FARE Blog

Food, Agriculture, and Resource Economics

Federal Disaster Aid Package Becomes Law

by Adam N. Rabinowitz

On June 6, 2019, the disaster aid package (officially known as H.R. 2157, “Additional Supplemental Appropriations for Disaster Relief Act, 2019.”) was signed into law.  The bill contains substantial money that will aid Georgia in the recovery from Hurricane Michael, as well as addressing other disasters throughout the U.S. during calendar years 2018 and 2019, including Hurricane Florence, other hurricanes, floods, tornadoes, typhoons, volcanic activity, snowstorms, and wildfires.  I have outlined below key highlights of the legislation directly relevant to Georgia agricultural producers.

  • A total of $3 billion has been allocated to losses of crops (including milk, on-farm stored commodities, crops prevented from planting in 2019, and harvested adulterated wine grapes), trees, bushes, and vines.
  • Block grants will be provided to states for forest restoration, poultry, and livestock losses.
  • Tree assistance payments are to be made to eligible orchardists or nursery tree growers of pecan trees with a tree mortality rate that exceeds 7.5% (adjusted for normal mortality) and is less than 15% (adjusted for normal mortality) for losses incurred from January 1, 2018 and December 31, 2018.
  • Not more than $7 million for agricultural producers whose Whole Farm Revenue Protection indemnity payments were reduced following 2018 crop year losses due to state authorized disaster assistance programs.
  • Crops eligible for Federal Crop Insurance or Noninsured Crop Disaster Assistance Program (NAP) are limited to payments not to exceed 90% of the loss for those that obtained either of these policies. For producers that did not obtain available crop insurance or NAP, payments are limited to 70% of the loss.  The expected value of the crop is defined as the greater of the projected price or the harvest price.
  • Additional allocations were made for the Emergency Forest Restoration Program ($480 million), Emergency Conservation Program ($558 million), Emergency Watershed Protection Program ($435 million), and rural community facilities programs ($150 million).

Keep in mind that dollar figures included here are not allocations only for Georgia but are for all producers throughout the nation that are eligible for aid.  It is expected that the crop losses will be managed through the Farm Service Agency (FSA) using the Wildfires and Hurricanes Indemnity Program (WHIP) in the same fashion as was applied in 2018 for Hurricane Irma, with the exception of the increased payment limits to 90% and 70% for insured and uninsured acres, respectively.  The signup process and payment dates are not known at this time.  More information is forthcoming.

Georgia Vegetable Estimated Losses Due to Hurricane Michael

By Esendugue Greg Fonsah, Andre da Silva, Bhabesh Dutta and Timothy Coolong

The UGA Vegetable Team recently conducted damage assessments aimed at preparing a comprehensive report to determine the potential losses incurred to the Georgia Fruit and Vegetable Industry caused by the hurricane Michael. Calculations were based on the information gathered by the Vegetable Assessment Team, growers and county extension agents during farm visits in southwest Georgia. Total acreages, estimated percentage of damaged field, yield losses, and current prices for the various vegetable crops were taken into consideration.

There were significant losses per crop across the state of Georgia, but nothing compared to losses incurred in southwest Georgia, where most of vegetable crops are produced in the state. A portion of early maturing fall crops had already been harvested before hurricane Michael makes landfall. However, the majority of crops were still in the field, which increased losses to Georgia vegetable growers. For instance, bell and specialty pepper, eggplants, tomato, sweet corn, squash, and cucumbers sustained approximately 70 – 90% losses in the most impacted areas while other vegetables like cabbage, greens, snap beans and broccoli sustained damages from 20 – 50%.

Our estimate thus far depicts a total loss of $480.31 million to the Georgia Vegetable Industry. According to the Vegetable Team report the vast majority of initial crop damage was caused by the strong winds, which resulted in lodging or defoliation of plants. Further, damages were sustained after the hurricane due to “sunburn” of exposed fruit. This is because most of the foliage in crops were either damaged due to the strong winds.  It is projected that the secondary damage and losses will exceed initial losses caused by the hurricane. Losses were exacerbated due to power outages, which prevented growers from properly cooling or storing harvested produce.  Power outages also impacted the ability to irrigate crops remaining in the field.

These values are subjected to changes as it does not include property losses. Losses caused by hurricane Michael left a devastating blow not only to our farmers, but equally to the community and the Georgia economy at large.

For more information contact the Vegetable Team Members:

Dr. Esendugue Greg Fonsah, Professor and Fruits and Vegetable Extension Economist, Department of Agriculture and Applied Economics, Tifton, GA 31793. Email: gfonsah@uga.edu Tel: 229-386-3512.

