Federal Disaster Assistance & Crop Insurance Programs:

An Overview


The federal government plays a significant role in assisting agricultural producers coping with financial losses caused by natural disasters. Three major ways this assistance is provided are through the federal crop insurance program, the Noninsured Disaster Assistance Program (NAP), and the Emergency Farm Loans. These programs are permanently authorized under federal law.

The federal government currently assists farmers through its re-authorized programs from the 2008 Farm Bill which were first renewed by the 2014 Farm Bill, and again in the 2018 Farm Bill. These programs were established as part of an effort to avoid the traditional practice of issuing of “ad hoc” disaster assistance. The programs that were renewed are: the Tree Assistance Program (TAP), the Livestock Indemnity Program (LIP), the Livestock Forage Disaster Program (LFP), and the Emergency Assistance for Livestock, Honey Bees, and Farm-Raised Fish Program (ELAP). Additionally, the 2014 Farm Bill reauthorized the Noninsured Disaster Assistance Program and created two new coverage options. The first is the Stacked Income Protection Plan (STAX), and the second is the Supplemental Coverage Option (SCO). One of the biggest differences between the 2008 and 2014 Farm Bills is that the 2014 Farm Bill no longer requires producers to purchase crop insurance or NAP, which were required under the 2008 Farm Bill. The current 2018 Farm Bill has made minimal changes to these sections, which reauthorizes them just as the 2014 did. A quick overview of the various changes the 2018 Farm Bill instituted is available here.

Separate from the 2014 Farm Bill, the Farm Service Agency added another disaster assistance program in 2017. This newer disaster assistance program is referred to as the 2017 Wildfires and Hurricanes Indemnity Program (2017 WHIP). The recently passed 2018 Farm Bill has made some minor change affecting both of these categories.

Federal Crop Insurance

Federal crop insurance is designed to help protect producers from “drought, flood, or other natural disaster (as determined by the Secretary [of Agriculture]).”  7 U.S.C. § 1508(a).  The program has expanded greatly since it began in the 1930s and is likely to become an even more important risk management tool, especially in light of potential changes to traditional federal farm policy. The Federal Crop Insurance Act (FCIA), 7 U.S.C. §§ 1501-1524, permanently authorizes the current program. The regulations implementing the FCIA are found at 7 C.F.R. §§ 400-499.

The FCIA created the Federal Crop Insurance Corporation (FCIC), which is a wholly owned government corporation and agency of the USDA.  The activities of the FCIC are administered by the USDA Risk Management Agency (RMA) pursuant to the RMA’s authority under the FCIA.  The FCIC is authorized “[t]o carry out the purposes of” the FCIA, including providing reinsurance to private insurance providers who insure producers of eligible agricultural commodities.  7 U.S.C. § 1503.  In addition to reinsuring approved private insurance providers, FCIC subsidizes the crop insurance premiums in order to help make crop insurance affordable nationwide.

Federal crop insurance is available for more than 100 commodities throughout the United States.  Policies regarding the commodities available for federal crop insurance are typically published in the Code of Federal Regulations.  Crop insurance policies are typically categorized as either yield loss or revenue loss. Certain types of losses are not covered by crop insurance.  For example, losses due to a producer’s “neglect or malfeasance,” failure to reseed “to the same crop in such areas and under such circumstances as it is customary to reseed,” or failure “to follow good farming practices” are not covered. 7 USC 1508(3)(a)

Legal issues arising under the federal crop insurance program are diverse, intricate, and often complicated.  Producers, lenders, crop insurance companies, crop insurance agents, and others may take heed at the myriad issues that can arise under the complex statutory, regulatory, judicial, and administrative structure of federal crop insurance.  A discussion of these issues is outside the scope of this Overview, but a seminal publication discussing many legal issues that can arise in the federal crop insurance context is A Practitioner’s Guide to the Litigation of Federally Reinsured Crop Insurance Claims, available here.

Noninsured Crop Disaster Assistance Program (NAP) 

NAP provides financial assistance to producers of crops that are not insured under the federal crop insurance program when low yields, loss of inventory, or prevented planting occurs due to natural disasters. Unlike federal crop insurance, however, NAP is administered by the USDA Farm Service Agency.  NAP is permanently authorized by federal statute and receives recurring funding through the Commodity Credit Corporation (CCC). The 2018 Farm Bill did make some changes to NAP. Some of these changes where the availability of “buy up” coverage, increased service fees, and service fee waivers and premium reduction for qualified military veterans. For additional information regarding NAP, please visit the USDA Farm Service Agency website here.

