SANTEE — South Carolina farmers facing steep losses from last year’s flood must await government action on financial assistance as the new Farm Bill and private crop insurance are not built to handle such a disaster, according to presenters at an event sponsored by the Clemson University Cooperative Extension Service.

“While politics may be distasteful for some, it is essential to survival,” S.C. Farm Bureau President Harry Ott said at the S.C. Cotton Growers annual meeting sponsored by Clemson Extension and the S.C. Cotton Board.

The 2014 Farm Bill eliminated direct, guaranteed payments and disaster assistance to farmers, which placed a heavy burden on private insurance coverage. Ott said that early estimates show insurance covering about one-third of the $370 million in crop losses stemming from October’s historic flood.

nathan smith

Nathan Smith

Clemson University agricultural economist Nathan Smith agreed, saying that costly insurance premiums prompt farmers to opt for higher deductibles, which reduces claims payments. Additionally, coverage is capped at 85 percent of a farmer’s planted acreage, and most farmers can only afford policies that cover between 65 and 75 percent, Smith said.

Any claims payments farmers do receive are based on market prices, which tend to be lower than the prices local growers actually would receive if they had crops to sell to local merchandisers and processors.

“When you factor all of that in, yeah, insurance is only going to cover about one-third to half of the loss,” Smith said.

The 2014 Farm Bill may not be much help either.

“It is not meant to handle the magnitude of the disaster we just had,” Smith said.

The 2014 Farm Bill replaced direct, guaranteed payments with the Agriculture Risk Coverage (ARC) or Price Loss Coverage (PLC) programs. While ARC and PLC may provide some revenue protection, payments are variable and uncertain and cotton is no longer covered under the program. Payments to farmers, for example, are based on average county revenue, which will be extremely low this year because of the drought and flood. Additionally, those payments are capped at 10 percent of county revenue, so payments to farmers will be low compared to the magnitude of individual losses, Smith said.

“The Farm Bill puts reliance on private insurance,” he said.

Farmers are likely experiencing issues with filing claims, meanwhile. In some cases, farmers are required to harvest crops to receive a claim based on crop appraisal, said Jeanne Lindsey, a senior risk management associate with the U.S. Department of Agriculture’s Risk Management Agency.

“I understand that was an issue for some producers because the ground was so wet they couldn’t even get in there to harvest,” Lindsey told attendees of the cotton meeting.

Cotton production dropped 72$ in South Carolina last year because of flooding, according to federal data.

Cotton production dropped 72 percent in South Carolina last year because of flooding, according to federal data.
Image Credit: Clemson Public Service and Agriculture

South Carolina cotton production dropped 72 percent last year, while peanut production was down 35 percent, according to initial estimated from the U.S. Department of Agriculture’s National Agricultural Statistics Service. Of 278,000 acres of cotton planted last year in South Carolina, just 124,000 acres were harvested and the per-acre yield was down 36 percent from 2014, federal data shows.

Direct crop losses from the flood amount to $329 million, according to analysis by the USDA, the Farm Service Agency and the S.C. Department of Agriculture. Farmers suffered another $46 million in losses because wet conditions prohibited them from planting winter wheat, vegetables and fruit.

Typically, insurance provides a buffer for farmers who have some crop to sell but less than a normal operating year, Ott said.

“But now many farmers have no crops to sell,” he said. “Insurance can’t fill that hole.”

He said government assistance is needed to keep some farmers in business.

Congress approved $300 million in disaster assistance for which South Carolina farmers could receive a share, Ott said, but state government must approve the release of that federal funding. Additionally, the S.C. Farm Bureau is working with state lawmakers to allocate some state assistance to farmers, but lawmakers have not yet approved it, Ott said.

In addition to presentations from Ott, Smith and Lindsey, growers heard about the latest in insect management from Clemson entomologist Jeremy Greene of the Edisto Research and Education Center and an overview of new cotton variety performance testing conducted by Mike Jones, the state cotton specialist and researcher at Clemson’s Pee Dee Research and Education Center.