begins Feb. 1

By Tracy Sayler

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Prairie Grains is the official publication of
the Minnesota
Association of
Wheat Growers,
North Dakota Grain Growers Association,
South Dakota Wheat, Inc., and the Minnesota Barley Growers Association.

The program will help farmers in the Red River Valley region who suffered qualifying crop losses. However, it will fall short for some farmers in the Northern Plains who suffered crop disaster losses, but not enough to qualify for assistance, say grain groups in North Dakota and Minnesota.

Congress approved nearly $6 billion in assistance last fall to help farmers manage income losses from poor commodity prices and weather. Close to $3 billion has already been distributed to farmers across the nation to help with poor prices.

Of the $2.375 billion earmarked for disaster relief, farmers in the Northern Plains were most interested in the program structure for multi-year losses. Under the multi-year provisions of the program, farmers who carried federal crop insurance, or who grow non-insurable crops, and had indemnifying losses in three or more years from 1994 through 1998, will receive an extra payment equal to 25% of insurance claim payments made during that period.

Prevented plantings are expected to qualify as a loss year, but confirm this with your local FSA office. No farmer will receive more than $80,000 in aid. No one with an annual gross income of $2.5 million or more is eligible.

Indemnifying losses from different crops would qualify for the multi-year program: for example, a producer who received an indemnity from a crop loss one year in wheat, one year in barley, and one year in sunflower between 1994 and 1998 would qualify for the 25% additional payment under the multi-year disaster payment, notes John Mittleider, executive director of the North Dakota Barley Council. However, he points out that a producer who had qualifying losses on three crops in two of the past five years will not qualify for the additional payment.

"Our expectations were that farmers who suffered from crop losses due to scab would qualify for some assistance, and make no mistake, it will help some farmers. It will be well-received by those who have received indemnities three out of the past five years. However, there are many who have had several years of crop losses but not severe enough to qualify under the criteria of this program, and that is disappointing," says Tim Dufault, a Crookston, Minn., farmer and past president of the Minnesota Association of Wheat Growers.

For 1998 single year losses, farmers will be compensated if their losses exceeded 35% of historic yields. Farmers with eligible losses of insured crops will be compensated at 65% of crop insurance market price elections. Farmers with eligible losses to uninsured crops will be compensated at 60% of the crop insurance market price elections, and must agree to buy crop insurance for the 1999 and 2000 crop years.

Farmers with eligible losses of non-insurable crops will be compensated at 65% of the five-year average National Agricultural Statistics Service (NASS) price. Non-insured Crop Disaster Assistance Program (NAP) area loss triggers will not apply.

Historic yields will be based on the greater of the five-year average NASS county yield or the crop insurance yield or the NAP expected yield.

Farmers can receive payments under either the single year or multi-year provisions, but not both and USDA will make payments at the higher of the two levels.

The plan includes $30 million in assistance for farmers whose crops suffered multiple outbreaks of fusarium head blight (scab). Producers will be required to prove scab losses, and USDA was in the process of determining how at this writing. Assistance for scab losses may come in the form of crop insurance coverage buy-ups for 1999; eligible producers should contact their local FSA offices for more details.

USDA will also make available compensation (up to $30 million) to farmers with crop land that is flooded and expected to be out of production indefinitely, and not eligible for prevented-planting crop insurance coverage. This will include the Devils Lake Basin in ND and Day County in SD. No details were available at this writing on how these payments will be made; eligible producers should contact their local FSA offices.

Additionally, USDA will use $400 million of the disaster package to provide incentive payments to farmers to purchase higher levels of crop insurance for their 1999 crops. Farmers will get a premium discount of 25% to 35% on buy-up coverage. The discount will apply to any level of coverage and all crops the producer decides to insure.

The crop insurance discount will be in addition to any 1998 crop loss payment, multi-year crop loss payment, and scab-related payment that an eligible farmer would receive. Further, farmers may not need to qualify for disaster relief to qualify for the crop insurance discount.

No farmer will receive more than $80,000 in crop insurance incentive. To get a crop insurance premium discount, farmers should contact a crop insurance agent. FSA offices have a list of agents.

Package falls short of expectations

ND and MN wheat and barley leaders expressed disappointment in the program rules.

"The $400 million for crop insurance buy-ups next year is spread nationwide. That would have gone a long way to help improve multi-year crop loss payments for producers in the Northern Plains," says Dufault.

Mark Gage, president of the North Dakota Grain Growers Association and a Page, ND, farmer, points out that while uninsured producers will not be eligible for multi-year crop loss assistance, they will be under the single-year payment structure for 1998 crop losses, where all crops, whether insured and uninsured, will be eligible for payments if their losses exceeded 35% of historic yields.

This seems to favor producers in the southern U.S., who had greater losses in 1998 and who do not participate in the federal crop insurance program to the extent of producers in the Northern Plains, says Gage.

Gage agrees with Dufault that although many wheat and barley producers have suffered multiple crop failures in the 1990s, they did not technically qualify for indemnifying losses, which is a crop loss of at least 35%.

"Multiple disaster years stretching back to 1993 have lowered the actual production history (APH) of many wheat and barley farmers in the Upper Midwest. This decline in APH has resulted in greater difficulty in qualifying for federal crop insurance coverage of crop losses. This irony will also make it more difficult for growers to qualify for this disaster relief package," says Gage.

Dufault says 1993 should have been included in the three-out-of five payment calculation period, since severe crop losses that year figures into the APH used to calculate the crop yield history for federal crop insurance now.

Both producers say quality losses due to scab are difficult to quantify, and it is unclear how the disaster program will treat quality losses in malting barley. They say too that the details of this package emphasize again that a better crop insurance program is better than an ad hoc disaster program, which can be difficult to implement and all too often can become political.

"We need crop insurance reform, and maybe the disaster relief package in 1998 will help make the case to finally do it right in 1999," says Gage.

Disaster program signup will last through March 12, 1999. Crop loss payments are expected to be made in late April or early May, after all claims information has been processed and factors applied.

Disaster Relief Overview

• Feb. 1-March 12 signup
• Farmers who carried federal crop insurance, or who grow non-insurable crops, and had indemnifying losses in three or more years from 1994 through 1998, will receive an extra payment equal to 25% of insurance claim payments made during that period.
• No farmer will receive more than $80,000 in aid. No one with an annual gross income of $2.5 million or more is eligible.
• For 1998 single year losses, farmers will be compensated if losses exceeded 35% of historic yields. Insured crops and non-insurable crops compensated at 65% of crop insurance price elections. Uninsured crops compensated at 60%, on condition you buy crop insurance for the 1999 and 2000 crop years.
• Farmers can receive payments under either the single year or multi-year provisions, but not both and USDA will make payments at the higher of the two levels.
• Assistance available for crop losses due to scab. Producers will be required to prove scab losses. Assistance may come in the form of crop insurance coverage buy-ups for 1999.
• Assistance to farmers with flooded cropland.
• Incentive payments to farmers to purchase higher levels of crop insurance for 1999 crops. Farmers will get a premium discount of 25% to 35% premium on buy-up coverage. The discount will apply to any level of coverage and all crops the producer decides to insure.