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Published March 08, 2010, 08:11 AM

SURE in 2010?

FARGO, N.D. — Farmers and ranchers have until close of business March 15 to buy insurance that could make them eligible for the 2010 federal “permanent” disaster program known as SURE.

By: Mikkel Pates, Agweek

FARGO, N.D. — Farmers and ranchers have until close of business March 15 to buy insurance that could make them eligible for the 2010 federal “permanent” disaster program known as SURE.

The Supplemental Revenue Assistance Program was a new feature in the 2008 farm bill.

It is designed and promoted chiefly by Sens. Kent Conrad, D-N.D., and Max Baucus, D-Mont., with support from others. The program is designed to cover validated revenue losses and so-called “shallow production” losses (production losses of 10 percent to 35 percent) that aren’t typically covered under traditional disaster programs.

“The key thing here is that this is permanent disaster — not adhoc,” says Aaron Krauter, North Dakota state executive director for the Farm Service Agency. “There’s a methodology here. You’ve got to meet certain deadlines, prices and farm revenues. It comes out to a mathematical formula that can be supported by the” Congressional Budget Office.

The traditional ad hoc style of disaster program is not guaranteed from year to year, even though they’re often pushed through. Under an ad hoc system, farmers and their advocates go to Washington and lobby Congress for disaster relief after disasters occur. But for farmers to get relief and political support, disasters often must occur in numerous places across the country.

“That’s a hit-or-miss deal,” Krauter says of the ad hoc system. “This SURE is permanently available every year from 2008 to 2011.”

Room for RMPR

The difference is that SURE requires farmers to purchase crop insurance in advance to be eligible formally in a mechanism called Risk Management Purchase Requirement (RMPR, an acronym often pronounced “romper”).

A primary step here is that farmers need to decide now which crops are “economically significant” in their operations and to purchase either crop insurance or Noninsured Assistance Program coverage. Any crop expected to generate more than 5 percent of a farm’s total expected revenue must be covered.

If an eligible participating farmer’s farm revenue is less than his “farm guarantee” and at least one crop of economic significance suffers a 10 percent loss in yield, this triggers a SURE payment — but only if the farmer is in a county where the secretary of agriculture has declared a disaster or a county next door.

The SURE payment is calculated at 60 percent of the difference between expected “guarantee revenue” for that farm and the actual revenue.

To calculate this revenue, SURE takes in all crop insurance and farm program payment data. Actual revenue is calculated based on national average market prices.

The “guaranteed revenue” figure is determined by multiplying a farm’s planted or “considered planted” acreage, times the crop yield. (Technically, the crop yield is the higher of the crop’s Actual Production History, adjusted APH or countercyclical yield times the insurance price election, times the level of coverage.)

Farmers get better SURE coverage if they buy higher levels of crop insurance.

For example, producer with bare-bones catastrophic risk coverage would get 32 percent of protection on expected revenue. If the same farmer buys up to the “80 percent of yield-100 percent coverage” level, it would maximize his SURE guarantee to 90 percent of expected revenue.

On the fiscal responsibility side of the issue, the SURE program payouts (including livestock programs listed below) are capped at $100,000 per eligible producer, Krauter says.

SURE first was offered in 2008, when all 53 counties in North Dakota were eligible because of declared disasters.

In 2009, 43 counties were involved. Of course, it won’t be known until fall how many counties are eligible in 2010. (In any year, a producer with a 50 percent loss in the whole farm is eligible for SURE, as in a bad hail storm.)

These are related livestock-oriented programs under permanent disaster provisions:

n Livestock Forage Program: Besides SURE, the RMPR requirement also applies to the LFP, which involves protection of losses in grazing. For most applicants in 2010 (if they’d not earlier purchased grazing insurance through Pasture Forage Rainfall Index Program), this requires producers to purchase insurance for grazing land using the FSA’s Noninsured Crop Disaster Assistance Program. (Cost is $250 per crop, up to $750 for three or more crops in a county with a maximum of $1,875 for crops a producer operates in more than two counties.) The agency ran LFP in 2008. No North Dakota counties hit the trigger in 2009. The “trigger” is the U.S. Drought Monitor rating. Payments are triggered if a producer’s operation is in a county where the monitor hits a “D3” or “extreme” drought level anytime in the grazing season. The trigger also is reached if the ranch is in a “D2” or “severe” drought for eight consecutive weeks.

n Emergency Livestock Assistance Program: ELAP covers losses not covered by other programs (such as LFP, the Livestock Indemnity Program and SURE. This could include losses for harvested or purchased feed that’s destroyed by flooding. Beekeeper provisions. Beekeepers must have secured NAP coverage by Dec. 1, 2009, to have been eligible for SURE or ELAP in 2010. For ELAP, they’d be eligible for benefits if their hives had been destroyed by weather, or their colonies suffered any level of loss from “colony collapse.” The NAP fee for all honey production a producer has the entire country is $250, covering 50 percent of their yield and 55 percent of expected price. Importantly, there are “exempt” groups from these insurance requirement. Those are socially disadvantaged, limited resource and beginning farmers or ranchers. They’re eligible for SURE coverage and LFP and ELAP without meeting the RMPR requirement of buying the insurance. But farmers in those exempt groups still might want to buy the insurance because it can build a personal APH or enhance their risk management and SURE guarantee levels.