The Farm Service Agency announced Tuesday it would increase indemnity payments for non-adult livestock that died in natural disasters.
According to the Montana FSA, the change comes after severe winter storms hit Montana and North Dakota in April and caused “significant” calf loss. The losses forced the FSA to reexamine indemnity payments for livestock producers.
The USDA FSA Livestock Indemnity Program compensates producers for livestock deaths exceeding normal mortality from extreme weather events and predators.
The change will increase LIP payments for beef, beefalo, bison and dairy animals less than 250 pounds. For every animal besides bison, the indemnity payments have more than doubled what they were previously.
“It became apparent that our Livestock Indemnity Program (LIP) payment rates were not reflective of the true market value for non-adult beef, beefalo, bison, and dairy animals,” Zach Ducheneaux, FSA administrator, wrote in a press release on Aug. 2.
“It was time for us to pivot.”
Previously, indemnity payments were made at a rate of 75% the market value of livestock.
After the announcement, the payment rate rose from $175 to $474 for beef; from $236 to $559 for beefalo; from $337 to $599 for bison; and from $45 to $255 for dairy, according to the FSA press release.
The payments will be applied for losses dating back to Jan. 1, 2022 for all eligible causes including excessive heat, winter storms, flooding, and other qualifying natural disasters.
Les Rispens, farm program director for the Montana FSA, said as of Aug. 4 there were four completed applications for Montanans who lost livestock in the April storms. They came from Powell and Sheridan counties.
The Montana FSA has distributed $8,673 for the indemnity program so far this year, Rispens said. He called the indemnity payment increase “a positive step for livestock producers.”
There are still many other incomplete applications for lost livestock in the pipeline, Rispens said, because ranches have until Jan. 2023 to finalize their 2022 applications.
“So I don’t think that we will know what impact [the storm had] until next January, when ranchers finalize their applications with their total losses for the year,” Rispens said.
As of Aug. 4, there have been no applications for cattle lost to the June flooding, he added.
The April storms were a wake-up call for the FSA to increase their indemnity payment rates, said Jay Bodner, executive vice president of the Montana Stockgrowers Association.
After losing cattle, producers realized that the FSA rate of 75% market value was extremely low. Ranching coalitions called on the FSA to raise payment prices to reflect what livestock was truly worth.
The FSA responded pretty quickly to everyone’s concerns, Bodner said.
“I don’t mind saying that, under our previous payment rates, cutting a LIP check to a rancher for $150 for a calf in today’s market came nowhere near covering the year-long investment in carrying the cow through pregnancy and carrying the calf from birth to sale,” FSA administrator Ducheneaux said.
The new LIP policy complements other changes made to the FSA Emergency Assistance for Livestock, Honey Bees and Farm-Raised Fish Program (ELAP) in 2021, which pays for “above normal” costs for hauling water to livestock in drought.
The updated ELAP will also pay for hauling feed to livestock and moving livestock to graze for areas experiencing drought or other adverse weather conditions.
The changes come as farm production expenditures climb across the country.
A report from the USDA National Agricultural Statistics Service published July 29, 2022 found that from 2020 to 2021, farm production expenditures in the U.S. increased by 7.3% from $366.2 billion to $392.9.
Data for overall 2022 farm production costs was unavailable, but inflation has caused input costs — like fuel and fertilizer — to nearly triple this year for Montana producers.
The average farm expenditure per farm was $196,087 in 2021, up 7.7% from $182,130 in 2020.
Total livestock farm expenditures increased to $185.3 billion, up 8.5% from 2020, the report found.
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