Livestock Forage
Disaster Program (LFP)
James B. Johnson
Emeritus Professor
MSU Department of Agricultural Economics and Economics
Collaborating Partners:
RMA Billings Regional Office
Fort Peck Community College
Billings, MT
January 28, 2010
1
LFP Overview
• The purpose of LFP is to provide
compensation to eligible livestock producers
who have suffered grazing losses because
of qualifying drought or fire.
• LFP is applicable when grazing losses that
occur because of a qualifying drought
during the normal grazing period for the
county on land that is native or improved
pastureland with permanent cover, or planted
with a crop specifically for grazing livestock.
2
LFP Overview, con’d.
• LFP is applicable when grazing losses due
to wildfire are suffered on rangeland
managed by a Federal agency because
the producer is prohibited from grazing the
normally permitted livestock on the
managed rangeland because of fire.
• LFP has a risk management purchase
requirement for program benefit
eligibility.
3
Risk Management
Purchase Requirement
• For purposes of meeting the LFP risk management
purchase requirement, a Montana producer must
purchase either rangeland insurance or pay for Noninsured Disaster Assistance Program (NAP)
coverage for rangeland, or both.
• The RMA-approved insurance program for
pastureland and grazing land in Montana is Pasture,
Rangeland and Forage Rainfall Insurance (PRFRI). This is a pilot program and only covers losses
due to drought (rainfall index shortfalls).
4
Risk Management Purchase
Requirement, con’d.
• Livestock producers are NOT required to
purchase pilot program insurance to fulfill the
risk management purchase requirement for
LFP eligibility.
• Because PRF-RI does not cover all perils,
NAP is made available to producers for all
pastureland and grazing land to cover
multiple perils, including fire.
5
LFP Signup
• A general signup period and ending date are
not applicable for LFP.
• A county FSA office will announce that
producers may make application for LFP
because the county has incurred a qualifying
drought based on the U.S. Drought Monitor
severity rating.
6
LFP Signup, con’d.
• A producer impacted by grazing losses due
to fire on Federally managed grazing land
will be expected to notify the county Farm
Service Agency office of the loss. Producers
will communicate that they were notified by
the Federal management agency that they
are prohibited from grazing their normally
permitted livestock and/or that their normal
grazing days are reduced because of the fire.
7
Qualifying Droughts
• Qualifying droughts are rated by the U.S.
Drought Monitor as any of the following:
– D2 (severe drought) in any area of the
county for at least 8 consecutive weeks
during the normal grazing period for the
specific type of grazing land or pastureland
for the county.
8
Qualifying Droughts, con’d.
– D3 (extreme drought) intensity in any area of the
county at anytime during the normal grazing
period for a specific type of grazing land or
pasture land in the county.
– D3 (extreme drought) intensity in any area of the
county for at least 4 weeks during the normal
grazing period (not necessarily consecutive
weeks) for the specific type of grazing land or
pastureland for the county or D4 (exceptional
drought) intensity in any area of the county at any
time during the normal grazing period for the
specific grazing land or pastureland for the county.
9
Qualifying Droughts, con’d.
• The beginning date for each of the qualifying drought
ratings is specified by the Farm Service Agency for
each pasture/grazing land type.
• The four grazing land/pasture types considered
are: native pasture, improved pasture, small
grains and forage sorghum (with the last two
combined), are specified in each county. For each
type the beginning and ending dates of the grazing
period, grazing days and acres per animal unit are
specified.
10
LFP Payments for Losses
from a Qualifying Drought
• An eligible livestock producer who owns or leases
grazing land located in a county with a D2 (severe
drought) during the normal grazing season will
receive one month of payment, equal to the
monthly feed cost.
• An eligible livestock producer who owns or leases
grazing land located in a county with a D3 (extreme
drought) during the normal growing season will
receive 2 months of payment, a payment equal to
twice the monthly feed cost.
11
LFP Payments for Losses from
a Qualifying Drought, con’d.
• An eligible producer who owns or leases
grazing land located in a county with a D3
(extreme drought) for at least four weeks
during the normal growing season or a D4
(exceptional drought) during the normal
growing season will receive 3 months of
payment, a payment equal to three times
the monthly feed cost.
12
LFP Payments for Losses from
a Qualifying Drought, con’d.
• The LFP Payment Rate for losses because of a
qualifying drought is 60 percent of the smaller
of:
1. Monthly payment rate for a particular kind,
type and weight of livestock, as specified by
FSA, or
2. Grazing land acres divided by normal
carrying capacity, then multiplied by 30 days
and multiplied again by daily feed cost per
animal unit.
13
Example: A Drought-Impacted
Ranch in Carter County
• A Carter County ranch has 500 cows, 20
mature range bulls and 75 un-bred heifers
and 6 saddle horses at the beginning a 215
grazing period that lasts May 1 to December
1. A drought of D2 intensity begins July 15th
and lasts until September 28th. This livestock
is grazed on 15,000 acres of non-irrigated
native range, which the rancher has NAP
coverage for drought and other covered
perils.
