Johnson, James B.

English

Research Papers in Economics

   B R I E F I N G
Briefing No. 14 (Revised)         November 2001
                                                             Noninsured Crop Disaster Assistance Program
                                                            James B. Johnson
Agricultural Marketing Policy Center
Linfield Hall
P.O. Box 172920
Montana State University
Bozeman, MT 59717-2920
Tel: (406) 994-3511
Fax: (406) 994-4838
email: ampc@montana.edu
website: www.ampc.montana.edu
Objective
Analysis
for Informed
Decision Making
Introduction:
Farm managers evaluating whether or not
to expand their existing crop rotations
with the introduction of alternative crops
are usually concerned with managing
additional production risks.  
Farm managers, through their crop
insurance agents, may readily determine
whether there are offerings of multiple
peril crop insurance for the alternative
crops they are considering.  Crop
insurance agents can determine whether or
not there are risk management actuarial
tables for the subject crops available in the
counties where the production is being
considered.  
If Risk Management Agency actuarial
tables are available for the subject crops in
the county, then producers may work with
their crop insurance agent to obtain the
production risk coverage they desire
through multiple peril crop insurance
offerings.  If their choices are to not
purchase multiple peril crop insurance
offerings, they have chosen to self-insure
or they have chosen forms of private
sector singular peril coverage available for
particular crops.  With the choice not to
purchase multiple peril offerings they
have no other mitigation avenues available
in the public sector to cover production
losses.  
Eligible NAP Crops:
If Risk Management Agency actuarial
tables are unavailable for the alternative
crops under consideration, farm managers
have two primary avenues to pursue. 
They may file a Request for Actuarial
Change with their crop insurance agent
(the subject of a separate Briefing).  Or
they may rely on the Farm Service
Agency’s Noninsured Crop Disaster
Program (NAP).  Among the Montana
crops often covered by NAP are grains
produced for hay, as there are no crop
insurance offerings for grain hay.
In Montana the only insurable crops
eligible for NAP coverage are the hay-
type barley varieties intended for grain
and overage stands of irrigated alfalfa and
alfalfa-grass mixtures intended for forage. 
(Note that overage nonirrigated alfalfa and
mixtures intended for forage are not
covered).
Ineligible NAP Crops in Montana:
The following situations have been
determined by the Montana Farm Service
Agency’s state committee to be ineligible
for NAP coverage.  These situations have
been determined by the Risk Management
Agency (RMA) to be poor farming
practices:
! Crops planted in FCIC unrated map
areas.
! Crops planted on new breaking from
native sod.
! Failure to follow recommended crop
rotations stated in FCIC Special
Provisions and RMA crop policy
provisions.
! Failure to follow approved
maintenance schedules for orchards.
! Failure to produce the minimum
production requirements as
established under crop provisions
such as cherries.
! New seedings of perennial crops
including alfalfa, grass, and mixtures
on both irrigated and nonirrigated
acreage are not eligible in the year of
establishment.
Contact:
James B. Johnson
(406) 994-5606
jamesjohnson@montana.edu
Gary W. Brester
(406) 994-7883
gbrester@montana.eduThe NAP Program:  
The Noninsured Crop Disaster Program
(NAP) provides financial assistance to
eligible producers affected by natural
disasters.  This program covers
noninsurable crop losses and prevented
plantings resulting from natural
disasters.  
Eligible crops include commercial crops
and other agricultural commodities
produced for food (including livestock
feed) or fiber for which the catastrophic
level of crop insurance is unavailable.  
An eligible producer is a landowner or
tenant who shares in the risk of
producing the crop.
Eligible Natural Disasters:
An eligible natural disaster is any of the
following: 
! damaging weather such as
drought, excessive moisture, or
hurricane
! adverse natural occurrence such
as an earthquake or flood
! related condition such as
excessive heat or insect infestation
associated with damaging weather
or an adverse natural occurrence.
Applying for NAP Coverage:  
To apply for NAP coverage eligible
producers must file their Applications
for Coverage and pay the applicable
service fees at their local Farm Service
Agency offices.
Applications and service fees must be
filed by the application closing date as
established by the state-level Farm
Service Agency committee.  (Generally
NAP closing dates will correspond to
crop insurance closing dates.  For
instance, the closing date for many
spring-planted crops will be March 15). 
The service fee schedule is as follows:
$100 per crop per county; or,  $300 per
producer per administrative county;
with the total fees not to exceed $900
per producer in all counties.  Limited
resource farmers may request a waiver
of fees.
By crop NAP is offered at the basic unit
level.  A basic unit for NAP purposes
follows the definition used for crop
insurance underwritten by the Risk
Management Agency, USDA.  For
instance, a basic unit for an
owner/operator may be all of a subject
crop in the owner/operator has 100
percent interest in a county.  If the same
person had a 50 percent share as the
operator in the same crop with two
landlords, the two arrangements would
likely constitute a separate basic unit.
Unlike crop insurance, enterprise and
optional units are not employed for NAP
coverage.
Coverage Periods:
The coverage period for NAP depends on
whether an annual or perennial crop is
under consideration.  
The coverage period for annual crops
begins the later of: (1) 30 days after the
producer applies for coverage and pays
the applicable fees: or (2) the date the crop
was planted, not to exceed the final
planting date.  (Final planting dates will
vary by crop.  Farm managers will need to
confer with Farm Service Agency
personnel to identify final planting dates
for subject crops).  The coverage period
for an annual crop ends the earlier of: (1)
the date the producer completes the crop
harvest; (2) the normal harvest date for the
crop; (3) the date the crop is abandoned;
or (4) the date you destroy the entire crop
acreage.  (Normal harvest dates will vary
by crop.  Farm managers will need to
confer with Farm Service Agency
personnel to identify normal harvest dates
for subject crops). 
The coverage period for perennial crops
always begins 30 calendar days after the
application closing date and ends the
earlier of: (1) 10 months from the
application closing date; (2) the date the
producer completes harvest: (3) the
normal harvest date for the crop; (4) the
date the crop is abandoned; or (5) the date
when you will destroy the entire crop
acreage.
Reporting  Crop Acreage and
Production Information:  
To remain eligible for NAP assistance,
farm managers must annually report both
acreage and production information. 
Local FSA offices can advise producers of
reporting dates.
Farm managers should report crop acreage
soon after planting.  The farm manager
must report the following crop
information:
 
