FARE Blog

Food, Agriculture, and Resource Economics

Information on Disaster Assistance Programs

By Adam N. Rabinowitz

Click here for a PDF version of this post.

Last week Hurricane Michael ripped through the heart of Georgia agriculture, devastating the southwest region and destroying a significant amount of our farmers’ hard work.  While government programs can never fully replace the loss, there are a number of resources that are available to help farmers recover from disasters.  Some general tips and good practices include:

  • Collect documentation! Prior to starting any cleanup activity, make sure to take pictures of damage and losses that have occurred.
  • If you have crop insurance, contact your crop insurance agent to report losses or damages. It is important to do this before starting any cleanup activities so that everything can be documented properly.   Furthermore, farmers need to notify their crop insurance agent within 72 hours of discovery of a loss.  Beyond that, farmers should make sure that a signed written notice is provided within 15 days of the loss.
  • If you have noninsured crop disaster assistance or are eligible for other disaster assistance programs, contact the local FSA office. It is important to do this before starting any cleanup activities so that everything can be documented properly and a waiver can be issued prior to cleanup.

Important Disaster Resources

The USDA has a disaster website for Hurricane Michael that can be accessed at: https://www.usda.gov/topics/disaster/storms.  At that link there is information on FEMA and other disaster programs.  There is also a more direct resource related to agriculture that can be accessed at: https://www.farmers.gov/recover.  Some of the disaster assistance programs potentially applicable to hurricane losses include:

More information about each of these programs can be found at the above websites.  In addition, there have been some specific disaster related questions which are answered below.

  • What is the next step(s) after receiving crop damage? (reporting claims, documentation, etc.)

Depending on the program, contact either your crop insurance agent or local FSA office.  Make sure to take pictures of the damage and do not burn any debris.  An adjuster or FSA representative will need to survey the damage, thus it is important to wait before starting any cleanup until this has happened or permission to cleanup has been granted.

Keep in mind certain crop insurance deadlines.  Notice to your crop insurance agent must occur before abandoning a crop within 72 hours of a loss.  A written notice needs to be signed within 15 days of loss.

In addition to documenting the damage and loss, keep track of expenses related to cleanup.  It is advisable to keep records of all activities related to the disaster.

  • Do farmers have to pick the crop (in certain situations)? (requesting an appraisal, pros/cons of picking vs. taking the appraisal)

This is a difficult question that depends on individual circumstances.  Some issues that need to be considered is whether there is any salvage value of the crop and the quality of anything that can still be harvested.  If it is a good crop then it should be harvested.  The farmers crop insurance agent can help make a determination of how to proceed.

  • If you don’t pick the crop, how bad will it hurt the established yield?

If there is crop available to pick and you choose not to then it will count against the loss.

  • What if a farmer has an FSA loan on a structure that was damaged?

Contact the local FSA office immediately to report this damage.

  • What additional disaster relief may become available and when?

After many natural disasters that result in widespread damage there are often additional programs that become available to aid with agricultural losses.  This, however, is not guaranteed and it does take time before they are available as they require a special appropriation from the U.S. Congress and signature of the President.  One such example is the 2017 Wildfires and Hurricanes Indemnity Program (WHIP) that covered losses from Hurricane Irma that caused widespread damage in September 2017.  Allocation for that program was not made until February 9, 2018 as part of the Bipartisan Budget Act of 2018.  Sign up for that program did not begin until July 16, 2018.

While a special allocation may not be immediately available, it is important to document losses and to communicate to your legislators in a way that illustrates the impact that Hurricane Michael has had on your farming operation.  This information will help drive policy decisions and additional allocations that may become available.

 

Disclaimer

The information provided in this document is not a specific recommendation.  Producers should make disaster assistance decisions in consultation with their crop insurance agent local Farm Service Agency or other government entity responsible for program administration.

 

Market Facilitation Program: What is available to cover my marketing losses from trade tariffs?

By Yangxuan Liu

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U.S. Department of Agriculture releases details about the spending plans for $12 billion in trade aid package for farmers. The main component of the aid package is the Market Facilitation Program (MFP). MFP is authorized under the Commodity Credit Corporation (CCC) and administered by Farm Service Agency (FSA). MFP provides a direct payment to help producers who have been negatively impacted by foreign governments imposing tariffs on U.S. agricultural products.

MFP payment rates will consist of two announced payment rates. The first rate is announced on September 4, 2018 for the first payment rate and applies to 50% of the producer’s 2018 actual harvest production. On or near December 3, 2018, if applicable, the second payment rate will be announced and will apply to the remaining 50% of the producer’s 2018 production. For each commodity covered, USDA has set the first payment rates for the 50% of the producer’s 2018 actual harvested production as follows:

  • Cotton – $.06 per pound, estimate total payments of $277 million
  • Corn – $.01 per bushel, estimated total payments of $96 million
  • Soybeans – $1.65 per bushel, estimated total payments of $3.6 billion
  • Sorghum – $.86 per bushel, estimated total payments of $157 million
  • Wheat – $.14 per bushel, estimated payments of $119 million
  • Hogs – $8 a head, estimated payments of $290 million
  • Milk – $.12 a hundredweight, estimated payments of $127 million

The signup started on Tuesday, September 4, 2018 until Tuesday, January 15, 2019. For cotton producers, you can sign up with FSA now and update later to FSA with your production record, e.g. ginning records.

