Climate Change and Fiscal Sustainability

Are you aware of the conservation and risk management programs available to your farm?
Climate Change and Fiscal Sustainability - Articles
Climate Change and Fiscal Sustainability

Photo by Heather Manzo

This series has tackled sustainability from the ground up and the sky down, focusing on soil building and water issues on farm. This last article in the series highlights the fiscal sustainability of farms by providing an overview of crop insurance, conservation and risk management programs available through the USDA.

The Farm Bill is renewed every five years in order to reflect the changing needs of the agricultural community." This cycle includes specialty funding for small, new, low resourced, organic, minority and urban farms1. USDA is comprised of many agencies, which are interested in reaching these non-traditional types of agricultural operations in addition to traditional large scale agriculture and commodity operations. The goal of this article is provide an overview the agencies and allocations 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 cops can help increase the resiliency of a farm in the face of changing climate. However, farm income can be lost by unforeseen natural disasters such as severe storms; prolonged weather events like drought by can reduce yields, destroying crops, land and infrastructure. Farms are a business and crops are the inventory and that value must be protected in order to allow for fiscal survival when natural events out of the control of the farmer 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 The National Oceanic and Atmospheric Administration (NOAA) has created a searchable online database known as ‘The Billion Dollar Club’2. This resource tracks weather and climate related events such as super storms, winter storms, floods, and wildfires that cause US$1 Billion or more in damage, of which 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, in order to understand what opportunities and interventions farmers may consider as part of the USDA AFRI funded Enhancing Food Security in the Northeast (EFSNE) grant3.

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 US 4.6°F higher than the average temperature recorded in the last 100 years. 4. It is too early to tell what 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 are expecting 85-90% of a full crop of apples, 75-80% of a full crop of peaches, 50% of a full crop of tart cherries 5. Damage was most significant to apricots, plums and pears due to early dormancy breaks, with peaches and apples fairing slightly better6.

According to the 2012 PA Ag Census, agriculture in PA is valued at US$7.4 Billion annually, and $160 Million of that comes from tree products including fruit and nuts 7. 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 United States Department of Agriculture (USDA). Farms and businesses wanting to make application 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:

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 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 a farm and provide consulting on farm 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 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:

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% up to $50,000.

Conservation Stewardship Program (CSP)

This program assists land owners to maintain existing conservation efforts, adopt new conservation efforts including: water, energy, soil air, and habitat. Payments are performance based; contracts are 5 years with a $200k cap.

Conservation Innovation Grants (CIG)

As this grant name implies, CIG grants 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 $75k per project with a 50/50 match, therefore a total project of 150k can be accepted.

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 that; its goal for farms to adopt technology practices and planning to increase growing efficiency through improving water, air quality, reduce erosion, sedimentation, improve created habitat. This grant has ten year contracts, and special incentives for beginning, socially disadvantaged, limited resource farmers. For these categories of growers, up to 50% advance on project materials / services is possible to get the project off of the ground.

Farm Service Agency

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

Rural Development (RD)

The role of USDA Rural Development is to improve the economy and quality of life in rural communities through economic development, loans and grants and technical assistance for community empowerment projects. The Value Added Producer grant (VAPG), available annually and usually announced in spring, is a funding option for those looking to add value to farm products, expand marketing and processing, and create 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. The deadlines are Paper Application: July 1, 2016 Electronic Applications: June 24, 2016.

RMA

The Risk Management Agency administrates 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, increase in the substitute yield adjustment, and production history from farming operation they have been involved in previously. An overview of several program 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% premium reduction.

The business of farming can be just as challenging as difficult weather conditions or pest problems. It can be worthwhile to occasional 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.

Sources:

1. 2014 Farm Bill

2. NOAA’s Billion Dollar Weather and Climate Disasters: Table of Events

3. USDA AFRI EFSNE

4. NOAA Winter 2015-2016 weather analysis

5. Penn State Fruit Times and email with FREC staff

6. Lancaster Farming

7. PA Ag Census

Acknowledgements:

This article was also published in the Pennsylvania Association for Sustainable Agriculture newsletter, and was supported by an EPA Environmental Justice grant (#96335501) for educational programs related to climate change and agriculture.

Authors

Local Food System Development Value Chain Optimization Farmers Market Development Feasibility Studies Enterprise Budgeting Entrepreneurship Support Urban Agriculture Business and Marketing Plan Development Agricultural Marketing New Farmer Training LEED project management Organizational Sustainability

More by Heather E. Manzo