Supplemental Revenue Assistance (SURE)
Federal disaster payments for areas that have suffered severe crop losses have been around for a long time. However, they have usually been implemented on an ad hoc basis each time widespread production problems arose. The last farm bill changed this.
Supplemental Revenue Assistance
The 2008 farm bill, officially known as the Food, Conservation and Energy Act of 2008, created an Agricultural Disaster Trust Fund. A major part of this fund will finance Supplemental Revenue Assistance (SURE) payments, which are designed to supplement the protection producers can purchase from private crop insurance companies. In fact, a producer must purchase insurance for all major crops produced each year to be eligible for the SURE disaster program.
Farmers may be eligible to receive a SURE payment if they operate land in a county declared a disaster county by the U.S. Secretary of Agriculture ("Secretarial Designated" disaster counties) or in a county contiguous to a disaster county. Farming operations not in eligible counties can also qualify if they have more than a 50 percent loss in the expected gross value of their crop production. Additionally, at least one crop on the farm must suffer a production (yield or quality) loss of 10 percent or more for the farm to receive a payment.
SURE is a revenue guarantee program, similar to crop revenue insurance. If the farm’s actual crop revenue is less than the guarantee, the SURE payment makes up 60 percent of the difference. The actual crop revenue includes not only the estimated value of the crop produced, but other USDA payments and crop insurance indemnity payments received, as well. This prevents farmers from receiving double payments for the same losses. All guarantees and actual revenues under SURE are calculated as the sum for all crops and all counties involved in the “farming operation,” even if some of the land is located in an ineligible county. Payments are not made for losses to individual crops or insurance units.
The SURE guarantee is simply the sum of all the crop insurance guarantees purchased for the current crop year, increased by 15 percent. The extra 15 percent is designed to fill part of the revenue gap not covered by insurance. For example, a producer who purchased a 70 percent guarantee on all crops would have that raised to 80.5 percent for SURE (70% x 1.15 = 80.5%). There is also an overall “cap” on the SURE guarantee that is equivalent to 90 percent of the expected revenue on all crops, as measured by crop insurance guarantees.
If the crop insurance proven yield (APH yield) is less than the yield used by the Farm Service Agency (FSA) to calculate counter cyclical payments (CCPs), then the CCP yield is used instead for calculating the SURE guarantee. Producers who have used “plug” yields to calculate their APH yields in some low production years will also have their SURE yield recalculated without the years in which plug yields were used.
The SURE “actual revenue” includes the actual number of bushels harvested for each crop valued at the average cash marketing year price as determined by the USDA. For corn and soybeans, this price is calculated from September through August. For 2011 crops, the marketing year prices were $6.65 for corn and $11.80 for soybeans. The cash marketing year price may be higher or lower than the harvest futures price used to calculate crop revenue insurance indemnity payments.
Also, the actual revenue includes any MPCI crop insurance indemnity payments and prevented planting payments received (minus the farmer's share of the insurance premiums), 15 percent of any USDA direct payments, and 100 percent of any ACRE payments (starting with the 2009 crop), counter cyclical payments and loan deficiency payments received. If payments are received under any other USDA crop disaster programs, they are included as well.
If the actual revenue calculation is below the SURE guarantee, the producer will be paid 60 percent of the difference. There is a payment limit of $100,000 per year per eligible producer, based on the same rules outlined for other commodity programs in the 2008 farm bill.
Insure All Crops
To be eligible for SURE payments, a producer must insure all eligible crops. Approximately 90 percent of the corn and soybeans in Iowa are covered by crop insurance each year. However, only a small percent of other crops, such as oats, wheat and hay, are typically insured. Crops can be insured with a catastrophic (CAT) level policy for $300 per crop. For small acreages of some crops, purchasing regular crop insurance at a higher guarantee may cost less than the CAT fee.
Crops not eligible for private insurance but eligible for the Noninsured Assistance Program (NAP) policy offered through FSA also need to be covered. These include many horticultural crops, as well as some forage crops. The NAP fee is $250 per crop.
Pasture is not included in the crops that have to be insured. Other exceptions include any crop that makes up less than 5 percent of the expected value of all crops grown on the farm, and crops for which the NAP premium is more than 10 percent of the value of the insurance coverage offered.
The maximum charge is $900 for insurable crops (CAT) and $750 for non-insurable crops (NAP) per producer per county. All crops must be insured by the sales closing date, which is March 15 for most Iowa crops. Fall seeded crops, such as hay and wheat, have a Sept. 30 deadline for CAT or “buy-up” insurance and a Dec. 1 deadline for NAP. If all crops are already insured, no other signup is necessary.
No prior signup is required for SURE. Stay in touch with your local FSA office for more details on applying for benefits.
Use the Decision Tool A1-44 SURE Payment Calculator to estimate payments for Supplemental Revenue Assistance (SURE).
, retired economist.