Credit Factors to Consider Under Drought Conditions

Federal Disaster Assistance Programs

Emergency (EM) Loans. Emergency loans are available in counties that the President, the U.S. Secretary of Agriculture, or the FSA Administrator designate as disaster areas. This assistance is also available in all counties contiguous to declared counties. These EM loans are for severe physical and/or production losses and may be used to repair or replace damaged or destroyed farm property or other expenses incurred or needed to continue farming operations.

Loan eligibility is limited to an applicant who:

Has suffered property damage or severe production losses from a natural disaster;

Is a U.S. citizen or legal resident alien;

Is an established farm, ranch, or aquiculture operator;

In unable to obtain credit elsewhere;

Can provide adequate security;

Can demonstrate adequate repayment ability;

Has losses to crops that are not insurable under the Federal Crop Insurance Corporation. (usually waived);

Has training and farming experience.

The loan limit is 80 percent of the sum of the calculated actual production loss and/or 100 percent of the actual physical loss, or $500,000, whichever is less, per borrower per each disaster declaration/designation.

Loan repayment time is usually 1 to 7 years, but may be up to 20 years for production losses, and up to 30 years (40 years in special needs situations) for physical losses to essential buildings and facilities.

Noninsured Crop Disaster Assistance Program (NAP). When widespread natural disasters cause greater than 35 percent production losses or prevented planting of noninsurable crops, NAP provides assistance comparable to the catastrophic level of crop insurance. Individual producers must suffer greater than 50 percent production loss or be prevented from planting more than 35 percent of the intended acreage in order to qualify for benefits. NAP assistance is made available to specific areas based on the occurrence of specific natural disaster conditions.

NAP areas:

May consist of a single county, multiple contiguous counties or portion(s) of one or more counties.

If not established based on county or multiple county boundaries, must include a minimum of 320,000 acres or be an area with at least $80 million average annual value of all crops produced.

Must include a minimum of five affected producers.

Must be defined in a manner that does not intentionally include or exclude producers or crops.

Eligible crops are those:

Produced for food, fiber (excluding trees grown for wood, paper or pulp), or feed for livestock (including but not limited to grain and seeded and native forage crops) for which the catastrophic level of insurance is not available.

Specifically provided for by law, including: aquacultural species, floriculture crops, ornamental nursery, Christmas tree crops, turfgrass sod, industrial crops and seed crops used to produce other eligible NAP crops.

Producers who share in the risk of producing the crop as an owner, landlord, tenant or sharecropper and who are entitled to a share in the crop available for marketing are eligible for benefits. Persons with qualifying gross revenue exceeding $2 million in the year preceding the disaster year are not eligible for assistance. Benefits are limited to $100,000 per person per crop year.

Other FSA Programs. FSA has several other disaster assistance programs available. A separate request from the local Food & Agriculture Committee (FAC) is required to implement these programs.

Emergency Conservation Program provides assistance for repair or replacement of permanent fencing; debris removal from cropland and fields; grading and rehabilitating farmland; and other assistance as needed and approved by the county committee. This is a cost-share program.

Haying and Grazing may be authorized on acreage conservation reserve land retired from the production of annual program crops.

Source: Disaster Recovery Texas Manual, Division of Emergency Management, DPS, Revised.