! name of the crop, i.e.; clover
! type and variety, i.e., red
! location and acreage of the crop
!  producer’s share of the crop and the
names of other producers with an
interest in the crop
! type of practice used to grow the
crop, i.e., irrigated
! date the crop was planted–by field if
there are several; and 
! intended use of the commodity, i.e.,
processed.
Additionally, the farm manager must
annually provide the following production
information: 
! the quantity of all harvested
production of the crop in which you
have an interest during the crop year 
! the disposition of the harvested crop,
such as whether it was marketable,
unmarketable, salvaged, or used
differently than intended
!  verifiable or reliable production
records, when required.
The Farm Service Agency (FSA) uses the
acreage information to verify that crops
exist and to record the number of acres of
the subject crop. Acreage information is
combined with the production data to
calculate an approved yield–expected
production for the crop year.  An
approved yield for a crop for an individual
producer is usually the average of the
producer’s actual production history
(APH) for a minimum of 4 to a maximum
of 10 years.  
NAP Assistance After a Disaster:
When an eligible producer’s crop or
planting is affected by a natural disaster,
the farm manager must notify the local
FSA office and complete the Notice of
Loss section of the Application for
Payment form, within 15 days of the
following: 
! natural disaster occurrence
! final planting date, if the farm
manager’s planting was prevented by
a natural disaster
! date damage to the crop or loss of
production becomes obvious to the
producer
! the normal harvest date.  
To receive NAP  benefits the farm
manager must fully complete the
Application for Payment form prior to the
acreage reporting date for the subsequentyear crop.  For 2003 crop year NAP
coverage, the deadline will be July 15,
2004, for all commodities except honey
which would be December 1, 2004.
In order for a farm manager to receive
any NAP payment, the natural disaster
must have either: 
! reduced the expected unit
production of the crop by more than
50 percent or
! prevented the producer from
planting more than 35 percent of
the intended crop acreage.
FSA compares expected production
(producer’s approved yield), the
production expected in the absence of a
natural disaster, to the actual production
to determine the percentage of crop loss.
  
FSA Calculation of NAP Payments:
NAP covers the amount of a production
loss greater than 50 percent of the
producer’s expected production, based
on the producer’s approved yield and
reported acreage.
The per unit of production payment rate
that FSA specifies is 55 percent of the
average market price  for the specific
commodity, as established by the state
FSA committee.
The calculated NAP payment may be
reduced by a payment factor reflecting
the decrease in production costs
incurred in the crop production cycle for
the crop that is harvested, unharvested,
or prevented from being planted. 
Payment factors will vary by crop.  For
instance, dry peas might have a factor of
1.0 if the crop is harvested, 0.93 if the
crop is unharvested, or 0.60 if there is
prevented planting. 
Consider as an example an eligible
producer of exotic peas, a hypothetical
crop.  The producer’s expected
production based on the approved yield
is 1,600 pounds per acre.  The state FSA
committee established an average
market price of $0.06 per pound.
Due to a severe drought the producer
harvested only 380 pounds of exotic
peas per acre. The producer’s total loss
from the expected production is 1,220
pounds (1,600 pounds - 380 pounds).
Because this is a 76.25 percent loss, 
(i.e. greater than the 50 percent
threshold), the producers will receive a
NAP payment.  NAP cover production
losses in excess of 50 percent of expected
production.  The production loss covered
is 420 pounds (1,220 pound loss -1,600
pounds x 0.50).  For exotic peas, the FSA
payment rate will be $0.033 per pound, 
($0.06 per pound x 0.55).  So, the
producer’s per acre gross NAP payment
will be $13.86, (420 pounds covered loss
per acre x $0.033 per pound).  If the
payment factor for peas that are harvested
is 1.0, then the producer will receive the
NAP gross payment of $13.86 per acre. 
This particular producer had 100 acres of
exotic peas, so the producer’s total NAP
payment would be $1,386.Support for the preparation and delivery of materials in this publication was provided by the Montana Agricultural Experiment Station, the MSU
Extension Service, the Federal Crop Insurance Corporation through the Risk Management Agency, and the Cooperative State Research, Education
and Extension Service of the United States Department of Agriculture.
The programs of the MSU Extension Service are available to all people regardless of race, creed, sex, disability or national
origin.  Issued in furtherance of cooperative extension work in agriculture and home economics, acts of May 8 and June 30,
1914., in cooperative with the U.S. Department of Agriculture, David A. Bryant, Vice Provost and Director, Extension Service,
Montana State University, Bozeman, MT 59717.

Noninsured Crop Disaster Assistance Program

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