| Abstract: | The Agricultural Act of 2014 (2014 Farm Bill) permanently funded a number of supplemental disaster assistance programs, including the Livestock Forage Disaster Program (LFP). LFP provides assistance to livestock owners and certain contract growers that have suffered a loss of grazed forage due to qualifying drought during the normal grazing period for the county. This study compares the additional costs incurred by a producer in the presence of drought and subsequent compensation through LFP payments. It utilizes one of the Agricultural & Food Policy Center⁰́₉s (AFPC) representative ranches (and the associated costs of production) to analyze the extent to which the various LFP payment thresholds are calibrated to the actual costs of production incurred during a drought. This analysis is conducted by evaluating net present value, net cash farm income, and ending cash in response to four drought management scenarios: feeding in response to a one-year drought, and feeding, culling, or relocating in response to a three-year drought. Compensation received from LFP in the case of drought mitigates some of the additional costs incurred, but it does not make a producer whole. In the case of a one-year drought, LFP is fairly well calibrated. LFP payment rates are designed to cover 60% of feed costs, and that is what was found in that scenario. However, the remaining additional costs had a long-term impact on cash flow. As drought persists and alternative management strategies are utilized, LFP compensates for a smaller share of the costs incurred due to drought. The electronic version of this dissertation is accessible from https://hdl.handle.net/1969.1/198077 |
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