USDA to Provide Payments to Livestock Producers Impacted by Drought or Wildfire

New Emergency Livestock Relief benefits to be delivered through two-phased approach; compensation for 2021 forage losses

WASHINGTON, March 31, 2022 – The U.S Department of Agriculture (USDA) today announced that ranchers who have approved applications through the 2021 Livestock Forage Disaster Program (LFP) for forage losses due to severe drought or wildfire in 2021 will soon begin receiving emergency relief payments for increases in supplemental feed costs in 2021 through the Farm Service Agency’s (FSA) new Emergency Livestock Relief Program (ELRP).

“Producers of grazing livestock experienced catastrophic losses of available forage as well as higher costs for supplemental feed in 2021. Unfortunately, the conditions driving these losses have not improved for many and have even worsened for some, as drought spreads across the U.S.,” said Agriculture Secretary Tom Vilsack.  “In order to deliver much-needed assistance as efficiently as possible, phase one of the ELRP will use certain data from the Livestock Forage Disaster Program (LFP), allowing USDA to distribute payments within days to livestock producers.” 

Background 
On September 30, 2021, President Biden signed into law the Extending Government Funding and Delivering Emergency Assistance Act (P.L. 117-43). This Act includes $10 billion in assistance to agricultural producers impacted by wildfires, droughts, hurricanes, winter storms and other eligible disasters experienced during calendar years 2020 and 2021. Additionally, the Act specifically targets $750 million to provide assistance to livestock producers for losses incurred due to drought or wildfires in calendar year 2021. ELRP is part of FSA’s implementation of the Act. 

For impacted ranchers, USDA will leverage LFP data to deliver immediate relief for increases in supplemental feed costs in 2021. LFP is an important tool that provides up to 60% of the estimated replacement feed cost when an eligible drought adversely impacts grazing lands or 50% of the monthly feed cost for the number of days the producer is prohibited from grazing the managed rangeland because of a qualifying wildfire.   

FSA received more than 100,000 applications totaling nearly $670 million in payments to livestock producers under LFP for the 2021 program year. 

Congress recognized requests for assistance beyond this existing program and provided specific funding for disaster-impacted livestock producers in 2021.  

ELRP Eligibility – Phase One 

To be eligible for an ELRP payment under phase one of program delivery, livestock producers must have suffered grazing losses in a county rated by the U.S. Drought Monitor as having a D2 (severe drought) for eight consecutive weeks or a D3 (extreme drought) or higher level of drought intensity during the 2021 calendar year, and have applied and been approved for 2021 LFP. Additionally, producers whose permitted grazing on federally managed lands was disallowed due to wildfire are also eligible for ELRP payments, if they applied and were approved for 2021 LFP.

As part of FSA’s efforts to streamline and simplify the delivery of ELRP phase one benefits, producers are not required to submit an application for payment; however, they must have the following forms on file with FSA within a subsequently announced deadline as determined by the Deputy Administrator for Farm Programs: 

• CCC-853, Livestock Forage Disaster Program Application
• Form AD-2047, Customer Data Worksheet.
• Form CCC-902, Farm Operating Plan for an individual or legal entity. 
• Form CCC-901, Member Information for Legal Entities (if applicable). 
• Form FSA-510, Request for an Exception to the $125,000 Payment Limitation for Certain Programs (if applicable). 
• Form CCC-860, Socially Disadvantaged, Limited Resource, Beginning and Veteran Farmer or Rancher Certification, if applicable, for the 2021 program year. 
• A highly erodible land conservation (sometimes referred to as HELC) and wetland conservation certification (Form AD-1026 Highly Erodible Land Conservation (HELC) and Wetland Conservation (WC) Certification) for the ELRP producer and applicable affiliates. 

ELRP Payment Calculation – Phase One 

To further expedite payments to eligible livestock producers, determine eligibility, and calculate an ELRP phase one payment, FSA will utilize livestock inventories and drought-affected forage acreage or restricted animal units and grazing days due to wildfire already reported by the producer when they submitted a 2021 CCC-853, Livestock Forage Disaster Program Application form.  

Phase one ELRP payments will be equal to the eligible livestock producer’s gross 2021 LFP calculated payment multiplied by a payment percentage, to reach a reasonable approximation of increased supplemental feed costs for eligible livestock producers in 2021.  

