Farm Bill Changes Revenue Safety Net, Disaster Coverage

Farm Bill Changes Revenue Safety Net, Disaster Coverage

August 8, 2008

A new disaster aid program and a new kind of revenue safety net for farmers are two changes in the 2008 farm bill, according to UNL economist Paul Burgener.

Congress voted in May to approve the Food, Conservation and Energy Act, the new farm bill. It continues many farm program, some with minor tweaks, but also makes several fundamental changes in Title 1, the Commodity Title, and in Title XV, Disaster Assistance. Many of the changes won't take effect until the 2009 crop year. In some cases, the U.S. Department of Agriculture (USDA) is still writing rules and regulations to implement them and in others, enrollment deadlines are still a ways off. But at least one provision, the new disaster aid program, will require farmers to act by mid-September if they want to participate.

Since the Farm Bill's approval, UNL has been working with USDA, commodity groups, growers and others to develop educational programs, Burgener said. UNL will be providing a number of educational events in time for producers to make timely decisions related to the new farm programs, Burgener said.

UNL also has a Web site with summaries of the various provisions, analysis, and text of the bill itself at farmbill.unl.edu.

SURE: New Crop Disaster Program

The new disaster aid plan is known as SURE, for Supplemental Revenue Assistance. It is one of five new disaster assistance programs. SURE is for crops; the others are the Livestock Forage Disaster Program, the Livestock Indemnity Program, the Tree Assistance Program, and the Emergency Assistance Program for livestock, honey bees, and farm-raised fish.

SURE and the other programs will replace the ad hoc disaster programs used in some parts of the nation over the past several farm bills, Burgener said. In order for a producer to qualify, one of two conditions must be met: Either the entire county must have a secretary of ag designation as a disaster area, or the entire farm must have a 50% loss due to weather. Unlike past programs, SURE encompasses losses over the entire farm and all crops in determining a total farm revenue program guarantee.

"What they're really trying to do is offer a disaster aid program," Burgener said,""but they want you to use the federal crop insurance program as the first level of protection, so you've done what you can to mitigate the risk prior to the government coming in and helping out."

SURE requires a grower to carry at least the minimum coverage level of crop insurance. The producer must insure everything, including crops for which insurance products are not available, and must carry NAP (Noninsured Crop Disaster Assistance Program). The cost is not expensive, $100 per crop. With a maximum of three crops per producer in up to three counties, the total could reach $900 for one producer.

This year, since the farm bill was not approved until after the March 15 crop insurance deadline, producers who did not enroll will have 90 days from the date the Farm Bill was passed, or until Sept. 16, to sign up for CAT or NAP. Those who sign up late will have to pay the fees to qualify for the disaster program. If they incur qualifying losses, they will receive disaster payments, but not insurance payments.

Burgener said the key point is for producers to evaluate their situation and sign up by Sept. 16 if they are concerned. He said most farmers in western Nebraska have insurance coverage on most of their high-value crops, but some may choose to add coverage on alfalfa or grassland pasture.

Commodity Program Changes

Another change in the '08 Farm Bill that could affect western Nebraska farmers is in Title I, the Commodity Title. Beginning in 2009, four programs can provide payments for eligible commodities:

  • Direct-payment (DP) Program
  • marketing loans or Loan Deficiency Payments (LDP)
  • counter-cyclical payment (CCP) program
  • ACRE (for Average Crop Revenue Election), a new program

ACRE Farm Income Protection

ACRE protects farm income based on revenue, as opposed to production, as in the traditional LDP and counter-cyclical programs, he said. The program will be available from 2009-12 as an alternative to the CCP program. A producer can elect ACRE in any year beginning in 2009, but once ACRE is chosen, the producer cannot go back to CCP, Burgener said.

ACRE payments will be triggered when two things occur:

  • Actual state revenue falls below ACRE Program guaranteed revenue
  • Actual farm revenue falls below the farm revenue benchmark for the crop year for the covered commodity.

Burgener said producers should expect to see educational programs beginning in late fall and early winter, as information about the new farm bill and program details become available. The programs will be in time for farmers to make decisions for 2009.

David Ostdiek, Communications Specialist
Panhandle Research and Extension Center