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USDA, Doubling Pay Limit, Offers Growers up to $500,000 in Disaster Aid
Farmers are eligible for up to $500,000 apiece for the hurricanes, wildfires, floods, and other disasters they faced in 2018 and this year, including Hurricane Dorian last weekend, said the USDA on Monday, with $3 billion in aid available. As it did in July for Trump tariff payments, the USDA set the maximum disaster payment at double the Congressional limit for farm subsidies.
The Trump administration is showering the Farm Belt with cash this year, creating some uneasiness within the sector about a potential backlash. The USDA estimated last month that direct federal payments would total $19.5 billion this year, the highest amount since 2005. The figure did not include the new disaster program nor a $3.63 billion tranche of trade-war payments possible in November. The first tranche of Trump payments, of up to $7.25 billion, is being paid now.
Enrollment for disaster payments will begin on Wednesday. Agriculture Secretary Sonny Perdue said the assistance “will ease some of the financial strain” caused by extreme weather. Farmers suffering damage from Hurricane Dorian are eligible for aid, said the USDA.
Large individual payments, whether for the Sino-U.S. trade war or natural disasters, are justified because of the scope of losses, said Administrator Richard Fordyce of the Farm Service Agency, which oversees farm subsidies. “If you think about some of the losses that have been experienced by producers … I think this is more commensurate with some of the losses that some of our producers across the country have experienced,” Fordyce told reporters.
Crop subsidies were set by Congress at $125,000 per person per year. The disaster program, called WHIP+, for Wildfire and Hurricane Indemnity Program Plus, allows payments of $250,000 per person per year if at least 75% of a producer’s adjusted gross income is from farming; otherwise the limit is $125,000. Since the disaster program covers two years, the maximum payment per person would be $500,000, said USDA. For this year’s Trump payments, the USDA set a limit of $250,000 apiece for row crops, specialty crops, and dairy and hogs, with a combined limit of $500,000.
Farm spouses are automatically eligible for payments in most USDA programs, which doubles the amount a large operation might receive.
“Why is Congress giving away its authority to act?” asked Ferd Hoefner of the National Sustainable Agriculture Coalition, a small-farmer advocate. In the past, lawmakers claimed primacy over the design of aid programs. The administration’s $250,00-a-year payment limit “completely contradicts the (2018) Farm Bill,” said Hoefner.
Disaster aid will be available in counties that were declared “primary” disaster areas, either by the White House or USDA. Payment rates will be higher for farmers who had crop insurance than for those who did not. A producer’s payment will be adjusted to reflect insurance indemnities and the value of the crop that was harvested. Payments will be made in full for 2018 claims but prorated at 50% for 2019 claims. Farmers would receive a second payment after next January 1 of up to 50% “if sufficient funding remains.”
A signup for prevented-planting payments should begin soon, in “a week or two,” said Fordyce. The rainiest spring in a quarter century meant millions of acres of cropland were not planted this year. Payments would equal 10% of a farmer’s crop insurance indemnity for prevented planting plus a 5% “bonus” if the policy included the so-called harvest price option. Those are the most popular type of crop insurance.
The disaster package includes compensation for grain stored on farms and damaged by flooding this year and for milk that farmers had to dump during severe storms.
Congress earmarked $3 billion for agricultural aid as part of a disaster bill passed three months ago after prolonged haggling over hurricane relief funds for Puerto Rico.
While significant, the disaster program is dwarfed by the billions of dollars the administration is putting into trade-war payments to farmers. It disbursed $8.6 billion in cash to farmers and ranchers for 2018 crops and livestock and says up to $14.5 billion is available for this year’s production.
“That is a big pile of money. That is the point,” said President Roger Johnson of the National Farmers Union recently. Mammoth trade payments may jeopardize congressional support for the farm bill in the future, he said. Agriculture is the only sector of the economy to receive trade-war payments. The money is drawn from a multibillion-dollar USDA account that Congress routinely replenishes with no debate.
Some administration officials are concerned about the legal underpinnings of USDA’s trade-war payments, said the Washington Post, describing them as “an expansive new programs without precedent.”
The payments are drawn from the Commodity Credit Corp, created during the Depression and nicknamed “USDA’s bank.” The CCC can borrow up to $30 billion from the Treasury before needing a replenishment of its accounts. In June, Michigan Senator Debbie Stabenow said the CCC had $7.7 billion left in spending authority.
“White House aides are, for the first time, pressing Congress to increase how much the administration can distribute through the farm bailout before hitting the program’s legal spending limit this fall — even though farmers have already been promised billions in additional bailout funding,” said the Post.
Asked during a teleconference if USDA has enough money in the CCC for the Trump payments, Fordyce, the FSA chief, said, “We’re monitoring this closely. I think we’re comfortable where we are today.”