Dr. Bhabesh Dutta, Assistant Professor and Extension Vegetable Disease Specialist, Plant Pathology.  Email: bhabesh@uga.edu Tel: 229-386-7495.

Dr. Timothy Coolong, Associate Professor specialized in vegetable production, Horticulture Department, University of Georgia, Athens, GA 30602.  Email: tcoolong@uga.edu  Tel: 229-386-7495

Dr. Andre Luiz Biscaia Ribeiro da Silva, Assistant Professor specialized in vegetable production, Horticulture Department, University of Georgia, Email: adasilva@uga.edu  Tel: 229-386-3806

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.

 

Hurricane Michael Hit Georgia Vegetable Industry

By Esendugue Greg Fonsah, Andre Da Silva, Bhabesh Dutta, Timothy Coolong and Scott Carlson

Hurricane Michael touched down Wednesday morning, October 10th, 2018 leaving behind a devastating blow to the South Georgia population, the community and the fruit and vegetable growers industry.  Farmlands and crops were blown off, trees blown down and electricity shut down in most areas.  Our major fall crops such as bell peppers, tomatoes, cucumbers, eggplants, squash, zucchini, sweet corn and snap beans were all affected.  The magnitude of the damage varied from crop to crop and from location to location but a rough initial estimate puts the damage around 40-60%, equivalent to about $250-$300 million.  The UGA Vegetable Team is currently conducting a full damage assessment and prepare a comprehensive report to determine the actual loss value to the Georgia Fruit and Vegetable Industry.

Courtesy of Dr. Andre Da Silver

Economic Productivity and Profitability Analysis for Whiteflies and Tomato Yellow Leaf Curl Virus (TYLCV) Management Options

By Esendugue Greg Fonsah, Chen, Yu, Stan Diffie, Rajagopalbabu Srinivansan and David Riley

Introduction: (Complete version of journal article is attached here).

In 2015, the United States was the second largest producer of tomatoes in the world.   The U.S. produces tomato for fresh and processed markets respectively, and both markets contribute over $2 billion in annual farm cash receipts. In the state of Georgia, tomato is one of the most important commercial crops and ranks amongst the top ten vegetables in terms of farm gate value.  For instance, from 2009 to 2014, tomato contributed over $265 million to the state economy. Tomato yellow leaf curl virus (TYLCV), transmitted by whiteflies, are a major threat to tomato production around the world.  The spread of the virus in the field and in glass houses is directly correlated to increase in whitefly population. The virus was first seen in Israel in 1950.  Almost 50 years later, the virus was seen in Florida, Georgia, the Carolinas, Texas and California.  Infected plants show symptoms of stunting, flower abortion, curling of leaflet margins, yellowing of young leaves, inferior overall cosmetic appearance of fruits quality and decreased yields.  It is common to experience yield losses of up to 100% in affected fields.  Also there is no official estimate of losses caused by this virus but it is assumed to be in the tens of millions of dollars.

Although several studies discussed the economic evaluation for preventing tomato with respect to pesticide use, exclusion screen, intercrop and cultivars, there are limited studies that provide economic analyses of TYLCV prevention and management options. As a result, the objective of this study was to develop an economic productivity and profitability analysis aimed at determining the financial and economic viability, if any, of managing TYLCV.

Methods

This experiment was conducted at the Horticulture Farm, Coastal Plains Research Station, University of Georgia, Tifton, during the summers of 2013-2015.  We specifically evaluated the use of TYLCV-resistant cultivars, metallic silver mulch, and the use of the insecticides relative to white mulch, a TYLCV-susceptible tomato, and a no insecticide check, respectively.  The experimental response variables measured were whitefly adult, immature and egg incidence, TYLCV symptom severity, and marketable yield.  Tomato cultivars used included Shanty, Security, Tygress and the susceptible cultivar FL-47.  The types of mulch used were reflective and a standard non-reflective white mulch.  Insecticides used were cyantraniliprole, applied at 13.5 fl. oz. per acre, imidacloprid at 10.5 fl. oz. per acre and water as a control.   Each treatment was replicated 4 times.

Results

The inputs used in the economic analysis of insecticides for the management of whitefly- transmitted TYLCV in tomato production were slightly different from the conventional tomato production practices.  For instance, the planting materials were TYLCV-resistant lines plants, which cost $466/ac.  Silver mulch was $513/ac while insecticide used to control white flies was $159/ac.  The combined fertilizer cost was $692/ac.  Fumigation, fungicides and labor costs were $570, $189 and $550/ac respectively.  Total pre-harvest variable cost (P-H VC) was $4,200/ac.

