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January 15, 2010

Farm Programs: SURE program available for 2008 crop losses

Originally published in the January 8, 2010, print edition.

The 2008 farm bill included a new Supplemental Agriculture Disaster Assistance Program — the so-called “permanent disaster” program — which was initiated for the 2008 crop year.

The new disaster program is intended to replace the need for passage of frequent “ad-hoc” disaster programs after a natural disaster occurs. The Supplemental Revenue Assistance Payments Program is the primary piece of the new federal disaster program for crop producers. The SURE program is available to all eligible producers in any county that was declared a “disaster county” by the U.S. ag secretary in 2008, including all contiguous counties.

The SURE program covers all crops, whether insurable by Federal Crop Insurance or the Noninsured Assistance Program/Noninsured Crop Disaster Assistance Program, and covers both production losses and crop quality losses, provided that producers were signed-up for Federal Crop Insurance or the NAP insurance coverage for the 2008 crop year. Sign-up for the 2008 SURE program payments for eligible producers started on Jan. 4 at county Farm Service Agency offices.

Details of the SURE program

Many crop producers in the Upper Midwest will be eligible for SURE program payments for the 2008 crop year, due to the fact that several counties in Minnesota, Iowa, North Dakota, South Dakota, Wisconsin and other states were declared “disaster counties” in 2008, or are contiguous counties. Here are the details of the SURE program for the 2008 crop year.

• SURE eligibility: Producer must have one or more of their farm units in a county that was declared a “U.S. Department of Agriculture Federal Disaster Area,” including all contiguous counties, for the 2008 crop year. In addition, a producer in one of the designated disaster counties, or contiguous counties, must have at least a 10 percent crop loss (by definition) on one crop in order to be eligible for 2008 SURE payments. Producers in other counties could also be eligible for the SURE program for 2008, if their total actual production for 2008 was less than 50 percent of normal production.

• Minnesota counties eligible: Cook, Lac qui Parle, Mahnomen and Wilkin counties received primary disaster declarations in 2008. The following Minnesota counties are SURE eligible for 2008 due to being contiguous counties for disaster declarations: Becker, Big Stone, Chippewa, Chisago, Clay, Clearwater, Faribault, Fillmore, Freeborn, Grant, Houston, Kittson, Lake, Marshall, Martin, Mower, Norman, Otter Tail, Polk, Swift, Traverse, Washington and Yellow Medicine.

• Other states: In Iowa, all counties are eligible for the SURE program in 2008, except some counties in northwest and west central Iowa. All counties are eligible for SURE in North Dakota, about half of the counties in South Dakota, and all Wisconsin counties, except a few counties in the western part of the state. A complete listing of eligible counties for the 2008 SURE program is available on the USDA FSA Disaster Assistance Programs website.

• Crop insurance requirement: Producers must have carried crop insurance (minimum of Catastrophic Crop Insurance coverage) on all eligible crops for 2008, and have must carried NAP insurance coverage on all non-crop insurance crops for 2008, in order to be eligible for SURE program payments for 2008. About 90 percent of producers carry crop insurance coverage on their corn and soybean acres; however, a much smaller percentage of producers carry crop insurance on wheat, barley, oats and other small grain crops, or on minor crops. A relatively small percentage of producers also carry NAP insurance on alfalfa and other forage acres. All forage acres and other NAP crops that make up at least 5 percent of the total farm gross revenue, excluding pasture acres, must have been insured by NAP coverage for 2008, in order to be eligible for SURE payments on corn and soybeans.

• 2009 ARRA impacts: The American Recovery and Reinvestment Act of 2009 amended provisions to provide potential added financial assistance for producers who are eligible for the SURE program for the 2008 crop year. Producers with Federal Crop Insurance policies at 70 percent or greater production coverage at 100 percent price coverage are eligible for a SURE guarantee of 120 percent of the crop insurance revenue guarantee (the normal SURE guarantee is 115 percent). There are also added SURE incentives through ARRA for producers who took advantage on crop insurance buy-ins and NAP insurance purchases for the 2008 crop year.

• SURE program guarantees: The SURE program is a revenue guarantee program, similar to many crop insurance revenue products, without the increasing “harvest revenue,” if crop prices increase during the growing season. If a given eligible farm’s actual crop revenue is less than the guaranteed revenue, the SURE program will pay 60 percent of the difference. The actual crop revenue includes the value of the crop harvested, crop insurance indemnity payments and other USDA payments. All payments under the SURE program are based on the sum of the total revenues for all crops in all counties for a FSA farm unit.

• SURE program guarantee: Sum of all crop insurance guarantees x 115 percent (120 percent with ARRA provisions.) For example: $520,000 of total insurance coverage times 1.20 equals a $624,000 SURE guarantee.) The maximum SURE guarantee is 90 percent of the expected crop value for the year.

• SURE program yields: The higher of the crop insurance APH yield or the FSA Counter-Cyclical Program payment yield.

• SURE program actual revenue: Actual harvested bushels of each crop x the 12-month USDA average market price of the crop (Sept. 1 to Aug. 31 for corn and soybeans.)

+

Crop insurance indemnity payments (Including prevented planting payments)

+

15 percent of USDA Direct Payments, CCPs and LDPs (Only direct payments for most crops in 2008.)

• Producer responsibilities: Eligible producers must enroll in the SURE program for the 2008 crop year at their county FSA office, starting Jan. 4, in order to be eligible for potential SURE payments. Producers in all designated USDA disaster counties and contiguous counties should check with their county FSA office for details. The FSA office will already have access to most 2008 crop acreage and crop yield information through FSA and crop insurance information; however, producers will be responsible to provide that data on other crops, or in the cases where verification is not adequate.

• Payment limits: No individual person, as defined by USDA guidelines in the 2008 farm bill, may receive more than $100,000 total in payments from SURE and the other federal disaster programs for the 2008 year (LFP, LIP, ELAP and TAP). Also, any person with an adjusted gross income of $2.5 million or more in 2008 is not eligible for 2008 SURE payments. For 2009, the income threshold fore SURE payment eligibility drops to $500,000 in non-farm income to remain eligible.

Bottom line

If you are in a county that was declared a “disaster county” for 2008 by the U.S. secretary of agriculture, or are in a contiguous county, and if you received a crop insurance indemnity payment for your 2008 crop production, it will likely be worth your effort to check with your FSA office regarding eligibility for the SURE program on your 2008 crop production.

If you are a producer in a county that was not declared a “disaster county” in 2008, or a contiguous county, you could also be eligible for SURE program payments, if they have more than a 50-percent total revenue loss on all farm units for the 2008 crop year.

With the price drop from the original 2008 crop insurance price guarantee to the final National Agricultural Statistics Service 12-month national average price for corn and soybeans, many more producers are likely to qualify for potential 2008 SURE payments.

Producers who planted most of their crop acres to corn and soybeans in 2008, and purchased crop insurance on all acres for 2008, have probably already met most of the necessary requirements at the their FSA office to be eligible for the 2008 SURE program.

For more details on SURE program eligibility, payments, etc., as well as a listing of eligible counties in the United States, producers should contact their county FSA office, or refer to the USDA FSA website at www.fsa.usda.gov. Then click on “Disaster Assistance Programs.”

•••

Kent Thiesse is a government farm programs analyst and a vice president at MinnStar Bank in Lake Crystal. He may be reached at (507) 726-2137 or kent.thiesse@minnstarbank.com.

 

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