USDA-FSA’s Livestock Indemnity Program

By Dr. Kenny Burdine

Following the February 2021 winter storm, James wrote about USDA’s Livestock Indemnity Program (LIP). The LIP program is intended help compensate producers for greater than normal levels of livestock deaths from adverse weather, disease outbreaks, and predator attacks. The program can also partially compensate producers for lost value resulting from injury. As I try to process the disastrous impact of the recent flooding in my home state of Kentucky, and other parts of the region, I felt like a reminder about the program might be worthwhile.

LIP payment rates for losses are set by the Secretary of Agriculture and are done so on a per head basis. The rates are updated regularly and are intended to be about 75% of the average national market value of cattle by type and weight range. The table above shows payment rates per head for all categories of beef cattle, which includes a recent increase in the payment rate on calves under 250 lbs. While this newsletter focuses on beef cattle, most all types of livestock are eligible for payments if losses resulted from a qualifying event.

I will quickly walk through a simple illustration of how this might work. Suppose a producer had 50 cows on their farm at the time and lost 10 of them directly as a result of flooding. This producer may be eligible for payments on those lost cows, above what FSA considers to be a normal mortality rate. If FSA’s normal loss rate on cows were 1.5%, then normal mortality would round to 1 head for this 50 cow herd over the course of a year. In that case, the producer could potentially be eligible for an LIP payment on 9 head at the rate of $829.18 per head. If calves were lost, a similar estimate could be made for the calf crop using actual calf losses and assumed normal mortality on calves. In cases were animals were sold at a market discount as a result of injury from the event, producers may be eligible for the difference between the value they actually received at sale and the program payment rates above. In all cases, documentation is crucial to receiving payments.

Application for LIP benefits is made through local FSA offices and producers should address specific questions to that office about documentation requirements. Producers are required to file a notice of loss within 30 calendar days of the loss and apply for payment within 60 days of the close of the calendar year in which the loss occurred. The USDA-FSA Fact Sheet on the Livestock Indemnity Program is also a useful publication and can be found here.