Emergency Farm Loans 

Subject to several qualifications, emergency farm loans are made available to producers in counties that have been designated as a disaster area by the President or the Secretary of Agriculture.  These loans are low-interest loans that can help producers recover from production losses or physical losses.  Once a county is declared eligible, producers in contiguous counties become automatically eligible as well.  Emergency farm loans are permanently authorized by Title III of the Consolidated Farm and Rural Development Act and are administered by the USDA Farm Service Agency.  For more information regarding emergency farm loans, please visit the USDA Farm Service Agency website here.

2014 Farm Bill Programs

As noted, the 2008 Farm Bill authorized and funded five disaster programs.  However, funding for these programs expired September 30, 2011.  Of the five programs, the SURE program was not reauthorized, but the remaining programs – TAP, LIP, LFP, and ELAP – were reauthorized in the multi-year comprehensive 2014 Farm Bill.  The four reauthorized programs applied retroactively to September 30, 2011.  For the latest updates regarding the Farm Bill, visit the Ag & Food Law Blog (www.agandfoodlaw.com).

TAP allows eligible orchardists and nursery tree growers to receive payments to offset 70% of the costs associated with replanting or rehabilitating eligible trees, bushes, and vines damaged by natural disasters. LIP makes financial assistance available to livestock producers to help offset the costs of cattle deaths in excess of normal mortality rates. LFP provides financial assistance to producers who suffered grazing losses due to drought or fire. ELAP is designed to provide financial assistance for losses not sufficiently covered under other disaster programs.

Outside of the 2014 Farm Bill, in 2017, the 2018 Bipartisan Budget Act was passed, which created a new disaster assistance program to be administered by the USDA Farm Service Agency. 2017 WHIP helps producers recover from the effects of wildfires and hurricanes. For more information about 2017 WHIP, please visit the USDA Farm Service Agency website here.

2018 Farm Bill Programs

The 2018 Farm Bill, who passed through Congress with the largest majority of any farm bill, established several notable improvements to the pre-existing crop insurance and disaster relief programs. The 2018 Farm Bill, also known as the Agricultural Improvement Act, strengthened its crop insurance programs by adding improvements to the Whole Farm Revenue Protection Policy (WRFP) policy, which provides more meaningful risk protection to farmers. Further, the 2018 Farm Bill directed more funding towards research for the development of policies to better address low-frequency catastrophic events like hurricanes. To view the entire 2018 Farm Bill, please visit the USDA Farmers Guide to 2018 Farm Bill Programs here.

Pandemic Assistance for Producers

The COVID-19 pandemic created disruptions in agricultural supply chains which resulted in unexpected financial losses for several producers across the nation. In response to the economic crisis caused by the pandemic, Congress allocated funds to USDA to aid producers who suffered financial losses due to the pandemic. Congress directed USDA to implement assistance programs to provide direct assistance to producers. Aside from the Congressional funding, USDA also funded assistance programs through the agency’s borrowing authority under the Commodity Credit Corporation (“CCC”) Charter Act. USDA has authority to borrow from the CCC in order to support agency-led programs that provide assistance to producers.

With this funding, USDA implemented the Coronavirus Food Assistance Program (“CFAP-1”). Under this program, USDA provides direct financial assistance to farmers and ranchers of eligible agricultural commodities who suffered unexpected financial losses due to the pandemic. Afterwards, USDA chose to fund another round of CFAP payments, known as CFAP-2. Under CFAP-2, USDA expanded eligibility to other commodities that were excluded from eligibility for CFAP-1 payments. With remaining funds from CFAP-1 and CFAP-2, USDA announced it would provide another round of CFAP funding more producers under CFAP-Additional Assistance (“CFAP-AA”).

When the Biden Administration took office, it directed USDA to examine the previous agricultural COVID-19 assistance programs. Upon completing this review, USDA concluded the previous programs distributed aid in an inequitable way between U.S. producer groups. Thus, in order to balance the distribution of COVID-related assistance and offer further aid to a large portion of producers, USDA formed a new agency-led initiative known as Pandemic Assistance for Producers (“PAP”). The PAP initiative is broken down into four separate parts: (1) expanding producer assistance; (2) funding for existing pandemic-related programs; (3) continue CFAP payments; and (4) reopen CFAP-2 applications. Under this four-part initiative, USDA provides funding to a broader range of producers across the nation and also established new financial assistance programs, such as the Pandemic Livestock Indemnity Program (“PLIP”), Pandemic Assistance for Timber Harvesters and Haulers program (“PATHH”), Pandemic Market Volatility Assistance Program (“PMVAP”), and the Pandemic Cover Crop Program (“PCCP”). To view the pandemic-related assistance under the PAP initiative, click here.

Updated August 30, 2023