The ELRP payment percentage will be 90% for historically underserved producers, including beginning, limited resource, and veteran farmers and ranchers, and 75% for all other producers.  These payments will be subject to a payment limitation.

To qualify for the higher payment percentage, eligible producers must have a CCC-860, Socially Disadvantaged, Limited Resource, Beginning and Veteran Farmer or Rancher Certification, form on file with FSA for the 2021 program year. 

Payments to eligible producers through phase one of ELRP are estimated to total more than $577 million.  

ELRP - Phase Two    

Today’s announcement is only Phase One of relief for livestock producers.  FSA continues to evaluate and identify impacts of 2021 drought and wildfire on livestock producers to ensure equitable and inclusive distribution of much-needed emergency relief program benefits.   

Emergency Relief Program (ERP) Assistance for Crop Producers 

FSA is developing a two-phased process to provide assistance to diversified, row crop and specialty crop operations that were impacted by an eligible natural disaster event in calendar years 2020 or 2021.

This program will provide assistance to crop producers and will follow a two-phased process similar to that of the livestock assistance with implementation of the first phase in the coming weeks. Phase one of the crop assistance program delivery will leverage existing Federal Crop Insurance or Noninsured Crop Disaster Assistance Program data as the basis for calculating initial payments. 

Making the initial payments using existing safety net and risk management data will both speed implementation and further encourage participation in these permanent programs, including the Pasture, Rangeland, Forage Rainfall Index Crop Insurance Program, as Congress intended. 

The second phase of the crop program will be intended to fill additional assistance gaps and cover eligible producers who did not participate in existing risk management programs.   

Through proactive communication and outreach, USDA will keep producers and stakeholders informed as ERP implementation details are made available.   

Additional Livestock Drought Assistance 

Due to the persistent drought conditions in the Great Plains and West, FSA will be offering additional relief through the Emergency Assistance for Livestock, Honeybees and Farm-raised Fish Program (ELAP) to help ranchers cover above normal costs of hauling livestock to forage.  This policy enhancement complements previously announced ELAP compensation for hauling feed to livestock.  Soon after FSA announced the assistance for hauling feed to livestock, stakeholders were quick to point out that producers also were hauling the livestock to the feed source as well and encouraged this additional flexibility.   

It is important to note that, unlike ELRP emergency relief benefits which are only applicable for eligible losses incurred in the 2021 calendar year, this ELAP livestock and feed hauling compensation will not only be retroactive for 2021 but will also be available for losses in 2022 and subsequent years.    

To calculate ELAP program benefits, an online tool is currently available to help producers document and estimate payments to cover feed transportation cost increases caused by drought and will soon be updated to assist producers with calculations associated with drought related costs incurred for hauling livestock to forage 

More Information  
Additional USDA disaster assistance information can be found on farmers.gov, including USDA resources specifically for producer impacted by drought and wildfire and the Disaster Assistance Discovery Tool, Disaster-at-a-Glance fact sheet, and Farm Loan Discovery Tool. For FSA and Natural Resources Conservation Service programs, producers should contact their local USDA Service Center. For assistance with a crop insurance claim, producers and landowners should contact their crop insurance agent.  

USDA touches the lives of all Americans each day in so many positive ways. Under the Biden-Harris Administration, USDA is transforming America’s food system with a greater focus on more resilient local and regional food production, fairer markets for all producers, ensuring access to safe, healthy and nutritious food in all communities, building new markets and streams of income for farmers and producers using climate smart food and forestry practices, making historic investments in infrastructure and clean energy capabilities in rural America, and committing to equity across the Department by removing systemic barriers and building a workforce more representative of America. To learn more, visit usda.gov.  

USDA is an equal opportunity provider, employer and lender.

Russia-Ukraine conflict will likely mean hardship, opportunity for agricultural producers

 

By Ryan McGeeney

U of A System Division of Agriculture 

 

Fast Facts: 

• Grain market futures trading highly volatile 
• Russia leading exporter of fertilizer; input prices continue to rise 
• U.S. producers may have opportunity for greater corn exports 

 

  

LITTLE ROCK — The Russian invasion of Ukraine is causing “gut-wrenching” volatility in grain markets and pushing already high prices for fertilizer and diesel even higher, economists with the University of Arkansas System Division of Agriculture said this week. 

Much of the world, including the United States, is imposing economic sanctions against Russia, including a halt of exports to Russia and the freezing of Russian assets in banks around the world.  

