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Laclede/Camden/Pulaski/Wright County, MO USDA - October 25, 2024

In This Issue:

• Five Facts About the United States Drought Monitor
• FSA Outlines MAL and LDP Policy
• Making Your Land More Resilient to Drought
• USDA Updates Farm Loan Programs to Increase Financial Freedom, Resilience and Profitability for Agricultural Producers
• Interest Rates:

Five Facts About the United States Drought Monitor

This is likely no surprise to you, but drought persists across the western U.S. and is intensifying in some areas. No geographic area is immune to the potential of drought at any given time. The U.S. Drought Monitor provides a weekly drought assessment, and it plays an important role in USDA programs that help farmers and ranchers recover from drought.

Fact #1 - Numerous agencies use the Drought Monitor to inform drought-related decisions.

The map identifies areas of drought and labels them by intensity on a weekly basis. It categorizes the entire country as being in one of six levels of drought. The first two, None and Abnormally Dry (D0), are not considered to be drought. The next four describe increasing levels of drought: Moderate (D1), Severe (D2), Extreme (D3) and Exceptional (D4). 

While many entities consult the Drought Monitor for drought information, drought declarations are made by federal, state and local agencies that may or may not use the Drought Monitor to inform their decisions. Some of the ways USDA uses it to determine a producer’s eligibility for certain drought assistance programs, like the Livestock Forage Disaster Program and Emergency Haying or Grazing on Conservation Reserve Program acres and to “fast-track” Secretarial drought disaster designations. 

Fact #2 - U.S. Drought Monitor is made with more than precipitation data.

When you think about drought, you probably think about water, or the lack of it. Precipitation plays a major role in the creation of the Drought Monitor, but the map’s author considers numerous indicators, including drought impacts and local insight from over 450 expert observers around the country. Authors use several dozen indicators to assess drought, including precipitation, streamflow, reservoir levels, temperature and evaporative demand, soil moisture and vegetation health. Because the drought monitor depicts both short and long‐term drought conditions, the authors must look at data for multiple timeframes. The final map produced each week represents a summary of the story being told by all the pieces of data. To help tell that story, authors don’t just look at data. They converse over the course of the map-making week with experts across the country and draw information about drought impacts from media reports and private citizens.

Fact #3 - A real person, using real data, updates the map.

Each week’s map author, not a computer, processes and analyzes data to update the drought monitor. The map authors are trained climatologists or meteorologists from the National Drought Mitigation Center at the University of Nebraska-Lincoln (the academic partner and website host of the Drought Monitor), the National Oceanic and Atmospheric Administration and USDA. The author’s job is to do what a computer can’t – use their expertise to reconcile the sometimes-conflicting stories told by each stream of data into a single assessment.

Fact #4 - The Drought Monitor provides a current snapshot, not a forecast.

The Drought Monitor is a “snapshot” of conditions observed during the most recent week and builds off the previous week’s map. The map is released on Thursdays and depicts conditions based on data for the week that ended the preceding Tuesday. Rain that falls on the Wednesday just before the USDM’s release won’t be reflected until the next map is published. This provides a consistent, week‐to‐week product and gives the author a window to assess the data and come up with a final map.

Fact #5 – Your input can be part of the drought-monitoring process.

State climatologists and other trained observers in the drought monitoring network relay on-the-ground information from numerous sources to the US Drought monitor author each week. That can include information that you contribute.

The Drought Monitor serves as a trigger for multiple forms of federal disaster relief for agricultural producers, and sometimes producers contact the author to suggest that drought conditions in their area are worse than what the latest drought monitor shows. When the author gets a call like that, it prompts them to look closely at all available data for that area, to see whether measurements of precipitation, temperature, soil moisture and other indicators corroborate producer-submitted reports. This is the process that authors follow whether they receive one report or one hundred reports, although reports from more points may help state officials and others know where to look for impacts.

There are multiple ways to contribute your observations:

1. Talk to your state climatologist - Find the current list at the American Association of State Climatologists website.
2. Email - Emails sent to droughtmonitor@unl.edu inform the USDM authors.
3. Become a CoCoRaHS observer - Submit drought reports along with daily precipitation observations to the Community Collaborative Rain, Hail & Snow Network.
4. Submit Condition Monitoring Observer Reports (CMOR) - go.unl.edu/CMOR.

