Analyzing the Efficacy of Livestock Forage Disaster Program Payment Thresholds
Abstract
The Agricultural Act of 2014 (2014 Farm Bill) permanently funded a number of supplemental disaster assistance programs, including the Livestock Forage Disaster Program (LFP). LFP provides assistance to livestock owners and certain contract growers that have suffered a loss of grazed forage due to qualifying drought during the normal grazing period for the county.
This study compares the additional costs incurred by a producer in the presence of drought and subsequent compensation through LFP payments. It utilizes one of the Agricultural & Food Policy Center’s (AFPC) representative ranches (and the associated costs of production) to analyze the extent to which the various LFP payment thresholds are calibrated to the actual costs of production incurred during a drought. This analysis is conducted by evaluating net present value, net cash farm income, and ending cash in response to four drought management scenarios: feeding in response to a one-year drought, and feeding, culling, or relocating in response to a three-year drought.
Compensation received from LFP in the case of drought mitigates some of the additional costs incurred, but it does not make a producer whole. In the case of a one-year drought, LFP is fairly well calibrated. LFP payment rates are designed to cover 60% of feed costs, and that is what was found in that scenario. However, the remaining additional costs had a long-term impact on cash flow. As drought persists and alternative management strategies are utilized, LFP compensates for a smaller share of the costs incurred due to drought.
Citation
Wilton, Allison Elizabeth (2022). Analyzing the Efficacy of Livestock Forage Disaster Program Payment Thresholds. Master's thesis, Texas A&M University. Available electronically from https : / /hdl .handle .net /1969 .1 /198077.