Disaster Package Passes Congress

Friday,February 14, 2003              By Shawn Wade

      Passage of the FY03Omnibus Appropriations Bill provided the culmination of a two-year effort tosecure crop loss assistance for farmers and ranchers adversely impacted bydrought and other causes in the 2001 and 2002 growing seasons.

      The package, which theBush Administration has said it will sign, includes $3.1 Billion foragricultural assistance programs.

      PCG will continue towork closely with USDA and Congressional contacts during the rulemaking processto ensure fair and timely delivery of CLP benefits.

      While the packages $3.1Billion price tag has received some criticism as being insufficient to coverthe losses incurred, the actual language in the Bill authorizes “such sums asnecessary” to pay for the program.

      With that in mind the$3.1 Billion estimate is really a figure only used to value the program forCongressional deliberation and will not be used as a hard cap on agriculturalassistance funding. That is good news for producers since it means theassistance provided will not be pro rated to fit a set amount of money.

      Even though there areno limits on how much the overall program will cost, there are individuallimits that will apply, just as in past programs. First, it is assumed that an$80,000 per person payment limitation will be applicable under this program andthat there will not be a separate payment limit for peanuts or other crops.

      Secondly, and what isnew in this regard with this program is a second overall cap on benefits thatsays a producer may not receive more than an amount equal to the differencebetween 95 percent of the “normal” crop value and the sum of actual croprevenue plus crop insurance indemnities.

      Early indications arethat the program will be conducted in much the same manner, and using many ofthe same rules, as the 2000 Crop Loss Assistance program. One of the keydifferences, however, is that the new program is multi-year in nature andproducers will have to specify either 2001 or 2002 when requesting benefits.

      That means growers willbe asked to sign up at the local Farm Service Agency office to qualify forbenefits. It is not expected that new rules will be completed or sign upscheduled any earlier than the Summer and possibly later.

      Obviously details aresketchy at best at this time. Educated guesses, however, based on previousprograms has helped flesh out the new program.

      One of the most obviousassumptions will be that growers provide evidence to document qualifying lossesof greater than 35 percent of their “normal” yield to participate.

      Determining what willconstitute the “normal” yield, and the updating of existing regulations tomatch the language used to describe key elements of the 2001/2002 Crop LossAssistance program, is where uncertainty begins to creep into early efforts tofigure out how the program will work.

      On its face theprogram’s authorizing language seems to mirror the traditional disasterprograms producers have participated in before. Eligibility will be determinedbased on losses greater than 35 percent of “normal” production levels. Thepayment rate for lost production eligible for payment will be calculated as apercentage of a predetermined “price” for each commodity.

      In past programsproducers with greater than 35 percent losses were eligible for payment only onthe loss that exceeded 35 percent, or 65 percent of their expected productionless actual production.

      Payment rates will beset at 50 percent of the applicable commodity price for insured crops or 45percent of the applicable price for noninsured crops. Crops for which insuranceis not available will be eligible for the 50 percent payment rate.

      Quality loss is alsospecified as being eligible for payments and it is assumed at this time thatthe quality provisions of the 2000 CLA program will applicable. The 2000 CLAprovision for cotton allowed for payments on a bale-by-bale basis with paymentsmade on 65 percent of the weight of the bale at a payment rate determined bythe amount of the quality loss.

      Cottonseed assistancein the amount of $50 million is included as part of the current package and itis assumed previous rules and procedures will be used to distribute those fundsto eligible first handlers of the cottonseed.

      Additional details willbe put forth as they become available, along with a comprehensive rundown ofall provisions applicable to cotton.