High Plains Ag Week 10/19/2020

Today is the third post in our series on drought mitigation programs. We’ll discuss the Livestock Forage Program (LFP). Check out the post from October 5 on the drought status and outlook before reading.

Local Market Conditions

Livestock Forage Program

We are again staring down the barrel of a relatively severe drought. If you haven’t had the opportunity, read our October 5 post on precipitation status and outlook. Through the month of October we are covering programs that mitigate losses from drought.

In addition to the October 5 outlook, we’ve included the most recent ENSO outlook below. What does this mean? It is an indication of the El Nino or La Nina status of the overall climate. La Nina means more dry conditions for the Southern Plains of the U.S. The outlook is for La Nina conditions through summer 2021. Some models indicated a La Nina of the same strength as 2010-2012.

Average of international model outlooks for NINO3.4 Issued 13 October 2020

With the knowledge that a drought is in progress and likely to continue, we are presenting programs that protect livestock producers. Last week we discussed PRF, a risk management program that insures against below average precipitation. This week we are discussing LFP. LFP is a program administered through FSA that provides payments to livestock producers who are also producers of grazed forage crops that have suffered a loss of grazed forage due to qualifying drought conditions. There are other aspects to the program that apply to grazers of federal land or in the event of fire. Today we will discuss the basic provisions.

Eligibility

A livestock owner or contract grower who also producers forage crops that are owned or leased are eligible for payments from LFP. Payments are based on the duration a given county was designated in different drought statuses. The table below provides the number of monthly payments based on durations spent in each drought category. Additionally, the final section of this post includes maps updated October 15 with the number of payment months by crop by county. Note that the scale changes by map. Most counties on the Texas High Plains qualify for payments under at least one crop.

Monthly Payments by Time Period County Designated in Given Drought Status

Eligible livestock run the gamut of normal species. Beef and dairy cattle, sheep, and goats are all eligible for payments, as are a long list of unique species. These include beefalo, buffalo, deer, equine, elk, reindeer, alpacas, emus and llamas.

More important that the species is the grazing status of these livestock. Eligible animals include those that are or WOULD HAVE BEEN grazing the eligible land during the normal grazing period for a specific type of forage. This is a key provision if you are concerned about access to payments due to drought-induced culling. Eligible livestock must have been owned, leased, purchased, or contracted during the 60 days prior to the beginning date of the qualifying drought. Eligible livestock include those sold or otherwise disposed of due to qualifying drought conditions. Any eligible livestock must be owned for commercial operations and not for recreation or hunting.

Program enrollment for eligible producers is conducted through FSA. Application for payments and required supporting documents proving inventory are due to the FSA office within 30 calendar days after the end of the of the calendar year in which the grazing loss occurred (~January 30).

Payments

The LFP monthly payment rate, applied based on the conditions outlined in the previous section, is equal to 60% of the lesser of either the monthly feed cost:

For all covered livestock owned/leased or
Calculated by using the normal carrying capacity of the eligible grazing land of the eligible producer.

Total LFP payments to a producer will not exceed five monthly payments for the same kind, type, and weight range of livestock. Payment limits for LFP (without regard to any other program) are set at $125,000. AGI rules apply.

2020 Payment Rates for Common Livestock Species

Payments are calculated on per head per payment month basis. We can use the payment rates above, and Eligible Crop county maps below to calculate a payment. For example, assume that a Dallam county producer grazing forage sorghum can show evidence of loss from drought. As a result, they are eligible for payments in 2020. In fact, the Forage Sorghum map indicates that they would be eligible for three monthly payments. If they were grazing 10, 500+ pound beef calves their payment would be:

Payment = Payment Rate * Payment Months = ($23.92/head * 10 head) * 3 = $717.60