF Insurance program is available in the 48 contiguous United States. How does PRF insurance work? PRF insurance coverage is based on rainfall rather than yields due to accurately measuring forage production and different management practices that affect forage production and yield. There is a high correlation between rainfall and forage production and indemnity payments to producers would offset the cost of purchasing replacement feed. The PRF Insurance program covers only established stands of perennial forages intended for either grazing or haying. A producer has to buy coverage by December 1 for coverage throughout the following year (January – December). Coverage is established on 2-month intervals, or mini insurance periods, county based values and coverage level. County based values are established by grazing and haying intended uses. Who sells PRF insurance? The PRF Insurance program is sold by private insurance agents and coverage is guaranteed by private insurance companies and the USDA. The USDA also provides premium assistance by covering between 51% and 59% of the premium costs, based on the producer’s selected coverage level. Each county, rainfall Grid and 2-month intervals are individually rated and influences the cost of the program as do the coverage level and productivity factor chosen by the producer. What is the Productivity Factor in PRF? The Productivity Factor is the dollar value of forage production per acre set by the Risk Management Agency. Producers can adjust this amount up or down (60% to 150%), depending on whether they want more coverage or not. Coverage and indemnities are based on the amount of rainfall measured in each Grid and 2-month interval. The rainfall measured is based on weather data collected and maintained by the National Oceanic and Atmospheric Administration (NOAA) Climate Prediction Center. The index reflects how much precipitation is received relative to the long-term average for a specified area (Grid) and 2-month interval. Documented rainfall amounts for a given area are drawn from precipitation data collected at NOAA climate reporting stations using the NOAA grid areas measuring 0.25° latitude by 0.25° longitude, which is about 17x17 miles. The Grid used for coverage are based on where the producer’s acres are located and the acres allocated by intended use. The Grid’s rainfall index value is calculated from rainfall data gathered at four NOAA stations nearest to the center of the GRID and not based on what the producer receives in his/her rain gauge. Rainfall indexes are generated for the two-month periods throughout the year. Producers can then choose insurance levels on individual PRF policies for coverage as high as 90% of the long-term precipitation averages for their grid area during those specific time periods. The producer can choose to increase the County Based Value, up to 150%, to increase the value of their forage. Purchasing an annual PRF policy When purchasing an annual PRF policy, you must select at least two 2-month intervals for insurance coverage. The intervals chosen are determined by the producer and when the producer thinks precipitation is critical for a given forage type. Precipitation data is collected daily and index values are calculated and published about six weeks after the end of each two-month time period. If the rainfall index for a given grid triggers and 2-month interval is below the producer’s selected coverage level, an insurance indemnity is due. Indemnities are applied towards the producer owed premium and once the premium is covered, a check will be sent. Checks are sent soon after those index values are announced. If premium is owed, premium is billed in September of the coverage year. There is no loss adjustment associated with the PRF insurance program because the rainfall data is collected by NOAA and losses are not based on forage yields. Indemnity payments are paid more quickly than most crop insurance policies. FBN® Insurance Agents have access to a privately developed PRF analysis tool to assist producers in determining optimal coverage and display the historical performance of a Grid. Learn more about PRF insurance Click here for more information about the PRF Insurance program or to speak to an insurance agent .