Special Note:  In 2002, all counties in the State are designated as Drought Counties!!!!!

Drought Aid

There are a number of programs and provisions which are designed to assist livestock producers
in managing through the financial impacts of drought.  In a droughty year, often the first step
made to enable producers to access drought programs is the declaration of a drought disaster.
This often begins with a County Commission issuing a resolution declaring a drought emergency.
This is forwarded through state and federal channels, and if the drought is indeed severe there
will be an official declaration of drought issued by the United States Department of Agriculture. 

This factsheet attempts to summarize some of the programs and provisions which are made
available to livestock and forage producers as a result of a county receiving an official drought
declaration.  It does not survey the programs or provisions affecting crop producers except as
there is overlap in provisions.

First, it should be clearly understood that a County Commission’s resolution does not constitute
an  official drought declaration.  The request is a request which must make it’s way through
agency channels until a declaration is issued.  Declarations come either from the Secretary of
Agriculture or the President. The lead agency in drought declarations is the Farm Service Agency
of the USDA.

The programs which do come from the declaration can be divided between those which exist
from year to year, and those which are authorized only for a year.  The principal agencies which
administer programs which are important to producers in drought include the Farm Service
Agency (FSA), the and the Internal Revenue Service (IRS).

The programs which are ongoing, and aren’t dependant upon authorization every year are the
following.
Emergency Loan Assistance, from FSA, which provides low-interest emergency loan assistance
to help cover production and physical losses.
Noninsured Crop Disaster Assistance Program, from FSA, which provides assistance for crops
injured by disaster and are not eligible for crop insurance.
Emergency Conservation Program, from FSA, which shares with producers the cost of
rehabilitating eligible lands damaged by disaster.  This program may also provide emergency
water assistance for livestock.

There are two FSA programs which require special authorization each year.  The authorization is
a decision separate and apart from the drought declaration decision.  These programs are the
“Livestock Assistance Program” and the “Crop Disaster Program”.  Both programs provide direct
payments to eligible producers who suffer grazing or crop losses due to natural disaster.

The IRS tax code has several provisions which provide producers leeway in making financial
decisions related to drought without incurring injurious tax liabilities.  Most of these require that
there be an official drought declaration.  In any event, if you hope to employ these provisions it is
extremely prudent to consult your tax professional.  Excellent discussions of these topics are
contained within IRS Publication 255, The Farmers Tax Guide.
Here are the important and pertinent provisions:  If you sell more livestock than you normally
would in a year because of a drought, you may be able to choose to postpone reporting the gain
from selling the additional animals until the next year.  If you sell or exchange livestock held for
breeding purposes solely because of drought, treat the sale or exchange as an involuntary
conversion.  This postpones the gain on the sale, thus sheltering the proceeds from taxes.  You
have two years from the end of the tax year in which the sale occurred to replace the livestock.
Finally, there are provisions in the code which may allow farmers to average all or some of your
current year's farm income by shifting it to the 3 prior years.

All of these programs and provisions are much more complicated than described here, and each
should be fully explored with the proper agency or professional before taking actions under the
assumption that you can benefit from the program or provision.  In addition, it is quite possible
that other useful programs exist or may come about before a drought is over.