MFP payments are capped per person or legal entity at a combined $125,000 for corn, cotton, sorghum, soybeans and wheat, and another $125,000 for dairy and hogs. This payment cap applies to MFP only. The $125,000 payment cap for Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) payments is a separate cap. Eligible applicants must have an ownership interest in the commodity, be actively engaged in farming and have an average adjusted gross income (AGI) for tax years 2014, 2015 and 2016 of less than $900,000. Producers will have the option to submit CCC-910’s and report production in person, by mail, or electronically to FSA.

The Impacts of Chinese Tariff on Georgia Agriculture

By Yangxuan Liu, Esendugue Greg Fonsah, Levi Russell, Adam N. Rabinowitz, and Don Shurley

The uncertainty in trade policy between China and the U.S. creates concerns among the agricultural community. We recently released an extension publication, named The Impacts of China and United States Trade and Tariff Actions on Georgia Agriculture: the Perspectives of UGA Agricultural Economists. Georgia agriculture produces many of the items targeted by Chinese tariffs, including nuts, fruits, soybean, corn, wheat, sorghum, cotton, pork, beef, and tobacco. The Chinese retaliatory trade tariff on products of U.S. origin would have a negative impact on Georgia’s agriculture and economy. However, the magnitude of the impact of these new tariffs on Georgia’s agricultural industry is unclear.  In this extension publication, we discussed in detail about the Chinese tariff and its potential impact on pecan, cotton, soybean, corn, wheat, sorghum, and livestock industry.

Click here to download the full publication.

 

Tariff Retaliation Already Hitting the Pork and Dairy Industries

by Levi Russell

Recent tariffs imposed on steel and aluminum imports to the U.S. from Canada, Mexico, and the European Union (EU) have resulted in retaliation in the form of tariffs on a range of U.S. exports to those countries. Incomplete lists can be found here, but the biggest concerns in terms of agricultural trade are Mexican tariffs on pork and cheese.  Mexico is responsible for a significant portion of all U.S. exports of pork (32% in 2017) and cheese (up to 28% annually), but the full effect of these tariffs is currently unknown.

New Mexican tariffs on cheese include a 15% duty on fresh cheese and a 10% duty on shredded or powdered cheeses. These duties increase to 25% and 20%, respectively, after July 5th. The new tariffs on pork include a 20% tariff on all chilled or frozen pork as well as cooked ham and shoulder products and a 15% tariff on pork sausages. The U.S. is still allowed to export pork to Mexico duty free under their 350,000 metric ton quota. However, this limit is only 43% of U.S. pork export volume in 2017 and the U.S. must compete with other exporting countries for this quota. To put it simply, the 350,000 metric ton quota is “first come, first served.”

The higher tariffs will likely have a severe impact on the dairy industry. U.S. Dairy Export Council President and CEO Tom Vilsack has indicated that the tariffs will make it very difficult for the U.S. to compete with other countries for exports to Mexico, putting $391 million worth of exports at risk.

The tariffs on pork will likely be prohibitive, meaning that pork otherwise exported to Mexico will have to find a new home. Wherever that pork is exported, it will likely receive a somewhat lower price. Given the demand-driven markets for pork, chicken, and beef this year (due mostly to significant supply side growth the past few years) make this especially concerning.

The Impacts of China Trade Tariff on Georgia Livestock Industry

By Levi Russell

China implemented a 25 percent increase in import tariffs on United States pork and is expected to increase import tariffs on United States beef products by 25 percent. However, unlike many row crops and other agricultural products, China is not a primary destination for United States meat products. Beef exports to China only resumed recently and there is not yet a significant amount of beef being produced in the United States that is exported to China. In 2017, the United States was the second largest pork producer after China, and the largest pork exporting country (USDA FAS, 2018b). Twenty-two percent of pork produced in the United States enters the export market (USDA FAS, 2018b). From January 2013 to January 2018, the USDA ERS reports that mainland China made up 7.5% of total United States pork exports, coming behind Mexico (29.3%), Japan (25.1%), Canada (10.4%), and South Korea (8.1%). Pork production is mainly concentrated in the Midwest and North Carolina, and Georgia is not in the major pork producing regions. The impact of the tariffs on pork will be minimal on Georgia’s agricultural industry. However, the reductions in pork prices could hurt some of the pork producers in Georgia. For beef and pork (and other meats), the NAFTA trade discussions are a far bigger concern than Chinese tariffs.

Short-term market fluctuations this year in both cattle and hog markets will almost certainly depend much more on rising supplies, domestic consumption, and exports to other countries than on Chinese tariffs. A recent report by the USDA FAS indicates that the reductions in exports to China will mostly be offset by the increases in shipments to Japan, Mexico, and the Philippines. Exports of both pork and beef from the United States are expected to rise this year, in part due to relatively low United States prices (USDA FAS, 2018a).

In the long term, however, these increased tariffs on pork and beef products constitute a missed opportunity, as China is the number one pork-consuming nation in the world. New sources of demand for United States producers are hard to come by and higher tariffs on beef and pork will likely result in increased production in other countries to fulfill China’s growing demand. This will put the United States at a competitive disadvantage in the long term if the tariff increases are put in place on United States beef and pork products.

 

References

USDA FAS. (2018a). Livestock and poultry: world markets and trade. Washington, D.C. Retrieved from https://apps.fas.usda.gov/psdonline/circulars/livestock_poultry.pdf.

USDA FAS. (2018b). Production, Supply and Distribution Database.  Retrieved April 25, 2018 https://apps.fas.usda.gov/psdonline/app/index.html#/app/advQuery