When severe storms strike or deadly animal disease spreads, cattle producers in Iowa and nationwide need a safety net that they can depend on. During economic downturns, our farmers deserve a fair price for their deceased livestock.
Through local Farm Service Agency offices, farmers often enroll in the Livestock Indemnity Program – an important tool that helps deliver economic relief to producers and their families who have been impacted by adverse and unpredictable events that cause cattle deaths and financial losses. This program is especially necessary during times of economic uncertainty and heightened inflation, as farmers and producers are now enduring to make a profit and keep their operations running.
However, under current law, LIP payment rates – which cover 75% of the average fair market value of livestock – are only updated once a year, which is a lengthy timeframe that does not accurately reflect volatile market conditions in the livestock industry.
That means that even if the average fair market value of cattle is much higher than the annual rate established by USDA producers cannot receive that accurate and fair price. Instead, they can only be compensated at the annual price level no matter the condition or need.
This law is especially devastating for small and family-owned cattle operations that do not have the financial flexibility in their budgets to, in some instances, receive less than half of the current market value of their livestock due to outdated federal policies.
For example, according to a fact sheet published by the USDA in May 2023, the payment rate for non-adult beef cattle over 800 pounds was about $1,618 while, at that time, the average market rate for the same category was more than $2,600 per head. A quick calculation reveals that the LIP payment was under 50% of the actual value in May of 2023.
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Additionally, just last summer, extreme heat was deadly for cattle across the Midwest, and a few winters ago, very low temperatures also led to premature cattle deaths. If producers are facing hardship and cattle loss during both the summer and the winter, an annual update to LIP payment rates simply does not cut it.
These discrepancies are catastrophic for any producer on a budget and working to provide for their families on an honest living. It’s easy to see why an amendment to federal law is needed sooner than later.
That’s why I introduced the Livestock Indemnity Program Improvement Act to cut the annual timeframe down to every three months, so that our producers and their families receive a fair and accurate price for their livestock. In other words, I’m working to allow the free market – not government bureaucracy – to determine the amount that cattle producers can be reimbursed to cover losses out of their control.
I’m especially grateful to Sen. Mike Rounds, who first led this legislation in the Senate to support our cattle producers and farm communities. He is a champion for South Dakota cattle producers and a strong voice for American agriculture in the Senate.
This bill was also included in the House version of the farm bill that passed out of the Agriculture Committee in May, and I’m glad that Sen. John Boozman’s framework for the Senate farm bill also contains this common-sense legislation.
Updating the LIP and bringing more pricing transparency to the livestock marketplace is just another reason why we must pass the farm bill this year and deliver relief to our cattle producers and their families. These hardworking men and women make invaluable contributions to our economy, give back to our rural communities, and keep our cattle industry strong. By signing the Livestock Indemnity Program Improvement Act into law, we can ensure that our producers receive a fair market price for their livestock and keep them financially stable during tough times.
Rep. Randy Feenstra represents Iowa’s 4th District. He serves on the House Ways and Means Committee and the House Agriculture Committee.