USDA helps ranchers weather the drought

Aug 13, 2009      The Eagle

Beverly Moseley

Aug. 13, 2009 (McClatchy-Tribune Regional News delivered by Newstex) -- MENDOZA -- It's so dry at Briarpatch Ranch in Caldwell County that buzzards are drinking out of water troughs.

A 30-acre lake that dried up in October has exposed a barren bottom strewn with weeds, dry cow patties and empty turtle shells.

About 22 inches of rain has fallen on the ranch since March 2007. The area normally receives 36 inches of rain annually.

Nick Cole, who manages the family ranch about 30 miles south of Austin, said he had fed more than 400 head of cattle in 20 of the last 24 months. He's now faced with culling deeper into his herd.

The drought has ranchers in some of the hardest-hit areas exploring options to answer a very difficult question: How do I stay in business?

Cole is one of the fortunate ranchers. He has an 800-acre pasture available that hasn't been grazed since 2007. He'll move his remaining cattle there after culling.

In an effort to restore the rangelands from which he pulls cattle and to earn a little money, Cole has decided to put an estimated 1,000 acres into the Grassland Reserve Program administered by the USDA-Natural Resource Conservation Service and Farm Service Agency. The program is part of the 2008 farm bill.

"I'm going to roll my dice and pull the animals off of here, enter this into the program and put my other animals on that other place and use my stock of feed to feed them out for the term of the program or till it rains over there," Cole said. "If I run out of graze on that place, we're just going to depopulate. There's a certain amount of cattle I have to keep."

Cole said that in a worst-case scenario, he'd cull until his herd got as low as 150 head.

"I've got a core group of animals I want to keep and I'm not going to let them go at just about any cost, whether it drives me into the poorhouse or not," he said.

Ranchers in counties hardest hit by drought will be given priority consideration when enrolling in the GRP. It offers two options -- rental agreements and permanent easements.

Rental agreements are for 10, 15 or 20 years on enrolled land with deferred grazing. Participants will receive annual payments valued at 75 percent of the land's grazing value for the duration of the rental agreement.

"They'll work with us on a grazing plan which calls for use exclusion. That means that they'll remove the livestock from that operation or that portion of the operation which they pick," said Don Gohmert, Texas' state conservationist with the NRCS. "They don't have to sell those cattle or sheep or goats. They can move them to another location. They can move them out of state. They just need to vacate that premises and allow that forage base to restore."

Along with the financial compensation, participants will receive technical assistance from NRCS. This can include on-site consultation on range management, livestock stocking rates and improving the overall condition of the rangeland.

Landowners who choose the permanent easement option will receive payments from the USDA "based on the fair market value of the property less the grazing value."

Gohmert explained that the GRP is not a disaster program designed to compensate ranchers for losses. It's designed to preserve the grasslands.

Texas has received $4.3 million for the GRP program, according to Micky Woodard, Texas chief of the conservation division of the USDA-Farm Service Agency.

"It's the producer's discretion what would be the most viable for his operation, and we would use those funds as needed and allocate them to the penny as best we could," Woodard said.

Ranchers can sign up for the reserve program at an NRCS or FSA office.

Cole plans to enter into a rental agreement. He said the annual payments should help buy a little feed.

Rainfall index insurance is another option available for ranchers in some Texas counties reeling from drought. It insures against less-than-optimal rainfall in 126 of Texas' 254 counties.

This insurance, which is part of the USDA's pasture, rangeland and forage pilot program, can be purchased through private insurance companies.

Marc Shepard, a crop insurance agent with Hargrove Ranch Insurance, explained that producers in eligible counties can purchase insurance protection against forage losses based on rainfall indices and measurements. There are two insurable categories under the rainfall index insurance -- grazing lands and hay lands.

The program uses factors such as index variables, two-month time-frame intervals, coverage-area grids and rainfall data from the National Oceanic and Atmospheric Administration to calculate qualified payments.

"Between 2008 and 2009, approximately 1.7 million more acres were enrolled into the program in Texas. That's about a 9 percent increase in acreage," Shepard said.

Last year, almost $70 million in claims were paid to Texas producers in the program, he added.

Insurance premiums for grazing lands run from about 60 cents to $1.50 per acre. Premiums for hay lands run about $6 to $10 an acre, he said.

The signup deadline for eligible Texas counties is Nov. 30 for grazing lands and hay lands insurance for 2010, Shepard said.

The Noninsured Crop Disaster Assistance Program, known as NAP, administered through the FSA, is similar to an insurance policy on pastures and hay lands, said John Cowan, a farm loan specialist with the FSA in Bryan.

He said some crops that don't qualify for traditional crop insurance may qualify under NAP.

Producers can apply for the rainfall insurance and NAP at the same time. However, they cannot receive compensation under both programs in the same calendar year, said Juan Garcia, Texas' FSA executive director.

Another 2008 farm bill disaster program that provides cash payments to qualified participants is the Livestock Indemnity Program. Signup for LIP began in July.

The Livestock Forage Disaster Program and Emergency Assistance for Livestock, Honeybees and Farm-Raised Fish Program should become available Sept. 9. The Supplemental Revenue Assistance Payment Program should become available in November, Garcia said.

Emergency loans at 3.75 percent interest also are available through the FSA.

Cowan explained that loan proceeds used to pay for input costs are usually repaid within one year, or the typical operating cycle.

"If replacing livestock, purchasing livestock, refinancing debt that's incurred as a result of a disaster, that can usually go from a five- to seven-year term," Cowan said. "We try to offer a little bit more flexible terms from that [disaster] standpoint."

Ranchers and landowners should consult with their local NRCS or FSA office on each program's guidelines, eligibility qualifications, regulations and application processes.

"Obviously, some of the FSA programs where it is compensation for losses like the livestock feed program and the disaster programs that they're available for participation, there's no cost. There's no repayment of that money. So obviously, that's a good benefit to them. In the alternative, the emergency loans cover some of the losses they have, and that money does have to be repaid," Cowan said. "I think they need to look at where they're getting the bang for the buck."

Newstex ID: KRTB-0258-37199952

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