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Climate Change and Fiscal Sustainability: Conservation and Risk Management Programs

Posted: July 28, 2016

This article was originally published in "Passages", the journal of the Pennsylvania Association for Sustainable Ag, and highlights the fiscal sustainability of farms by providing an overview of crop insurance, conservation and risk management programs available through the USDA.
Figure 1. Healthy apple blossom. Photo: R. Crassweller

Figure 1. Healthy apple blossom. Photo: R. Crassweller

The Farm Bill is renewed every five years in order to ostensibly reflect the changing needs of the agricultural community. This cycle includes specialty funding for small, new, low resourced, organic, minority and urban farms (2014 Farm Bill). The United States Department of Agriculture (USDA) is comprised of many agencies, which are interested in reaching these diverse types of agricultural operations in addition to large-scale commodity operations. The goal of this article is to provide an overview of the agencies and allocation programs available to farming operations of all sizes and styles.

Predicting weather has always been a part of the delicate dance of farming and the seasons. It is true that working with nature via sustainable farming practices such as soil building, contouring and cover crops can help increase the resiliency of a farm in the face of a changing climate. However, farm income can be lost by unforeseen natural disasters such as severe storms, and prolonged weather events like drought can reduce yields by destroying crops, land and infrastructure. Farms are businesses, crops and livestock are the inventory, and that value must be protected in order to allow for fiscal survival when challenging natural events occur. This is the premise for crop insurance, which is just one program available to support fiscal sustainability.

Climate related weather events are costly and on the rise, so much so that the National Oceanic and Atmospheric Administration (NOAA) created a searchable online database known as ‘The Billion Dollar Club’ (NOAA, 2016). This resource tracks weather and climate related events such as super storms, winter storms, floods and wildfires in the U.S. that cause $1 billion or more in damage. There were ten in 2015 alone, and three of those occurred in Pennsylvania. These ten events caused 155 deaths and economic devastation in many sectors.

Climate change scientists at Columbia University’s Earth Institute and Tufts University are currently analyzing data to understand what agriculture looks like in Pennsylvania under various climate change models. These models will provide farmers with information regarding what production opportunities and natural resource intervention farmers may consider in the face of a changing climate. An example of a climate related opportunity uses the scenario of extended drought in California, which would create a production deficit for green beans, opening up the market for Pennsylvania farmers (USDA AFRI funded Enhancing Food Security in the Northeast).

A recent example of crop damage attributable to weather fluctuations which will likely hit home for many readers is the damage fruit trees suffered in April 2016. A warm March was followed by hard frost and freeze in some areas of the state. NOAA classified the 2015-2016 winter as the warmest on record in the lower 48 states with the average temperature across the U.S. 4.6 F higher than the average temperature recorded in the last 100 years (NOAA, 2016). It is too early to tell what the extent of the yield and related economic impacts will be from this weather event. According to early estimates of yield impact from the Penn State Fruit Research and Extension Center in Biglerville, Adams County, fruit growers were expecting 85-90 percent of a full crop of apples, 75-80 percent of a full crop of peaches and 50 percent of a full crop of tart cherries (Penn State Fruit Times). Damage was most significant to apricots, plums and pears due to early dormancy breaks, with peaches and apples fairing slightly better (Lancaster Farming).

frost damaged apple blossom

Figure 2. Frost damaged apple blossom. Compare to healthy blossom in Figure 1. Photo: R. Crassweller

According to the 2012 PA Ag Census, agriculture in PA is valued at $7.4 billion annually, and $160 million of that comes from tree products including fruit and nuts (PA Ag Census, 2012). The economic and social impact of all agricultural efforts shapes the fabric of our communities and the landscape that Pennsylvanians call home. This is recognized by the federal government via allocations programs designed to protect the industry, primarily through the USDA. Farms and businesses wanting to apply for federal grants and contracts simply need to obtain System for Award Management (SAM) and Duns & Bradstreet (DUNS) numbers, which are free via a short form and take a couple of weeks to process. Let’s examine some of those programs.

Overview of USDA Agencies and Selected Programs

The United States Department of Agriculture (USDA) is the federal executive body responsible for developing and implementing policy and funding programs related to forestry, agriculture, food and farming. The following departments are under their purview; note this is not an exhaustive list:

USDA Natural Resources Conservation Service (NRCS)

The Natural Resources Conservation Service provides technical and financial assistance to farmers by working with them on the ground on projects that focus on conservation and the use of technology to improve farm systems. NRCS’s mission is “helping people help the land.” Staff is available to visit farms, get to know the farm and provide consulting on operations as well as suggest appropriate programs. NRCS receives its budget through an allocation system from the federal government to each state. In Pennsylvania, NRCS has regional offices which cover every county, and staff welcomes new relationships with farms and a variety of other land holders.

