Drought Assistance

1. Dr. Jody Campiche Assistant Professor & Extension Economist Agricultural Policy Oklahoma State University September 13, 2011 Drought Assistance

2. Drought Assistance • CRP Emergency Haying/Grazing • Disaster Programs • Emergency Loans • Crop Insurance

3. Conservation Reserve Program (CRP) Emergency Grazing • Emergency grazing authorized in 32 OK counties • Alfalfa, Beaver, Beckham, Blaine, Bryan, Caddo, Cimarron, Comanche, Cotton, Custer, Dewey, Ellis, Grady, Grant, Greer, Harmon, Harper, Jackson, Jefferson, Kay, Kiowa, Logan, Major, McCurtain, Osage, Roger Mills, Stephens, Texas, Tillman, Washita, Woods, and Woodward • Emergency grazing allowed through October 31, 2011 without an additional reduction in payment • Producers receive a 25% reduction in annual rental payment on acres hayed/grazed • Acres not eligible for managed grazing for 2 years • Producers should file request with county FSA office prior to grazing CRP land • Option to use harvested hay from expiring CRP acres (when the acres are being prepared for fall crops) • Livestock producers can use hay to feed their own livestock or can sell or donate the hay • If the haying option is utilized, producers will receive a 25% reduction in the CRP rental rate.

4. Drought/Disaster Programs • Emergency Conservation Program (ECP) • Emergency Loans • LFP • LIP • SURE

5. Emergency Conservation Program (ECP) •  Assistance to producers to rehabilitate farmland damaged by a natural disaster (tornado, wildfire, flooding, drought, etc.) • Assists producers with providing water for livestock during drought • Cost share program • up to 75% of the cost to provide water to livestock during a drought • Producers should contact their local FSA office for more information

6. Emergency Loans • Emergency loan assistance to producers for production losses due to drought, flooding, other natural disasters, or quarantine • Restore/replace essential property • Pay production costs associated with the disaster year • Pay essential family living expenses • Reorganize the farming operation • Refinance certain debts • Current interest rate - 3.75% • Check eligibility requirements • Complete application at local FSA office within 8 months of the county’s disaster designation date

7. Livestock Forage Disaster Program (LFP) • Provides assistance to producers who suffered grazing losses due to drought or fire occurring between Jan. 1, 2008 and Oct. 1, 2011 • Eligibility determined on a county basis by U.S. Drought Monitor • Grazing losses must be due to a qualifying drought condition during the normal grazing period for the county • As of August 25, 2011, almost all OK counties (excluding Nowata, Craig, and Ottawa) are covered by a qualifying drought condition for forage sorghum, improved pasture, and native pasture

8. Livestock Forage Disaster Program (LFP) • Oklahoma producers have already received $35 million in payments from the LFP program in 2011 • Eligibility Requirements: • Must have crop insurance policy or NAP policy on grazed acres with a loss • Only required to have insurance coverage on acres for which benefits are requested • Eligible farmers/ranchers who meet the definition of “Socially Disadvantaged,” ,“Limited Resource," or “Beginning Farmer or Rancher,” do not have to meet the crop insurance requirement

9. Livestock Indemnity Program (LIP) • Provides assistance for losses due to livestock deaths in excess of normal mortality as a result of adverse weather occurring between Jan 1, 2008 and Oct. 1, 2011 • Adverse weather events • Tornados, hurricanes, floods, blizzards, disease, wildfire, extreme heat, and extreme cold • Livestock do not have to be located in a county/contiguous county designated as a natural disaster • No risk management purchase requirement • Producers receive 75% of the average fair market value for livestock deaths in excess of normal mortality • Losses must be reported within 30 days of the severe weather event • As of August 23, 2011, Oklahoma producers have received $917,000 in 2011 payments from the LFP program

10. Emergency Assistance for Livestock, Honey Bees, and Farm-Raised Fish (ELAP) • Provides emergency relief to livestock producers due to blizzards, flooding, and wildfires • Benefits include • pasture losses • feed and forage losses produced on the farm or purchased prior to the disaster event • above normal purchase of feed and forage • expenses to deliver feed to stranded livestock • Producers must have a crop insurance policy or NAP coverage on every farm and commodity (excluding grazed acres) • Provides compensation for losses that are not covered through other disaster programs

