Livestock disaster payments being miscalculated

Nebraska Congressional members urge FSA to update its method for calculating livestock disaster payments in wake of recent tornado losses.

Nebraska’s Congressional delegation wrote a letter to U.S. Department of Agriculture (USDA) Secretary Tom Vilsack urging him to correct the Farm Service Agency’s (FSA) method for calculating livestock disaster payments in light of the devastating tornadoes in Pilger and surrounding areas last month.


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.


Producers who lost livestock during the June tornadoes discovered USDA is using outdated data when calculating reimbursement, resulting in reduced payments of up to $330 per head. The letter urges FSA to use current market values, which more accurately reflects the intent of the 2014 farm bill.


During the week of June 16, 2014, tornadoes devastated the town of Pilger, Neb. and severely damaged crop and livestock operations in the surrounding area. Producers who had livestock killed by the tornadoes have sought relief from the LIP program that was recently extended by Congress with passage of the 2014 farm bill. But after producers read the payment schedule produced by FSA, they realize they will receive much less from FSA than they are entitled to receive under the statute, the letter stated.


The Agricultural Act of 2014 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.”


However, 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 Congressional members said they appreciated 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.” 


For example, according to the LIP fact sheet published by FSA 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. Using the data from the Agriculture Marketing Service, 75% of the average value for a finished steer was $1,479, for a difference of $330 per head.


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