 

Together, Russia and Ukraine account for about 29 percent of global wheat trade, with Russia the world’s top wheat exporter. Ukraine accounts for about 16 percent of global corn exports. 

Scott Stiles, agricultural economist for the Division of Agriculture, said the situation will offer both opportunities and hardship for growers in Arkansas and elsewhere. 

“Over the past week, prices for the major grains traded to new highs,” Stiles said. July wheat futures contracts rose to $9.42-3/4 on Feb. 25 — the “highest the July contract has traded since February 2011.” 

 

However, “grain trading following the full invasion has been incredibly volatile,” he said, with July wheat contracts moving 93 cents in one trading session, from $8.50 to $9.42-3/4.   

 

“Unheard-of and gut-wrenching for growers and end-users alike,” Stiles said.  

 

Corn futures have been similarly turbulent, ranging from $5.94 to nearly $6.64 during Feb. 24-25 trading. 

 

How is the conflict affecting grain trade?
On Feb. 24, the Ukrainian government suspended commercial shipping from its ports. Cargill, ADM, Bunge and other privately owned grain companies have suspended operations in Ukraine. 

 

“At least for the moment, Russian exporters are still fulfilling existing contracts and ships are departing,” Stiles said. “From what I can gather today, the overwhelming majority of world grain importers are not making any new deals with Russia.” 

 

Stiles said that major wheat importers are currently looking at other sources outside the Black Sea region. ”In the near term, Australia, Canada, the EU and Argentina will see an uptick in wheat exports first,” he said. “The United States may see some increase in wheat exports as well.”  

The United States may see higher corn exports
Both China and the European Union have historically been major purchasers of corn from Ukraine — a market gap U.S. producers will likely have the opportunity to fill. While South America typically exports some amount of corn each year, those supplies won’t be available for a few more months, Stiles said. 

“Before the Ukraine-Russia situation was very concerning, corn and soybean futures had already been on edge due to a drought in key areas of South America,” Stiles said. “Weather issues in south Brazil and northeast Argentina kicked off a soybean price rally in early December.” 

Prices for both corn and soybean have risen steadily since late 2021, as global supplies of both crops have tightened. Cotton and rice prices are likewise at multi-year highs.   

“There's plenty of competition for acreage this year,” Stiles said. 

Input costs on the rise (again)
The Russian-Ukrainian conflict is pushing both fuel and fertilizer prices even higher, at a time when some input costs have already risen 300 percent or more over the previous year. 

“Russia is the world's largest fertilizer exporter,” Stiles said. 

After a brief period of moderation in January, U.S. Gulf prices for di-ammonium phosphate increased steadily throughout February, increasing about 20 percent in total. 

  

“Gulf urea prices were very volatile last week, trading in a $175/ton range,” Stiles said. “Following the invasion news, Gulf urea prices traded to $705/ton, which hasn't been seen since early January.” 

 

Belarus, which borders Ukraine to the north, is the third-largest global potash producer, accounting for 18 percent of global production. 

 

“Potash prices have now increased for three straight weeks,” Stiles said. “Belarus is a land-locked country and has had a transportation agreement with Lithuania for rail movement of potash to a port on the Baltic Sea, but that agreement ended Feb. 1. 

 

“Belarus is currently without port access,” he said. 

 

Crude oil has also been trading higher recently. West Texas Intermediate contract futures traded up to $112.51 on March 2. 

 

“That's the highest WTI crude has traded since May 2011,” Stiles said. “Diesel futures have traded near $3.45. This represents a major cost increase for ag producers. 

 

“A year ago, diesel futures were trading at $1.83 and WTI was $60 a barrel,” he said. “For growers that weren't able to lock in fuel costs at lower price levels, the sharp rise in energy costs may have some impact on planting decisions.” 

 

As of March 2, the U.S. had not sanctioned Russian exports of oil and gas, although U.S. President Joe Biden was quoted as saying the move was “on the table.” 

 

Stiles said there is always a degree of volatility in agricultural commodity trading, given the unpredictability of weather and trade disputes. The introduction of a war that disrupts global grain and energy trade, however, is truly a “black swan” event. 

“A lot depends on how long the conflict lasts,“ Stiles said. “In the near term, it appears Russia and Ukraine will both be out of the global grain market. That is having an impact not only on grain, but energy and fertilizer prices as well.”