11. SURE • Financial assistance for crop losses due to a natural disaster • To receive SURE payments, an eligible producer must have a qualifying loss • qualifying loss - at least a 10% production loss affecting one crop of economic significance due to a disaster on a farm in a disaster county • Producers outside a declared disaster county, but with production losses >= 50% of the normal production on the farm qualify • Must have insurance to qualify for SURE • Can’t apply for 2011 losses until end of 2011/12 marketing year (so November 2012)

12. Crop Insurance – FSA NAP • Provides financial assistance for low yields, loss of inventory or prevented planting occur due to natural disasters, such as drought • Noninsurable crops • catastrophic risk protection crop insurance is not available • crops planted and grown for livestock consumption, such as grain and forage crops (including native forage) • Natural disaster must occur before or during harvest and must directly affect the eligible crop • Producers must apply for coverage at their local FSA office & notify FSA if crop was affected by drought or other natural disasters and complete the Notice of Loss and Application for Payment

13. Crop Insurance – FSA NAP • November 30, 2011 deadline • NAP coverage for perennial crops, including pecans or native/improved grasses intended for hay • August 31, 2011 deadline • Alfalfa, all small grain grazing acreages, small grain acreages that will be harvested as forage, small grain inter-seeded in perennial grasses, cool season perennial or mixed grasses intended for grazing, and value loss crops such as nurseries

14. Crop Insurance - RMA • Federally-subsidized insurance programs • Administered by Risk Management Agency (RMA) and sold through private crop insurance agents • Sales closing date: September 30, 2011

15. Pasture, Rangeland, Forage Insurance (PRF) • Federally-subsidized insurance programs • Producers sign up w/private crop insurance companies • For the 2012 crop year, the sales closing date is September 30, 2011 • Allows forage/livestock producers to protect losses of forage harvested for hay or produced for grazing due to lack of rainfall • All counties in OK eligible for the Rainfall Index PRF • Last year, OK only had the vegetation index • Rainfall index is much better for OK

16. Pasture, Rangeland, Forage Insurance (PRF) • Rainfall Index • National Oceanic and Atmospheric Administration Climate Prediction Center (NOAA CPC) data used • each grid is 12 by 12 miles • Producers select at least two, 2-month time periods where rain is important to the operation, called index intervals • Insurance payments calculated using NOAA CPC data for the grid(s) and index interval(s) chosen by the producer • If the final grid index falls below the trigger, producers may receive a loss payment • Coverage based on the experience of the entire grid • not based on individual farms/ranches or specific weather stations in the general area • Not required to insure all acres • Can insure acres that are important to the grazing program or hay operation

17. Pasture, Rangeland and Forage • Select at least two 2-month time periods when rain is important to your operation. Index Intervals • Coverage Level • Select a Protection Factor between 60-150 percent of the County Base Value.

18. Pasture, Rangeland and Forage Payments will be calculated using NOAA CPC rainfall data for the grid(s) and index interval(s) you have chosen to insure. When the final grid index falls below your “trigger grid index”, there may be a loss.

19. Livestock Risk Protection • Protects cattle producers against price declines • during an established insurance period • Coverage prices and premiums change daily • No other peril is covered

20. WeatherBill – Total Weather Coverage (TWI) • Key benefits • customizable contracts • Do not have to prove loss to receive payments • Producers pick the time period or periods they want covered, temperature and/or precipitation levels and the coverage • Can choose which weather station they want to use to record data • Issues payment when weather conditions specified in the policy occur

21. WeatherBill – Total Weather Coverage (TWI) • Automatically sends payments and requires no proof of loss • Collects premiums, minus any payouts, in November after harvest unpredictable weather conditions • Uses an algorithm to calculate risk and sell insurance online against unpredictable weather

22. TOTAL WEATHER COVERAGE (TWI)

23. TOTAL WEATHER COVERAGE (TWI)

24. TOTAL WEATHER COVERAGE (TWI)

25. TOTAL WEATHER COVERAGE (TWI)

26. TOTAL WEATHER COVERAGE (TWI)

27. TOTAL WEATHER COVERAGE (TWI)

28. TOTAL WEATHER COVERAGE (TWI)

29. Questions? Jody Campiche Assistant Professor & Extension Economist Ag Policy 528 Ag Hall Stillwater, OK jody.campiche@okstate.edu 405-744-9811 Ag Policy Newsletters http://www.agecon.okstate.edu/agpolicy/index.asp?type=newsletters