FEDERAL AQUACULTURE BRIEFS
USDA/CSREES No. 99-1
February 1, 1999

USDA Noninsured Crop Disaster Assistance Program (NAP)
Background

On October 13, 1994, the Federal Crop Insurance Act was amended by the Federal Crop Insurance Reform Act of 1994 ("Act") and a new Noninsured Crop Disaster Assistance Program ("NAP") was established in Section 519 under Title I - Federal Crop Insurance Reform. NAP replaces the Disaster Payment Program. The Federal Crop Insurance Corporation finalized its regulations on February 22, 1996 on the provisions needed to carry out NAP to protect producers of crops for which insurance is not available. On April 4, 1996, legislation (Public Law 104-127) transferred financial responsibility for NAP to Commodity Credit Corporation (CCC). Regulations (7 CFR Part 1437) announced this change on December 31, 1996. NAP provides a level of protection that, in most respects, is comparable to the catastrophic risk protection program offered to producers of insurable crops. There is presently no Federal crop insurance program for aquaculture producers. The U.S. Department of Agriculture's Farm Service Agency (FSA) administers NAP on behalf of CCC..

Eligible Crops and Definitions

The term `eligible' crop' under NAP means each commercial crop or other agricultural commodity (except livestock) for which catastrophic protection is not available that is produced for food or fiber. For purposes of aquaculture the definition of current eligible aquaculture stocks under NAP is limited to species of finfish, mollusks, crustaceans, or other aquatic invertebrates.

Specific species group examples include; lobsters, crabs, prawns, shrimp, oysters, clams, finfish used for food for either humans or other eligible aquacultural species, and assorted ornamental fish.

Even though the Act limits NAP to crops produced for food or fiber, this Farm Bill amendment established the eligibility for NAP for assorted ornamental fish. The interpretation of definitions is important as baitfish, another economically important nonfood crop, is presently excluded from NAP when raised for purposes of bait for recreational fishing, but may be an eligible species when grown commercially for purposes of feeder fish or as food for ornamental fish.

How NAP Works

NAP is a local program and is not dependent on multi-state crop losses requiring passage of emergency legislation by the U.S. Congress. Federal funding is assured when eligibility requirements are met and producers do not have to pay an up-front fee or premium to obtain assistance under NAP.  The extent of the crop value loss as expected "Area Yield" determines whether NAP assistance can be provided. An aquaculture crop becomes eligible when the value of the crop within a minimum geographical area is reduced by more than 35 percent as the result of a natural disaster. To be eligible for assistance in the event of a natural disaster, producers must provide certain information to the local FSA county office annually BEFORE a disaster occurs. This information needs to be provided every year by the established program reporting deadlines. Certain farm production records must also be maintained throughout the year.

Producer Eligibility Requirements

The following are key requirements that must be met. Producers also need to adhere to these requirements if they desire any future NAP assistance. Producers should contact FSA officials at their local USDA Farm Service Center office to obtain additional details and information.

• Accurately report acres and shares for all crops potentially eligible for NAP on or before the required deadline (contact local FSA county offices for acreage reporting dates);
• Report crop losses within 15 days of the date the disaster occurs or the date that crop damage becomes apparent
• Certify crop production history and report current crop year production;
• Earn no more than $2 million in annual gross revenue per "person", as defined by FSA in the operation;
• Certify that compliance requirements with all highly erodible land and wetland conservation are met
• Request measurement service if needed; and

Request payments by the acreage reporting date of the year following the year of the disaster.

Note: The acreage reporting date for all aquaculture under NAP is September 30.

Determining Crop Loss

As with crop insurance, FSA allows producers to establish an expected level of production for their operations that reflect normal production capabilities. Except for a few crops that are considered "value lose" crops (see below), the actual history of producing the crop is used to determine the extent of the loss in the disaster year. FSA calculates normal yields by averaging actual yields over a 4- to 10-year period. If at least 4 years of acceptable production records are not provided, a yield will be assigned, which may be lower than the actual average yield.

