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FSA Low-Interest Disaster Loans


On Sept. 6, the Farm Service Agency sent Notice FLP-622 to state and county offices with guidance on how to establish losses to pasture, livestock and salvaged crops and procedures regarding emergency loan programs. Eligible producers have eight months after their county is designated a disaster to apply for low-interest (2.25%) emergency loans up to $500,000, which can be used to replace lost production, restructure the farm, family living expenses and other uses.

The notice begins with fast track assistance for grazing losses. Fast-track counties are designated by the Washington, D.C., office if they meet the drought intensity value of D2 (severe drought) for at least eight consecutive weeks, D3 (extreme drought) or D4 (exceptional drought). The definition of drought has been extended to include excessive heat, high winds, wildfires associated to the drought and/or insects associated to the drought.

For grazing losses in a disaster-designated county, pasture use must be reduced for 30% to be eligible for a fast-track loss calculation. If you have several forage crops with different grazing periods, the majority of the forage must have a 30% reduction of overall grazing time to qualify for fast track. The beginning date of the eligible loss period as the later of: designated (incident), beginning date of the disaster, or normal grazing period. The ending date is the end date of the normal grazing period. FSA staff will calculate monthly feed cost based on the number of livestock on hand at the beginning date of the disaster incident, prices and the months that the disaster and the grazing period coincide. If actual feed costs are more than calculated, an additional loan can be requested. Similar rules apply if feed is lost due to fire caused by the drought.

Those who liquidated livestock no more than 60 days before the county was designated as disaster because feed was unavailable or not cost effective also can apply for an emergency loan. This applies to both adult livestock and lost income from offspring. Horses now eligible if they contribute most of the farm’s income. Value received from the sale must be deducted from replacement costs to determine the size of the loan allowed.

Selling livestock at lighter weights due to excessive heat also qualifies for a loan on the difference between the expected value and the actual income. Lost milk production also qualifies.

Producers who planted a grain crop but harvested it as silage to salvage some value can get a loan equal to its potential grain sales value minus the salvage value. If a crop insurance adjuster declares the crop a total loss, you can apply for a disaster loan immediately; you don’t have to wait through harvest.

Get more information on emergency farm loans.

Get maps of disaster-designated counties.


Editor’s note: Richard Brock, Corn & Soybean Digest's marketing editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.

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