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MEDIA RELEASE

April 24, 2003

Crop Disaster Program Announced

Written By Kent Thiesse, U of M Extension Service

All crop producers will be eligible for the recently announced Crop Disaster Program for the 2001 or 2002 crop year, provided they can document adequate reductions in crop production for specific crops in either of those years. Sign-up for the Crop Disaster Program will start on June 6, 2003, at County Farm Service Agency (FSA) Offices throughout the Nation. Many of the details for the Disaster Program are similar to the Crop Disaster Programs of 1998-2000; however, there are a few changes, according to Kent Thiesse, University of Minnesota Extension Service.

Here are some details for the Crop Disaster Program :

• Choice of Years --- A producer may choose either 2001 or 2002 for the Crop Disaster Program, but not both. A producer must choose the same year for all crops and on all farms.

• 35 % Loss Required --- A producer must be able to document a 35 percent yield reduction from the "expected production" for any crop in either 2001 or 2002 in order to be eligible for Disaster payments.

• "Expected Production" --- This is determined by multiplying the planted acres times the "expected yield" for a crop. The times the "expected yield" for a crop. The "expected yield" is the higher of the producer’s "Actual Production History" (APH) with Federal Crop Insurance or the "County Average Yield" for a given year and a given crop.

• Prevented Planted Acres --- Prevented planted acres are eligible for Disaster payments provided those acres have been properly documented through Crop Insurance claims and FSA Acreage Reports.

• Payment Rates --- For insurable crops, the Disaster payment rate is the Federal Crop Insurance APH price for a given crop for the year of the crop loss. The final payment rate will be 50 percent of the APH price for producers with Crop Insurance and 45 percent of the APH price for producers without Crop Insurance. For non-insurable crops, the Disaster payment rate will be determined by FSA using 1996-2000 average prices for a given commodity. The APH prices for a given crop or County can be found on the USDA RMA web site at : http://www3.rma.usda.gov/apps/pricesinquiry

Note --- In Minnesota, the APH prices in 2001 and 2002 were :

• Corn --- $2.05/ Bu. in 2001 and $2.00/ Bu. in 2002
• Soybeans --- $5.26/ Bu. in 2001 and $4.92/ Bu. in 2002
• Spring Wheat --- $2.80/ Bu. in 2001 and $3.15/ Bu. in 2002.

• The "95 Percent Rule" --- The "Expected Value" of a crop is based on the "Expected Production" times the higher of the APH price or the NASS average market price for that crop and year. The sum of the following can not exceed 95 percent of the "Expected Value" for that crop in the selected year (2001 or 2002):

• Value of the Crop Harvested based on actual production times the higher of the APH price or the NASS average market price for a crop in a given year.

• Crop Insurance Indemnity Payment on that crop in a given year. Crop Insurance premiums paid are deducted from this amount.
• The Crop Disaster Payment on that crop in a given year. If this total exceeds 95 percent of the "Expected Value" of the crop, the final Disaster payment will be reduced accordingly by FSA.

• "Farm Units" --- For producers with Federal Crop Insurance, the "Farm Units" for the Crop Disaster Program will be the same as for Crop Insurance. For producers without Crop Insurance or on non-insurable crops, disaster payment calculations will be based on total production of a crop on all acres for a given year.

• Thiesse offers the following considerations for the Crop Disaster Program :

• All crop producers are eligible for the Crop Disaster Program for 2001 and 2002, not just producers in Counties that were declared a "Disaster County". The Livestock Compensation Program is restricted to the designated "Disaster Counties".

• Documentation that was used to file claims for Crop Insurance in either 2001 or 2002 can be used for Crop Disaster Program documentation by FSA Offices. A producer will still have to complete a Disaster Program application at County FSA Offices.

• A producer that did not have Crop Insurance and files for the Crop Disaster Program must agree to purchase Crop Insurance for the next two years.

• There is a maximum payment limit of $80,000 per producer for the Crop Disaster Program. Also, persons with a gross revenue exceeding $2.5 million are not eligible for Disaster Program benefits.

• Quality losses for some crops will be covered in a similar manner to previous Disaster Programs. Exact details on Quality loss provisions are not yet available.

• Crop Insurance indemnity payments that were previously received for a given crop in either 2001 or 2002 will not affect potential Crop Disaster payments, unless the "95 Percent Rule" is exceeded.

Thiesse said that County FSA Offices will be sending out information on the Crop Disaster Program as soon as USDA releases all the official procedures. Details on both the Crop Disaster Program and the Livestock Compensation Program are available at the following web site : http://disaster.fsa.usda.gov