Livestock producers face many sources of production risk from uncertain environmental conditions that affect feed availability, animal mortality rates, and production costs. For instance, pasture is vulnerable to drought and wildfire and producers incur higher costs when they purchase commercial feed to make up for lost grazing. Feed costs typically represent the most significant cost of animal production.
The Livestock Forage Disaster Program (LFP) was authorized in the 2008 and 2014 farm bills to provide eligible livestock producers with payments to partially cover additional monthly feed costs. A historic drought (October 2011-13) contributed significantly to increased program payments or outlays. Also, elevated costs of substitute feeds linked to the drought—specifically corn—increased the value of lost forage and average producer payments.
The upsurge in LFP outlays under the 2014 Farm Act, compared to those under the 2008 Farm Act, coincided with the drought that severely affected the Plains States as the 2014 Act retroactively covered payments triggered by events occurring as early as Oct. 1, 2011. — USDA Economic Research Service
