Ag Policy Blog
Chris Clayton DTN Ag Policy Editor

Wednesday 07/02/14

Nebraskans Question FSA Livestock Disaster Payment Formula

Nebraska's congressional delegation has written Agriculture Secretary Tom Vilsack to request a change in the way Farm Service Agency calculates disaster payments under the Livestock Indemnity Program.

Some major feedlots in Nebraska had significant cattle losses with the tornadoes that hit parts of northeast Nebraska two weeks ago. Livestock producers who filed claims are seeing lower payments than expected, the senators and congressmen wrote to Vilsack.

The lawmakers, all Republicans, cite that the Agricultural Act of 2014 changed the way payments are made. The law states producers will be paid 75% of the market value of their cattle "on the day before the death of the livestock, as determined by the Secretary." But the Nebraska delegation states that FSA is calculating payments based on 75% of "the average fair market value of the applicable livestock as computed using nationwide prices for the previous calendar year unless some other price is approved by the Deputy Administrator."

"These are clearly not the same standard. We appreciate that FSA may have some constraints on availability of appropriate data, but it is clearly unfair to producers who expect relief based on the plain language of the law to then find out that the relief received will be significantly less than 75% of the market value of their livestock," the Nebraska lawmakers wrote Vilsack.

The letter states that the difference in calculations translate into a $129 per-head difference for a 800-900 pound feeder cattle. On a fed-market steer, the difference can be as high as $339 per head.

"Therefore, we request that you direct FSA to calculate relief for livestock producers based on market values that more accurately reflect the plain reading of the statute," the lawmakers state.

The Nebraska letter raises questions regarding whether FSA used the correct methodology in calculating LIP payments for other livestock disasters, such as the South Dakota losses from storms last fall.

Chris Clayton can be reached at chris.clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

Posted at 4:04PM CDT 07/02/14 by Chris Clayton
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