For more information, read our Ask the Expert blog with a NDMC climatologist or visit farmers.gov/protection-recovery.

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FSA Outlines MAL and LDP Policy

Marketing Assistance Loans (MALs) and Loan Deficiency Payments (LDPs) provide financing and marketing assistance for wheat, feed grains, soybeans, and other oilseeds, pulse crops, rice, peanuts, cotton, wool and honey. MALs provide you with interim financing after harvest to help you meet cash flow needs without having to sell your commodities when market prices are typically at harvest-time lows. A producer who is eligible to obtain a loan, but agrees to forgo the loan, may obtain an LDP if such a payment is available. Marketing loan provisions and LDPs are not available for sugar and extra-long staple cotton.

FSA is now accepting requests for 2024 MALs and LDPs for all eligible commodities after harvest. Requests for loans and LDPs shall be made on or before the final availability date for the respective commodities.

Commodity certificates are available to loan holders who have outstanding nonrecourse loans for wheat, upland cotton, rice, feed grains, pulse crops (dry peas, lentils, large and small chickpeas), peanuts, wool, soybeans and designated minor oilseeds. These certificates can be purchased at the posted county price (or adjusted world price or national posted price) for the quantity of commodity under loan, and must be immediately exchanged for the collateral, satisfying the loan. MALs redeemed with commodity certificates are not subject to Adjusted Gross Income provisions.

To be considered eligible for an LDP, you must have form CCC-633EZ, Page 1 on file at your local FSA Office before losing beneficial interest in the crop. Pages 2, 3 or 4 of the form must be submitted when payment is requested.

Marketing loan gains (MLGs) and loan deficiency payments (LDPs) are no longer subject to payment limitations, actively engaged in farming and cash-rent tenant rules.

Adjusted Gross Income (AGI) provisions state that if your total applicable three-year average AGI exceeds $900,000, then you’re not eligible to receive an MLG or LDP. You must have a valid CCC-941 on file to earn a market gain of LDP. The AGI does not apply to MALs redeemed with commodity certificate exchange.

For more information and additional eligibility requirements, contact your USDA Service Center at (417)532-5741 or visit fsa.usda.gov.

Making Your Land More Resilient to Drought

USDA’s Natural Resources Conservation Service can help you conserve water and build resilience to drought, through conservation practices that improve irrigation efficiency, boost soil health, and manage grazing lands.

Irrigation Efficiency

USDA helps you improve your irrigation efficiency to ensure each drop of water is used wisely. Saving water on your farm can help during drought and can offset rising water costs; reduce expenditures for energy, chemicals, and labor; and enhance revenues through higher crop yields and improved crop quality. Funded conservation practices include conversion to more efficient irrigation systems, such as micro-irrigation or subsurface drip irrigation, installation of irrigation pipeline, irrigation water management, structures for water control, and flow meters. Tools like drip irrigation, which provides water precisely where and when it’s needed, can achieve greater precision with flow meters and soil moisture sensors.

Soil Health

In addition, soil health conservation practices, such as reduced- or no-till, cover crops, mulching and residue management can help to make your soil, and the plants you grow or animals you raise, healthier. Healthier soil can absorb and retain more water for longer periods of time, making your farm or ranch more resilient to drought. Using soil health practices, you can conserve water by increasing your soil’s water-holding capacity and use conservation tillage to keep the ground covered, reducing water loss through transpiration and evaporation.

And soil health practices increase organic matter, and each pound of organic matter can hold up to 20 pounds of water. Every 1% increase in organic matter results in as much as 25,000 gallons of soil water per acre. Each 1% increase in organic matter can also provide up to 30 pounds of more available nitrogen per acre. That means less money and time spent on inputs like water and fertilizer, which make your operation more profitable.

Rotational/Prescribed Grazing, Water Sources for Livestock

Drought also impacts grazing lands, and NRCS works with you to increase the resilience of your livestock operation. Ranchers can adapt to dry conditions in two main ways: increasing the availability and suitability of forage and ensuring that cattle have an adequate and reliable source of water. For forage, rotational or prescribed grazing (rotating cattle among pastures) can relieve pressure on stressed vegetation and ensure a more consistent supply of forage for animals. NRCS conservationists can also work with you to plant more drought-tolerant forage species, plants best suited to local soils and conditions. For reliable sources of water, NRCS can help you with installing watering facilities, water wells, or water pipeline for livestock. Having available forage and water for livestock can make a big difference in difficult drought conditions.

