FAQ: We were hit by hail in 2009 in north central Iowa. I had private crop insurance and the company has already paid me for damage. I also signed up for USDA's new Supplemental Revenue Assistance or SURE program for 2009 crops but haven't been paid by SURE yet. Can you please explain how SURE works?
Answer: Provided by Kevin McClure, program specialist, USDA Farm Service Agency state office in Des Moines.
Supplemental Revenue Assistance or SURE is a type of disaster payment program created as part of the 2008 Farm Bill. It takes the place of the previous disaster programs—which were generally "ad hoc" programs. Farmers are eligible to participate in SURE year-by-year through 2012 if they purchase private crop insurance on all insurable crops. On all non-insurable crops, if those crops exceed 5% of the total farm revenue for the farming operation, the farmer will need to buy the Non-Insured Assistance Program or NAP coverage in order to qualify for SURE.
SURE is meant to supplement privately purchased crop insurance, not replace it.
To qualify for SURE, you must buy crop insurance
To be eligible for SURE benefits, farmers must buy crop insurance on all insurable crops and NAP on all non-insurable crops that exceed 5% of the total farm revenue. If a farmer doesn't purchase crop insurance on a crop that is considered a crop of economic significance (5%) then the farmer isn't eligible for a SURE benefit for that year.
Once the farmer's "farming operation" becomes eligible for SURE, then the application for disaster payment will be accepted by USDA the following year—the year after the year of the disaster. The reason for this is the National Average Market Price must be established for each crop after the marketing year for that crop. So, 2009 SURE applications will not be taken until the fall of 2010.
Most of the past disaster programs made payments based on individual crop losses. SURE is a "farm operation" disaster assistance program that is tied to crop insurance coverage and farm planted acreage. SURE includes all crops within the farming operation. SURE is available for the 2008-2012 crop years.
How a SURE payment can be triggered
Generally, SURE payments can be triggered by two events. First, if a county is covered by a USDA Secretarial disaster declaration or the county is contiguous to a county with such a declaration, then SURE benefits will be available. Second, if a farm suffers a 50% revenue loss, regardless of the disaster status of the county, then the farm qualifies for SURE payments. So SURE can be triggered by county-level and/or farm-level disasters.
Individual farms also need to have suffered at least a 10% yield loss on one or more crops to qualify for SURE benefits.
The SURE guarantee can be up to 90% of the expected revenue on all of a farmer's crops as computed for crop insurance purposes. The actual revenue is the actual production harvested multiplied by USDA's marketing year average price, plus any crop insurance and other USDA payments received. Payments are equal to 60% of any shortfall between the SURE guarantee and the actual revenue.
It is important to note that starting in 2009 if crop losses in a state are widespread enough to trigger ACRE payments from USDA's Average Crop Revenue Election program, then it may be ACRE that compensates farmers for crop losses, not SURE. This is because payments received under ACRE are counted as actual revenue for purpose of calculating SURE payments.
You must wait until end of the marketing year
The way SURE works is you have to go through the entire marketing year for the crop, to find out how much money your SURE payment will amount to—if you have a crop disaster. At the end of the marketing year you can collect the SURE disaster payment if you qualify.
For example, for the crop produced in 2009, we will have to go through the entire 12 month marketing year (Sept. 1, 2009 to Aug. 31, 2010) for corn and soybeans for the average crop price to be established for the year.
Q: Say I have a crop loss and I apply for the SURE payment. When will I know if I'm approved to receive the disaster money, so I can say to my banker, I have this money coming?
A: With SURE, since it is a revenue based program, we have to wait for the national average market price to be announced, which is 12 months after the start of the marketing year for that particular crop. For example, for corn and soybeans in 2008, which was a big flood year in parts of Iowa, those prices for corn and soybeans were announced by USDA in October of 2009.
One criticism we sometimes hear is that if you have a major disaster, you need to be able to get the money sooner, to be able to plant the next year. SURE doesn't do that. We have to wait for the 12 month marketing year to pass to be able to calculate the total farm revenue for the producer.
Q: In 2008 disasters were caused by wet weather—flooding during the growing season or in some cases prevented planting. But isn't that covered under crop insurance?
A: Correct. SURE is a supplement to what you get from crop insurance. That's why it's called Supplemental Revenue Assistance. To figure the SURE payment we take into account all of the indemnities paid by your crop insurance policy and 15% of the direct and counter cyclical payments. Those are subtracted off to figure your potential SURE payment. Thus, SURE is not a double payment. USDA is paying a supplement to what you collect from crop insurance, to help cover the part of the loss not paid by insurance. Look at it this way—crop insurance is the cake, SURE is the icing.
If you have specific questions or need details regarding USDA farm programs, contact your local USDA Farm Service Agency office. You can also get news and information about DCP, ACRE and other USDA programs at www.fsa.usda.gov.
Two Iowa State University Extension Web sites have farm program information and analysis. They are ISU's Ag Decision Maker site at www.extension.iastate.edu/agdm and ISU Extension Specialist Steve Johnson's site at www.extension.iastate.edu/polk/farmmanagement.htm.
And be sure to read the regular column "Frequently Asked Questions about the Farm Program" that appears in each issue of Wallaces Farmer magazine and at www.WallacesFarmer.com