After a drought disaster last year, what did South Dakota farmers get?by Cara Hetland, Minnesota Public Radio
Gov. Tim Pawlenty has requested a federal disaster declaration for 25 Minnesota counties. If approved by the U.S. Secretary of Agriculture, the drought-stricken farmers would be eligible for low interest loans.
Typically, not that many farmers actually apply for the federal loans. For an example of what Minnesota farmers can expect, we look to last year's South Dakota drought and the assistance farmers and ranchers there received.
Sioux Falls, S.D. — 2006 was a dry year for many states. The entire state of South Dakota was declared a federal disaster. That means the U.S. Department of Agriculture opened up emergency loans.
Steve Magedanz, FAS farm loan specialist Huron, South Dakota, says not everyone qualifies for emergency loans. He says certain criteria must be met before a farmer who suffers a loss is eligible for an emergency loan.
"It is a loan program and the interest rate is 3.75 percent at this time," says Magedanz. "We make loans based on the fact that they cannot get credit elsewhere and they have payment and security for the loan they are seeking."
Magedanz says with last year's drought in South Dakota 100 farmers qualified for emergency loans averaging $65,000 each.
That's not a lot of people considering that there are about 30,000 farmers and ranchers in South Dakota. Magedanz says the numbers in no way reflect the impact of the drought.
Herman Schumacher runs a livestock sale barn in Herried, South Dakota. He says the mood this summer is still one of dismay. He says ranchers either sold off part of their herd to make ends meet or went out of business all together.
"I would say we lost 10 to 12 percent of them that are not going to be back, and a lot of them are going to have to sell half their herd again losing half their income for this year," says Schumacher.
Schumacher says ranchers do what they have to do when they can't feed their livestock. Usually that means selling them. He says cattle prices are high right now making it difficult to rebuild a herd. Spring rains in many parts of South Dakota helped rejuvenate pastures but the last month of hot dry weather is taking it's toll once again.
Emergency loans and disaster declarations may get much of the attention in times of drought, but crop insurance plays a much bigger role for most farmers. Last year farmers collected $472 million through crop insurance. That helps them keep up with bills but not make a profit.
Last August U.S. Secretary of Agriculture Mike Johanns did offer a relief package in addition to crop insurance. He offered livestock producers in 32 states $50 million. It's not clear how much of that, if any, went to South Dakota ranchers.
In a telephone conference call last August, Johanns told reporters the crop insurance program paid significantly more than the grants he offered.
"We expect crop insurance to pay out more than $4 billion to crop insurance producers who have suffered losses this year," says Johanns. "The assistance I'm announcing today, I want to be very clear, is in addition to that $4.6 billion dollar number."
While row crops are typically insured, crops like corn, soybeans and wheat, ranchers who raise their own livestock feed typically can't get crop insurance. However, there is a pilot insurance program underway now through the U.S. Department of Agriculture for grazing land.
There is one other way for farmers and ranchers to get financial assistance, an act of congress.
There was $3 billion for drought-stricken farmers in the 2007 Emergency Supplemental Appropriations bill. That bill included funding for the Iraq war and assistance for Hurricane Katrina victims. But remember, in 2006, 32 states suffered from drought. This year, Minnesota is the only corn belt state in that situation.
- All Things Considered, 08/06/2007, 5:43 p.m.