A sensitivity analysis based on total cost of production showed that an expected net return of producing tomatoes in the presence of TYLCV was $1,958/ac and obtainable 50% of the time.  The result further showed that $-887 may be obtained 7% of the time in a worst case scenario while a rare net return of $4,802 is also realizable 7% of the time.  These results reconfirm the importance of good agricultural practices and adherence to management recommendations from research and extension scientists in successfully managing whitefly-transmitted TYLCV (Table 1).

Table 1:  Sensitivity Net Return of producing tomatoes in the presence of whitefly-transmitted tomato yellow leaf curl virus (TYLCV) in the Southeast USA, 2017.

Net return levels (TOP ROW);
The chances of obtaining this level or more (MIDDLE ROW); and
The chances of obtaining this level or less (BOTTOM ROW).
Best Optimistic Expected Pessimistic Worst
Returns ($) 4,802 3,854 2,906 1,958 1,010 62 -887
Chances (%) 7% 16% 31% 50%
Chances (%) 50% 31% 16% 7%
Chances for Profit 85% Net Revenue $1,958

Acknowledgment: We acknowledge the technical help rendered by Mr. Simmy Meckeown, and numerous student workers at the vector biology laboratory, UGA, Tifton, during the course of this study.  This project was partially funded by USDA AFRI Grant 2012-67007-19870 for which the authors are grateful.

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.

 

The Impacts of China Tariff on Georgia Fruits, Nuts, and Vegetables Industry

by Esendugue Greg Fonsah

In 2016, Georgia’s food and fiber production and related industries represented $73.3 billion in output and contributed to more than 383,600 jobs (Center for Agribusiness and Economic Development, 2017). 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 United States origin products 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. Some industries, like the pecan industry, will be impacted more than others.

China implemented a fifteen percent increase in import tariffs on United States origin fruit and nuts. In the past few years, Georgia pecans, one of many nuts grown in the state, became a novelty for the Chinese market, especially due to the health benefits of the crop and the fact that prices for walnuts escalated exponentially in 2007 to an unbearable level.  Pecan exports to China increased by 64% in the same time period. The United States produces 80% of the world’s pecan and Georgia remains the number one producer of pecans with a record 50-70% exported to China for almost a decade. The high demand for pecans has also triggered a market distortion from the traditional distribution channel (grower-processor-consumer), to direct marketing and sales. Chinese buyers are willing to pay a proportion of pecan crops up front and pay the rest at or after delivery. This Chinese business model has provided a cushion and an additional safety buffer to United States pecan growers. An additional 15 percent tariff on nuts and fruits will be a major impact especially to the Georgia Pecan Industry and will definitely reduce the quantity exported to China. That would in turn increase domestic quantities. With the large pecan production and acreage expansion going on, the domestic market might be flooded and eventually dampen prices, if the 15 percent tariff on nuts and fruits is implemented and the trade dispute is not resolved. Note that although the overall U.S. agricultural trade have continuously enjoyed positive balances, the U.S. horticulture trade balances (fruits, vegetable and the green industry) have been negative for the past decade. In 2014, the U.S. imported $40.5 billion and exported $22.5 billion with a negative horticultural trade deficit of $18 billion (Fonsah, 2016; 2017).

On the brighter side, the trade disputes between the United States and China might help hasten the North American Free Trade Agreement (NAFTA) to come up with amicable solutions to the parties involved. Presently, the Georgia Fruits and Vegetable Industry (excluding Pecans) may not suffer any negative impact of the Chinese tariffs, because most of our fruits and vegetables are shipped domestically or between the NAFTA countries, such as Canada and Mexico.

 

References

Fonsah, E. G. (2017).  “Vegetable” In: 2017 Georgia Ag-Forecast. Farm to Port: Maximizing the global impact of Georgia agriculture, Department of Agriculture and Applied Economics, College of Agriculture and Environmental Sciences, University of Georgia, pg. 17.  www.GeorgiaAgForecast.com

Fonsah, E. G. (2016).  “Vegetable” In: 2016 Georgia Ag-Forecast. Farm to Port: Maximizing the global impact of Georgia agriculture, Department of Agriculture and Applied Economics, College of Agriculture and Environmental Sciences, University of Georgia, pg. 26-27.  www.GeorgiaAgForecast.com

Center for Agribusiness and Economic Development. (2017). 2018 Ag Snapshots. Athens, Georgia: University of Georgia.

Publication: Surviving the Farm Economy Downturn

by Levi Russell

A new publication entitled “Surviving the Farm Economy Downturn” is now available online free of charge. The publication provides a general farm economy outlook as well as discussions of topics such as risk reduction, cost control, alternative crops, livestock sales during drought, crop insurance, ARC and PLC payment forecasts, stress and suicide, and other issues. Please follow the link below to check out essays on these and other topics:

https://afpc.tamu.edu/extension/resources/downturn-book/