14
Example: A Drought-Impacted
Ranch in Carter County
• The rancher will receive the lesser of the following
two calculations of monthly feed costs:
Kind
Beef
Type
Weight Range
Adult
Cows & Bulls
Non-Adult 500 pounds or more
Equine All
Payment
Per Head
$40.04
$30.03
$29.63
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Example: A Drought-Impacted
Ranch in Carter County
• 520 Beef, Adult Cows and Bulls at
$40.04 per head = $20,821
• 75 Beef, Non-Adult animals at 500
pounds or more $30.03 per head =
$2,252
• 6 Horses, All at $29.63 per head = $178
• TOTAL = $23,251
• 60% of Total = $13,951
16
Example: A Drought-Impacted
Ranch in Carter County
Montana Grazing Periods, Grazing Days,
and Acres/Animal Unit By Eligible Grazing
Types
County Grazing
Period
Carter
Grazing
Days
5/01 – 12/01 215
Grass
Non-Irr
Native
Non-Irr
Tame
Annual
Non-Irr
Forage
21.00
10.50
5.25
17
Example: A Drought-Impacted
Ranch in Carter County
• Consider the native pasture lost:
15,000 acres/21.0 acres per AU =
714.29 AU x $40.04 per AU = $28,600
• The potential payment is therefore:
60% of Total = $17,160
• On this ranch, the one month
financial assistance will be $13,951,
the smaller of the two estimates.
18
Qualifying Fire
• LFP assistance may be available for a
qualifying fire only if:
1. The grazing loss occurred on rangeland
managed by a Federal agency; and
2. The eligible livestock producer is
prohibited by the Federal agency from
grazing normally permitted livestock on
the managed rangeland because of fire.
19
Qualifying Fire, con’d.
• Grazing loses must occur in the
calendar year that the benefits are
requested.
• The Farm Service Agency will confer
with the Federal management agency to
determine on what date permitted
livestock were first prohibited from
grazing.
20
LFP Signup Procedures for
a Qualifying Fire
• An impacted producer will notify the local Farm
Service Agency office of a grazing loss on Federally
managed rangeland do to fire.
• The Farm Service Agency will confer with the land
management agency to substantiate that a qualifying
fire has occurred, to identify the location of the fire, to
establish the date the fire started, and whether the
livestock producers were prohibited from their normal
permitted grazing and/or grazing days were reduced
because of fire.
21
Payment Calculations for a
Loss Due to Fire
• Payments begin on the first day that the permitted
livestock are prohibited from grazing the eligible
rangeland and ends on the earlier of either the last
day of the Federal lease for the livestock producer or
the day that would make the period a 180 calendar
day period.
• The payment rate is 50 percent of the monthly feed
cost for the number of days the producer is prohibited
from grazing the managed rangeland because of fire,
not to exceed 180 days.
22
Payment Calculations for a
Loss Due to Fire, con’d.
• To determine the payment for a grazing loss due to fire,
the smaller of two calculations is selected:
1. [Permitted AUs x normal grazing days x AU daily rate]
x 50 percent = Maximum payment amount.
2. [Reduced AUs x reduced grazing days x AU daily
rate] x 50 percent = Value of Grazing Reduction due
to fire
• The animal unit daily rate is the AUM rate, as specified by
the Farm Service Agency, divided by 30 days.
23
Example: A Fire-Impacted
Ranch in Carter County
• A second ranch in Carter County grazes cattle in
the Custer National Forest.
• This ranch has 500 animal units (AUs) of
permitted grazing for a maximum of 180
permitted days. A forest fire started by lightning
occurred about a third of the way through the
permitted grazing period and 350 of 500 animal
units are restricted from the permitted grazing for
the remaining 120 days of the grazing period
24
Example: A Fire-Impacted
Ranch in Carter County, con’d.
• To determine the LFP payment for the
grazing loss due to fire, the smaller of two
calculations is selected:
1. 500 permitted animal units x 180
permitted days = 90,000 animal unit days
x $1.3345 animal unit day payment rate =
$120,105.
(0.50) x $120,105 = $60,053
25
Example: A Fire-Impacted
Ranch in Carter County, con’d.
2. 350 lost animal units x 120 lost grazing
days from permit = 42,000 total
reduced animal unit days x $1.3345
animal unit day payment rate =
$56,049.
50% of $56,049 = $28,025
• On this ranch, the LFP financial
assistance for grazing loss due to fire
on federally managed land would be
$28,025.
26
Summary
• LFP provides eligible livestock producers
with compensation for grazing losses
because of qualifying drought or fire.
• LFP has a risk management requirement
for program benefit eligibility. In Montana
a producer may purchase PRF-RI
insurance or pay for NAP coverage, or
both.
27
Summary, con’d.
• Qualifying droughts, as rated by the U.S.
Drought Monitor, are:
– D2 (severe drought), 1 month of payment
– D3 (extreme drought), 2 months of
payment
– D3 (for at least 4 weeks) or D4
(exceptional drought), 3 months of
payment
28
Summary, con’d.
• The payment rate is 60 percent on smaller of
the monthly feed cost x the number of head or
60 percent of the maximum animal unit months
x the animal unit monthly feed cost.
• LFP also provides compensation fro grazing
losses due to wildfire on Federally managed
rangelands. The compensation rate is 50
percent of the monthly feed cost for the number
of days a producer is prohibited from grazing
the land subsequent to a fire.
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QUESTIONS?
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