USDA Adds $170 Million to Disaster Assistance

Funds Include Help for Disaster Areas Outside Hurricane-Impacted Area      

Agriculture Secretary Mike Johanns Sept. 7 announced that USDA is making more than $170 million in emergency assistance available to agricultural producers suffering from Hurricane Katrina. In addition, USDA’s Commodity Credit Corporation (CCC) is implementing immediate changes to its Marketing Assistance Loan Program. These changes will allow producers to obtain loans for “on-farm” grain storage on the ground in addition to grain bins and other normally approved structures.

“We are doing everything we can to help our Gulf Coast producers recover from the affects of Hurricane Katrina,” said Johanns. “The assistance announced today is an important component of USDA’s efforts and our commitment to help farmers and ranchers rebuild their operations.”

Hurricane Katrina affects agricultural producers beyond the immediate impact area.  The programs described in this section are open to ag producers other than those just in the immediate path of Katrina.  For instance, anyone impacted by shipping on the Mississippi River may be able to use some of what is described here.  Other programs are for those in federally declared disaster areas.  

Marketing Assistance Loans and “On-Farm” Grain Storage

Grain producers in the U.S. are facing logistical challenges as port operations in the central Gulf Coast and lower Mississippi River have been hampered by Hurricane Katrina, which were already complicated by summer drought in the upper Mississippi and Illinois River basins. USDA’s Commodity Credit Corporation (CCC) is changing its Marketing Assistance Loan Program to allow producers to obtain loans for “on-farm” grain storage on the ground in addition to grain bins and other normally approved structures. 

The changes to the Marketing Assistance Loan Program are consistent with emergency storage provisions already available to commercial warehouses.  The changes are consistent with the existing CCC mandate that ensures the orderly marketing of U.S. farm commodities.

CCC has authorized outside, on-farm storage of commodities which have been offered as collateral on non-recourse marketing assistance loans, as long as that storage meets CCC guidelines. Commodities stored outside must be protected from animals and located so that water drainage will not seriously affect the quality and quantity of the commodity. Producers are responsible for ensuring that the quality of the commodity pledged as marketing assistance loan collateral is maintained during the entire loan period.

CCC also reminds producers that its Farm Storage Facility Loan Program is available to provide low-interest financing for producers to build or upgrade on-farm grain or silage storage facilities. Eligible size of the structure is determined by the borrower’s demonstrated need for additional on-farm storage capacity to store eligible commodities.

An eligible borrower must have a satisfactory credit rating as determined by CCC and demonstrate the ability to repay the facility loan debt. Facilities built for commercial purposes and not for the sole use of the borrower(s) are not eligible for financing.

The maximum amount a person is allowed to borrow through the Farm Storage Facility Loan Program program is 85 percent of the net cost of the eligible storage facility and handling equipment, not to exceed $100,000. Loans over $50,000 must be additionally secured with a real estate lien. Loans are repaid through seven annual equal installments.

Loan applications should be filed in the administrative Farm Service Agency (FSA) office that maintains the farm’s records.

Emergency Loans

A total of $152 million in FSA’s Emergency Loan Program is available to eligible producers who have suffered at least a 30 percent reduction in crop production or have sustained physical losses to buildings, chattel or livestock. Farmers and ranchers have eight months from the date of a presidential or secretarial disaster declaration to apply for low-interest agency loans.  This includes drought or other areas that have been designated as disaster areas by the USDA secretary or president.

Additional Assistance

FSA has other programs to help producers recover from losses resulting from natural disasters such as Hurricane Katrina. FSA’s Noninsured Crop Disaster Assistance Program (NAP) provides financial assistance to producers of noninsurable crops when low yields, loss of inventory or prevented planting occur due to natural disasters.

To be eligible for NAP assistance, crops must be noninsurable crops and agricultural commodities for which the catastrophic risk protection level of crop insurance is not available. Producers must meet other eligibility requirements to receive NAP payments.

Also, FSA’s Debt Set-Aside (DSA) Program is available to producers in primary or contiguous counties declared presidential or secretarial disaster areas. When borrowers affected by natural disasters are unable to make their scheduled payments on any debt, FSA is authorized to consider set aside of some payments to allow the farming operation to continue. After disaster designation is made, FSA will notify borrowers of the availability of the DSA. Borrowers who are notified have eight months from the date of designation to apply.

Also, to meet current operating and family living expenses, FSA borrowers may request a release of income proceeds to meet these essential needs or request special servicing provisions from their local FSA county offices to explore other options.