Livestock Forage Disaster Program A Disaster For Taxpayers

Ranchers in the desert Southwest have received large subsidies from the USDA’s Livestock Forage Disaster Program (LFP) which have perpetuated unsustainable ranching on arid public land administered by the Bureau Land Management (BLM) and Forest Service.

Congress created the LFP in the 2008 Farm Bill to establish a permanent drought assistance program to replace the previous ad hoc drought programs administered by the USDA’s Farm Service Agency (FSA). The LFP was initially authorized from 2008 through 2011, but the 2014 Farm Bill made it permanent and authorized retroactive LFP payments back to 2011. This legislation also raised the maximum annual payment per person from $100,000 to $125,000 per year, and the maximum annual adjusted gross income (AGI) per person from $500,000 to $900,00.

LFP payments are awarded to ranchers grazing private or public land by local FSA offices in counties where, according to the U.S. Drought Monitor, there’s severe, extreme, or exceptional drought. Also, ranchers can receive LFP payments when they are prohibited from grazing a public land grazing allotment that was been recently burned by a wildfire.

Calculating LFP Payments

The amount of LFP money public land ranchers can receive annually is calculated using very complicated rules. The payments are 60% of the lesser of either the monthly feed cost of the livestock owned, or the the monthly feed cost of the ranch’s normal carrying capacity. The compensation rate jumps to 80% if the rancher was forced to sell livestock because of drought.

Verifying the normal carrying capacity of a public land grazing allotment can be problematic since the maximum number of livestock listed on grazing permits is typically higher (paper cows) than the actual numbers being grazed because ranchers typically fight to keep the permitted numbers as high as possible to inflate the real estate values of their ranch base properties. The real numbers being grazed are usually lower because of the realities on the ground.

LFP compensation should obviously be computed using the actual number of cattle that usually graze an allotment when there isn’t a drought. The BLM and Forest Service have some records that help to identify the actual carrying capacities of their allotments. The BLM, for example, requires each grazing permittee to submit an annual Actual Grazing Use Report Form at the end of each grazing season, although this requirement often isn’t enforced. And at the beginning of the grazing season the Forest Service issues each permittee Annual Operating Instructions (AOI) that include the maximum number of livestock authorized to graze the allotment that year, regardless of the number allowed on the allotment’s grazing permit. Both agencies, however, rarely count the actual number of cattle that ranchers have on the land.

As per federal regulation 7 CFR Part 760 Subpart D § 760.306, the FSA is supposed to require LFP applicants to submit “supporting documentation” that’s “determined to be necessary” to verify a drought loss claim. But like the federal land management agencies, the FSA relies mostly upon information that’s provided by the permittees.

And while determining the appropriate amount of LFP assistance is confusing, it’s clear that the money isn’t encouraging ranchers to take their cattle off the land during drought, because many Arizona public land ranchers have received large amounts of LFP during the same years they kept most of their cattle on the land – according to recent Forest Service AOIs. This is probably the worst thing about the LFP program – it encourages ranchers to keep their livestock on public land during a drought, when they should be removed.

2014 LFP Audit

In December 2014 the USDA’s Officer of Inspector General issued Audit Report 03702-0001-32, which was initiated to review the FSA’s administration of the LFP. They found that about 7% of the LFP payments they audited had been improperly issued by local FSA offices, and that the agency had used questionable monthly feed costs to calculate the amounts of LFP payments. An error rate of 7% may not sound too bad, but according the USDA, the FSA issued about $423 million in LFP assistance for FY 2018, and 7% of that is about $30 million.

The Inspector General’s report also pointed out that ranchers could receive duplicate compensation for drought losses through the USDA’s Noninsured Crop Disaster Assistance Program (NAP). The NAP provides highly subsidized crop insurance policies to agricultural producers. When precipitation or “vegetation greenness” falls below the coverage level selected in the policy purchased by a rancher, drought compensation payments are issued by the county FSA office. (The Inspector General’s report, however, failed to mention that since 2006 ranchers can also receive assistance to help them build new livestock waters in times of drought through the USDA’s Emergency Conservation Program (ECP).)

LFP Payments Perpetuate Ranching On Arid Public Land

First of all, it’s ridiculous that ranchers who graze their livestock on hot desert land are eligible for any kind of drought relief. Deserts are inherently unsuited for profitable ranching, and arid ecosystems are more susceptible to damage from livestock grazing. Unfortunately, however, livestock grazing is still permitted on most arid public land in the West. For instance, Arizona’s Tonto National Forest includes about 791,284 acres of Sonoran Desert, much of that with active grazing allotments.

Furthermore, the entire Southwest has been suffering from a nearly uninterrupted drought for about the last 20 years, and the last five years have been the hottest five years in history. It’s so bad it’s being called a megadrought, and this aridification trend will likely continue due to ongoing climate change. This means that LFP payments are helping to perpetuate increasingly unsustainable ranching operations. Many recipients have received LFP money for several years, and there’s no limit to the number of years in a row that a rancher can receive up to $125,00 a year in payments.

It would make a lot more sense for Congress to create a fund to fairly compensate public land ranchers that have repeatedly received significant amounts of LFP payments for arid grazing allotments to voluntarily relinquish their grazing permits, so that the associated federal grazing allotments can be retired. This would protect these desert public lands from livestock damage, and U.S. taxpayers wouldn’t have to keep throwing good money after bad.

Arizona Examples

The FSA has disbursed many tens of millions of dollars of LFP payments to ranchers in Arizona. The public land ranches shown below are just a few examples of the Arizona public land ranches where LFP payments have helped to subsidize livestock grazing in desert areas. These examples also show the other government assistance from which these ranches benefited.

Government Assistance For Ranchers Program Key

Note: Financial information acquired through Freedom of Information Act requests and Public Records Requests.

Updates

In 2021 Congress passed the Extending Government Funding and Delivering Emergency Assistance Act (P.L. 117-43), which provided at least $750 million nationally for livestock producers impacted by drought or wildfires. This resulted in the FSA creating its temporary Emergency Livestock Relief Program (ELRP). Ranchers were eligible to receive ELRP assistance while also collecting LFP payments from the FSA. In fact, ranchers that received LFP payments were automatically eligible to receive ELRP payments. In 2022 Congress allocated up to $500 million more for livestock producers impacted by drought or wildfires in the Consolidated Appropriations Act,  which included the Disaster Relief Supplemental Appropriations Act. This extended the ELRP program for another year. According to the FSA, this resulted in about $15 million in ELRP payments to Arizona ranchers in federal FY 2021 & 2022, in addition to the LFP payments they received those years.