Definition of Value Loss

Value loss means different crops, including aquaculture, as determined by the Commodity Credit Corporation (CCC) that due to their unique nature do not lend themselves to yield calculations. Eligibility is determined based on a loss of value at the time of the disaster, as determined by the CCC.  An example to determine crop value loss follows. A producer's crop inventory indicates all sizes and value of a type or variety of aquacultural species just prior to the disaster is $15,000. After the disaster, the crop value of the inventory is reduced to $4,500. The crop value loss for this example can now be determined as $4,500 - $15,000 = 30% of original value, or a value loss of 70% determined by 100% - 30%.

Area Defined

In addition to other criteria, in the 50 States a NAP area must include at least five producers on separate and distinct farms with eligible NAP crops that have each suffered more than a 35 percent area crop loss. There are three ways the State FSA office may geographically define an area for NAP:

1. a county,
2. at least 320,000 contiguous acres or,
3. acreage on which the value of all crops grown is $80 million annually or more

Outside the 50 States, in U.S. trust territories, a NAP area must include 10 or more producers on separate and distinct farms each with eligible NAP crops determined to have suffered more than a 35 percent area loss. The minimum geographical size requirements do not apply.

Farm Production Records

Accurate and adequate record keeping is essential to both document past yields and to monitor current crop inventories. NAP yields for most crops are calculated based on an average of actual yields for a 4 to 10 year period. A minimum of four consecutive yields is needed to calculate a NAP approved yield; in the event a producer does not have four consecutive years of yield records, a transitional yield will be used for missing yield years.

After an approved yield is established for a crop, the producer must annually report acreage and production. If acceptable production records are not provided, a yield will be assigned. Most producers will find the assigned yield to be low. Additionally a producer is eligible for only one assigned yield in the yield database. Consequently, if the producer fails to report production again, a zero yield is entered in the database.   Therefore, for most producers, crop protection from NAP assistance will increase when producers report their farm-specific yields to the local FSA office.

Exclusions

NAP does not cover losses due to:

• the neglect or malfeasance of a producer
• the failure of a producer to reseed to the same crop in those areas and under such circumstances where it is practical to reseed, or
• the failure of a producer to follow good farming practices
• failure or breakdown of equipment or facilities
• water contained or released by any governmental, public, or private dam or reservoir project if an easement exists on the acreage affected for the containment or release of the water

Payment

Once the area loss requirement is met for a crop, NAP payments are made available when 1) individual crop losses are in excess of 50% of the individual's approved yield, or 2) the producer is prevented from planting more than 35% of the acreage intended for the eligible crop.

Payments for 1999 and subsequent years are made based on 55 percent of the crop's average market price as determined by the USDA Farm Service Agency.  Payments to an eligible person cannot exceed $100,000 for any given crop year. The payment rate will be reduced for any crop which is unharvested or prevented from being planted, to reflect the difference in costs incurred. Producers cannot receive assistance from the same loss under more than one USDA program.

Aguaculture Terms and Definitions

The following is guidance for purposes of aquaculture crops used by FSA field offices which administer this program at the local (county) level.

A.    Eligible Aguacultural Species are:

• any species of aquatic organisms grown as food for human
• consumption fish raised as feed for fish that are consumed by humans
• ornamental fish propagated and reared in an aquatic medium

To be eligible for NAP assistance, eligible aquacultural species must be raised:

• by a commercial operator on private property (see section below on private property)
• in water in a controlled environment (see section below on controlled environment)

B.    Crop Year

The crop year for all aquacultural species is from October 1 through September 30.

C.    Private Property

For a producer to be considered eligible for NAP assistance on aquaculture, the following must apply:

• producer owns or has leased property with readily available identifiable boundaries
• the owner or lessee has total control of the waterbed, the ground under the specific type of water, as opposed to only having control over a column of water

Note: a lease should vest in the lessee all the rights and benefits of ownership of the leased land and not merely provide a license to gather the aquaculture species.

D.    Controlled Environment

Eligible aquaculture species must be:

• placed in the aquacultural facility by the producer and must not be growing naturally in the facility'
• planted or seeded on property described in section C above
• planted or seeded in containers, wire baskets, net pens, or similar device designated for the protection and containment of the seeded aquacultural species.