USDA and NRCS are here for you, helping you recover from drought and prepare for the next one. For more information on drought recovery assistance at farmers.gov/protection-recovery/drought#recovery. For more information on conservation practices to make your operation more resilient to drought in future years, go to www.nrcs.usda.gov.

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USDA Updates Farm Loan Programs to Increase Financial Freedom, Resilience and Profitability for Agricultural Producers

The U.S. Department of Agriculture (USDA) today announces changes to the Farm Service Agency’s (FSA) Farm Loan Programs, effective Sept. 25, 2024 — changes that are intended to increase opportunities for farmers and ranchers to be financially viable. These improvements, part of the Enhancing Program Access and Delivery for Farm Loans rule, demonstrate USDA’s commitment to improving farm profitability through farm loans designed to provide important financing options used by producers to cover operating expenses and purchase land and equipment.

Farm loan policy changes outlined in the Enhancing Program Access and Delivery for Farm Loans rule, are designed to better assist borrowers to make strategic investments in the enhancement or expansion of their agricultural operations.

The three most notable policy changes include:

• Establishing a new low-interest installment set-aside program for financially distressed borrowers. Eligible financially distressed borrowers can defer up to one annual loan installment per qualified loan at a reduced interest rate, providing a simpler and expedited option to resolve financial distress in addition to FSA’s existing loan servicing programs.
• Providing all eligible loan applicants access to flexible repayment terms that can increase profitability and help build working capital reserves and savings. By creating upfront positive cash flow, borrowers can find opportunities in their farm operating plan budgets to include a reasonable margin for increased working capital reserves and savings, including for retirement and education.
• Reducing additional loan security requirements to enable borrowers to leverage equity. This reduces the amount of additional security required for direct farm loans, including reducing the frequency borrowers must use their personal residence as additional collateral for a farm loan.

Additional Farm Loan Program Improvements

Under the Biden-Harris Administration, USDA’s FSA has embarked on a comprehensive and systemic effort to ensure equitable delivery of Farm Loan Programs and improve access to credit for small and mid-size family farms.

FSA has also included additional data in its annual report to Congress to provide information that Congress, stakeholders, and the general public need to hold USDA accountable on the progress that has been made in improving services to underserved producers. This year’s report shows FSA direct and guaranteed loans were made to a greater percentage of young and beginning farmers and ranchers, as well as improvements in the participation rates of minority borrowers. The report also highlights FSA’s microloan program’s new focus on urban agriculture operations and niche market lending, as well as increased support for producers seeking direct loans for farm ownership in the face of increasing land values across the country.

FSA has a significant initiative underway to streamline and automate the Farm Loan Program customer-facing business process. For the over 26,000 producers who submit a direct loan application annually, FSA has made several impactful improvements including:

• The Loan Assistance Tool that provides customers with an interactive online, step-by-step guide to identifying the direct loan products that may be a fit for their business needs and to understanding the application process.
• The Online Loan Application, an interactive, guided application that is paperless and provides helpful features including an electronic signature option, the ability to attach supporting documents such as tax returns, complete a balance sheet, and build a farm operating plan.
• An online direct loan repayment feature that relieves borrowers from the necessity of calling, mailing, or visiting a local USDA Service Center to pay a loan installment.
• A simplified direct loan paper application, reduced from 29 pages to 13 pages.

USDA encourages producers to reach out to their local FSA farm loan staff to ensure they fully understand the wide range of loan and servicing options available to assist with starting, expanding, or maintaining their agricultural operation. To conduct business with FSA, please contact your local USDA Service Center

FSA helps America’s farmers, ranchers and forest landowners invest in, improve, protect and expand their agricultural operations through the delivery of agricultural programs for all Americans. FSA implements agricultural policy, administers credit and loan programs, and manages conservation, commodity, disaster recovery and marketing programs through a national network of state and county off ices and locally elected county committees. For more information, visit, www.fsa.usda.gov

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