Drought Drives Farm Program Changes

As drought that hit the Corn Belt last summer lingers through fall, USDA announces more farm program changes.

Published on: Oct 15, 2012

FAQ: This past summer's extremely dry conditions are continuing through this fall. What changes have been made by USDA to assist producers during this difficult time?

Answer: This year's widespread drought prompted USDA to expand its assistance and make some changes and modifications to various farm programs. USDA's Farm Service Agency administers federal farm disaster programs, and your local FSA office is the place to go for answers to specific questions you may have. Beth Grabau, public information and outreach specialist at the Iowa FSA state office in Des Moines, supplied the answers to these questions.

DROUGHT HELP: Historic summer drought of 2012 is continuing well into fall, prompting USDA to expand its assistance and make more changes to various farm programs.
DROUGHT HELP: Historic summer drought of 2012 is continuing well into fall, prompting USDA to expand its assistance and make more changes to various farm programs.

USDA's Risk Management Agency has made changes that should benefit livestock producers. For the 2012 crop year, RMA intends to allow haying and grazing of cover crops without affecting the insurability of planted 2013 spring crops. This means farmers and ranchers can plant a cover crop this fall without foregoing crop insurance coverage in 2013, thus giving producers another opportunity to grow needed forage and feed for this fall and winter. Producers are encouraged to contact their crop insurance agent for more information on this change.

FSA's Emergency Loan or EM loan program was recently modified to allow loans for losses to feed, hay and pasture to be made earlier in the crop year. Producers will no longer have to wait until the end of the production cycle to obtain a loan.

Another significant change is in the interest rate for Emergency Loans. The EM loan interest rate was set a 3.75% for a number of years. The rate has now been lowered to better mirror commercial lending rates. The Emergency Loan interest rate is around 2.25% currently. This change will be beneficial for farmers as they recover from income losses related to the drought.  

Question: The county I live in has been designated as a disaster county making Emergency Loans available. Loans are available to replace income from row crops, but what other uses exist for the Emergency Loan program?  

Answer: Emergency Loans are primarily targeted toward helping farms return to normal operations after a disaster. As mentioned, these EM loans can replace lost income from reduced corn or soybean yields; however, EM loans can be used for a variety of applications as long as the loss was caused by the disaster. For example, if an operation liquidates livestock due to a lack of available feed, loan funds can be used to cover lost income from animals sold and lost income from offspring, as well as replacing the livestock. Loan funds can also be used to cover pasture and hay losses and help purchase feed.