The 2014 farm bill reauthorized the Livestock Indemnity Program (LIP) to provide relief for producers who suffer livestock deaths as a result of natural disasters, but payments are still be figured by using 2008 calculations.

Following devastating tornadoes in Nebraska last month, Sen. Mike Johanns (R., Neb.) and other members from the state wrote to the U.S. Department of Agriculture Secretary Tom Vilsack urging him to correct the method for calculating disaster payments.

A USDA spokesman explained that the process currently used to calculate benefits is the same process that was used during the last administration following the 2008 Farm Bill. “That process treats all livestock producers fairly and consistently, and provides ranchers certainty about the value of disaster payments each year,” the spokesperson noted.
 

However, the 2014 farm bill states that “payments to an eligible producer on a farm… shall be made at a rate of 75% of the market value of the applicable livestock on the day before the date of death of the livestock, as determined by the Secretary.” 

The rule implementing LIP states that “The LIP national payment rate for eligible livestock owners is 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.”

The difference could result in as much of reduced payments of up to $330 head. For example, according to the LIP fact sheet published by the Farm Service Agency in April, the payment rate for feeder steers weighing 800 pounds or more is $1,149, but data from the Agriculture Marketing Service indicate that 75% of the average value of an 800-900 pound steer was approximately $1,278 the week before the tornadoes hit Pilger, a difference of $129 per head. Moreover, producers also experienced losses for cattle that were at their finished weight of approximately 1400 pounds. 

Johanns urged Vilsack to have the FSA use current market values, which more accurately reflects the intent of the 2014 Farm Bill.

The USDA spokesperson added that the agency has received Johann’s letter and reviewing it in order to respond soon.