Ag Policy Blog

USDA will increase the payment rate for the Livestock Indemnity Program for cattle producers who have lost cattle in the extreme heat and humidity this summer.

As the latest heat wave in the Midwest breaks, USDA's Farm Service Agency on Friday stated it would help indemnify livestock producers with heavier-weight cattle in feedlots. The payment rate for losses under the LIP for cattle weighing over 800 pounds will increase from $1,244 per head to $1,618, an increase of $374.

"The recent heat domes plaguing many parts of the country have proven to be unsurvivable for some animals and temperatures are not expected to let up any time soon. This is one of the latest, many examples of how a changing climate is creating immediate challenges for farmers and ranchers, and we're finding that our emergency relief programs need to adapt accordingly," said FSA Administrator Zach Ducheneaux. "Given these circumstances and the trend towards higher weights in feedlots, it became clear that USDA's Livestock Indemnity Payment rates were not reflective of the true market value for cattle. This change will better indemnify the investments producers have in the livestock they raise, and we will continue to find flexibilities where possible to help our farmers and ranchers in the wake of climate-related impacts."

Nebraska Gov. Jim Pillen earlier this month spoke with Agriculture Secretary Tom Vilsack about the issue and wrote the secretary a letter following a heat wave that led to an unknown number of cattle losses in the state. Pillen asked for USDA to adjust the payment rate. Given the value of cattle, the LIP payment rate was paying producers for roughly half the value of losses instead of the 75% rate authorized under the farm bill.

FSA stated indemnity rates for LIP are made at a rate of 75% of the prior year's average fair market value for livestock. "FSA recognizes that an annual update of LIP payment rates does not account for the volatile nature of livestock markets and is further exploring flexibilities to establish more current payment rates."

USDA stated the updated LIP payment rate is effective immediately and retroactive to Jan. 1, 2023 for all eligible livestock losses for "excessive heat, tornado, winter storms, and other qualifying adverse weather." Producers who have already received a payment for their losses will receive an additional payment.

Chris Clayton can be reached at Chris.Clayton@dtn.com

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