NRCS programs often operate on an ‘in kind’ basis, meaning that the farmer matches the award amount with equipment, labor and other non-monetary contributions to the project. The farm then receives payments according to an NRCS schedule at agreed upon project milestones. There are many programs available, and when a match is not found with NRCS, there are often resources available through the Farm Service Agency (FSA), and farmers and landholders are encouraged to think of these sister agencies when developing the support network for their business and to be proactive about relationship building.

Some NRCS programs of note include the following:

Agricultural Management Assistance (AMA)

The goal of this program is to reduce risk in production by voluntarily addressing water management, water quality and erosion control by incorporating conservation into farming operations. Farms can have sales of over $1,000, and an implementation cost of 75 percent up to $50,000.

Conservation Stewardship Program (CSP)

This program assists landowners to maintain existing conservation efforts and adopt new conservation efforts including water, energy, soil, air and habitat. Payments are performance based; contracts are five years with a $200,000 cap.

Conservation Innovation Grants (CIG)

As the name implies, CIG support development and adoption of innovative approaches and technology to improve conservation of agricultural land. This grant is flexible in that any project proposal that ties back to that goal of improving conservation may be considered. EQIP is a funding vehicle under the CIG umbrella. Funding levels up to $75,000 per project with a 50/50 match, therefore a total project of $150,000 can be accepted.

CIG planting

Conservation Innovation Grant (CIG) funds supported the planting of twelve 1-acre high density orchard plantings across the Commonwealth. These plantings have served as models for other growers as the industry transitions from medium density orchards to “fruiting wall” systems. Photo: Tara Baugher

Environmental Quality Incentives Program (EQIP)

EQIP is commonly known as the high tunnel grant because it commonly supports high tunnel projects. The mission of this grant is more expansive that—its goal is for farms to adopt technology practices and planning to increase growing efficiency through improving water and air quality, reducing erosion and sedimentation and improving created habitat. This grant has ten year contracts and special incentives for beginning, socially disadvantaged and limited resource farmers. For these categories of growers, up to 50 percent advance on project materials/services is possible to get the project off of the ground.

cherries under high tunnels

Cherries under high tunnels. EQIP supports high tunnel projects for extending the growing season and preventing disease and weather-related losses.Photo: Tara Baugher

USDA Farm Service Agency (FSA)

Often, if a match is not found with NRCS, the Farm Service Agency is the next stop. FSA programs are designed to help small farmers to access funds through its microloan and other programs.

USDA Rural Development Agency (RD)

The role of USDA Rural Development is to improve the economy and quality of life in rural communities through economic development, loans, grants and technical assistance for community empowerment projects.

Value Added Producer Grant Program (VAPG)

Available annually and usually announced in spring, the Value Added Producer Grant Program is a funding option for those looking to add value to farm products, expand marketing, processing and creating new market opportunities for value-added products. Beginning, small and socially disadvantaged farmers and ranchers may receive priority. Planning grants are up to $75,000 and working capital grants are up to $250,000.

USDA Risk Management Agency

The Risk Management Agency administers and operates many programs, including all crop insurance programs through the Federal Crop Insurance Corporation (FCIC). Crop insurance plans are sold through private insurance agencies in the private sector. The mission of RMA is to strengthen the economic stability of agricultural producers and rural communities through risk management tools.

There are newer crop insurance programs for small, organic, diversified and non-traditional ag production including aquaculture and mushrooms. Insurance for these types of growers have benefits such as exemption from administrative fees, reduced out-of-pocket premium expenses, additional subsidy, a higher payment schedule, and different rules for sharing the farm’s production history.

An overview of several programs in these categories follows:

Organic Crop Insurance

This program provides coverage for certified organic acreage as well as transitional acreage, including any crop grown using organic farming practices.

Whole-Farm Revenue Protection

This is a comprehensive insurance program providing a safety net for the entire farm, and was first available in 2015. The program is crop neutral; anything is covered and is available in every county in the U.S. The policy covers levels up to 85 percent of revenue and can be combined with single crop policies.

Noninsured Crop Disaster Assistance Program (NAP)

Crops considered uninsurable under other programs are covered under NAP when low yields, loss of inventory, or prevented planting occur due to natural disasters, excessive heat, insect infestation and plant disease.

Noninsured Crop Disaster Assistance Program (NAP) for Underserved Farmers

Beginning, socially disadvantaged and limited resource farms, and those farms that are organic and sell at direct market prices are able to receive higher coverage levels than under the regular NAP program. The goal is to level the playing field for organic and direct market farmers who have been farming less than 10 years. Additionally the $250 service fee is waived, and policy holders enjoy a 50 percent premium reduction.

The business of farming can be just as challenging as difficult weather conditions or pest problems. It can be worthwhile to occasionally think of the farm in business terms. Those crops, animals and farm products are the revenue generator necessary to allow a farm to continue from one season to the next. Build relationships with staff of the mentioned USDA offices and Extension to create a network of professionals dedicated to protecting and preserving your farm.

Works Cited:

Contact Information

Heather E. Manzo
  • Extension Educator, Agricultural Entrepreneurship and Community Economic Development
Email:
Phone: 412-482-3458