Drought imposes significant costs on the U.S. agricultural sector, particularly for livestock producers who rely on precipitation to grow forage. The U.S. Department of Agriculture (USDA) administers several programs to mitigate the economic costs of drought. One of these programs is the USDA, Farm Service Agency’s (FSA) Livestock Forage Disaster Program (LFP), which provides payments to livestock producers impacted by drought. Program evaluation results suggest that producers in drought affected counties that received LFP payments achieved similar herd retention and liquidation outcomes as producers in less drought impacted counties that were ineligible for LFP payments. Simulation modeling results in this report suggest that LFP poses a financial-climate risk to the Federal budget. Depending on the future increase in greenhouse gas (GHG) emissions, annual Federal Government expenditures on LFP are projected to increase above the current average expenditures by 45–135 percent (in 2022 dollars) by 2100.
Details
Title
The Stocking Impact and Financial-Climate Risk of the Livestock Forage Disaster Program
Record Identifier
https://ageconsearch.umn.edu/record/340568
Language
English
Total Pages
58
Note
The study leveraged a mix of survey, administrative, and climatic data to assess the financial-climate risk of the Livestock Forage Disaster Program (LFP) and determine if the program achieved similar livestock herd retention and liquidation outcomes in drought-affected program-eligible counties as in counties not eligible for the LFP. Specifically, administrative data obtained from the USDA, Farm Service Agency on county-level program payments and eligibility periods were combined with survey data collected by USDA, National Agricultural Statistics Service (NASS) on county-level beef cattle herd size and data characterizing county-level drought conditions reported by the U.S. Drought Monitor. These data were used to sort counties into groups that were eligible for LFP versus those counties that were nearly eligible for the program. Aggregate county herd size outcomes for beef cattle were then compared between these two groups using a matching panel data econometric model to estimate how subsequent herd sizes compare between the two groups. To model the financial-climate risk of LFP, this report used outputs from an ensemble of climate models to project future drought conditions under a range of emission scenarios. These modeling outputs were combined with econometric estimates of the relationship between county-level LFP payments and herd sizes based on different program eligibility thresholds. Climate projections and econometric model estimates were used together to simulate future program payments across a range of emission scenarios and methodologies for defining drought.
