Published Feb. 5, 2016
S.C. farmers with crop losses from October’s historic flooding are facing longer waits for financial aid, partly as a result of changes in the 2014 Farm Bill (.pdf), a Clemson University statement said. The S.C. Farm Bureau said state lawmakers also have not yet released $300 million in disaster assistance that Congress approved and have not yet approved other funding that is being sought.
Speakers at the S.C. Cotton Growers Annual Meeting in late January said the farm bill and private crop insurance are not designed to handle such a disaster.
Federal records show S.C. cotton production dropped 72% last year because of flooding. (Photo provided)
Direct crop losses from the flood total $329 million, according to an analysis by the U.S. and S.C. departments of agriculture and the Farm Service Agency. Farmers suffered an additional $46 million in losses because wet conditions kept them from planting winter wheat, vegetables and fruit, the university statement said.
The 2014 Farm Bill eliminated direct, guaranteed payments and disaster assistance to farmers, forcing more reliance on private insurance coverage. Ott said early estimates show insurance covering about one-third of the $370 million in crop losses.
Clemson University agricultural economist Nathan Smith said costly insurance premiums have prompted farmers to opt for higher deductibles. Coverage is capped at 85% of a farmer’s planted acreage and most farmers can afford policies that cover only 65% to 75%, Smith said. Claims payments that farmers do receive are based on market prices, which tend to be lower than the prices local growers actually would receive if they had crops to sell to local merchandisers and processors, he said.
“When you factor all of that in, yeah, insurance is only going to cover about one-third to half of the loss,” Smith said. He said the farm bill is “not meant to handle the magnitude of the disaster we just had.”
The 2014 Farm Bill replaced direct, guaranteed payments with the Agriculture Risk Coverage and Price Loss Coverage programs. Although those may provide some revenue protection, payments are variable and uncertain and cotton is no longer covered under the program. Payments to farmers, for example, are based on average county revenue, which will be low this year because of the drought and flood. The payments are also capped at 10% of county revenue, so payments to farmers will be low compared with the magnitude of individual losses, Smith said.
“The Farm Bill puts reliance on private insurance,” he said.
In some cases, claims payments are based on a crop appraisal, said Jeanne Lindsey, a senior risk management associate with the U.S. Department of Agriculture’s Risk Management Agency.
“I understand that was an issue for some producers because the ground was so wet they couldn’t even get in there to harvest,” Lindsey said.
Federal records show S.C. cotton production dropped 72% last year, while peanut production was down 35%. Of 278,000 acres of cotton planted in 2015, 124,000 acres were harvested and the per-acre yield was down 36% from 2014, the data show.
Typically, insurance provides a buffer for farmers whose yield is less than a normal operating year, Ott said.
“But now many farmers have no crops to sell,” he said. “Insurance can’t fill that hole.”