oversight

Disaster Assistance: USDA and SBA Could Do More to Help Aquaculture and Nursery Producers

Published by the Government Accountability Office on 2012-09-11.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                 United States Government Accountability Office

GAO              Report to the Chair, Committee on
                 Small Business and Entrepreneurship,
                 U.S. Senate


September 2012
                 DISASTER
                 ASSISTANCE
                 USDA and SBA Could
                 Do More to Help
                 Aquaculture and
                 Nursery Producers




GAO-12-844
                                            September 2012

                                            DISASTER ASSISTANCE
                                            USDA and SBA Could Do More to Help Aquaculture
                                            and Nursery Producers
Highlights of GAO-12-844, a report to the
Chair, Committee on Small Business and
Entrepreneurship, U.S. Senate




Why GAO Did This Study                      What GAO Found
Farmers and other agricultural              The U.S. Department of Agriculture’s (USDA) Farm Service Agency (FSA) and
producers are exposed to natural            the Small Business Administration (SBA) have 10 disaster assistance programs
disasters, such as droughts, floods,        that small agricultural producers and businesses that support agriculture can use
hurricanes, and tornadoes. In the           to recover from natural disasters. These programs serve largely different
aftermath of such events, FSA and           populations but leave few gaps in the disaster assistance available to most small
SBA disaster assistance programs can        agricultural producers. Aquaculture and nursery producers could be eligible for
provide an important safety net for         six of these programs, but their participation is limited by awareness and
these producers. However, after past        eligibility issues (see table).
natural disasters, industry groups and
others have raised concerns that some       FSA and SBA Disaster Assistance Programs and Types of Losses Covered
small agricultural producers—                    Program                                                                       Crops      Livestock   Land   Other
particularly aquaculture (such as                                                                                         a
                                                 FSA Supplemental Revenue Assistance Payments Program                             X
farmed fish and shellfish) and nursery                                              a                                                 b
                                                 FSA Tree Assistance Program                                                      X
(such as trees and plants) producers—
reported being ineligible to obtain this         FSA Livestock Indemnity Program                                                              X
                                                                                                                                                  c
assistance.                                      FSA Livestock Forage Disaster Program                                                        X
                                                 FSA Emergency Assistance for Livestock, Honeybees, and
GAO was asked to (1) examine FSA                 Farm-raised Fish Program
                                                                          a
                                                                                                                                  X
                                                                                                                                      d
                                                                                                                                              X
and SBA disaster assistance programs             FSA Emergency Conservation Program
                                                                                                a
                                                                                                                                                       X
and the coverage they provide to small           FSA Emergency Forest Restoration Program                                                              X
producers; (2) identify the main factors,        FSA Emergency Loan Program
                                                                                        a
                                                                                                                                                              X
if any, that may limit small aquaculture                                                               a
                                                 SBA Economic Injury Disaster Loan Program                                                                    X
and nursery producers’ participation in
                                                 SBA Business Physical Disaster Loan Program                                                                  X
these disaster assistance programs;
and (3) examine FSA and SBA efforts         Sources: GAO review of federal disaster assistance program information provided by FSA and SBA.
                                            a
to collaborate in providing such             These programs are available to small aquaculture or nursery producers.
                                            b
assistance to these producers. GAO           FSA’s Tree Assistance Program does not cover crop production losses but provides partial cost
reviewed the 10 FSA and SBA disaster        reimbursement to replant or rehabilitate trees, bushes, and vines.
                                            c
assistance programs that become                 This refers to the loss of grazing land for livestock.
                                            d
available following a natural disaster          For the purposes of this table, GAO defines crops to include honeybees and farm-raised fish.
and that provide direct financial           GAO identified three factors that may limit small aquaculture and nursery
assistance or loans to these producers,     producers’ participation in the 6 disaster assistance programs for which they
interviewed agency officials and            could be eligible. In particular, the producers are often not aware of the
industry representatives, and reviewed      programs, have other options for assistance, or do not qualify because they do
agency documents and regulations.           not meet certain program requirements. Both FSA and SBA conduct outreach
What GAO Recommends                         related to their disaster assistance programs, but neither agency has specifically
                                            targeted its efforts toward small aquaculture and nursery producers. As a result,
GAO recommends that USDA and                eligible producers are missing opportunities to obtain assistance that could help
SBA target outreach to small                them maintain a viable business after experiencing a natural disaster.
aquaculture and nursery producers, for
example, by building on existing            FSA and SBA engaged in some informal efforts to collaborate in providing
outreach, and develop a strategy to         disaster assistance to small aquaculture and nursery producers. However, the
formally collaborate on disaster            efforts were limited because FSA field staff know little about SBA’s disaster
assistance for such producers. USDA         assistance programs, and SBA staff know little about the factors that affect
and SBA generally concurred with            whether an agricultural loan will be repaid. GAO has reported that agencies with
GAO’s recommendations.                      complementary programs can enhance the value of these programs through
                                            interagency collaboration. Without more formal collaboration, small producers
View GAO-12-844. For more information,      may not be consistently referred by one agency to the other, leading to fewer
contact Lisa Shames at (202) 512-3841 or    opportunities for these small producers to get assistance for which they
shamesl@gao.gov and William B. Shear at
(202) 512-8678 or shearw@gao.gov.           otherwise might qualify.
                                                                                                           United States Government Accountability Office
Contents


Letter                                                                                                1
                       Background                                                                     4
                       Disaster Assistance Programs Leave Few Gaps in Coverage for
                         Small Agricultural Producers                                                 9
                       Awareness and Eligibility Issues Limit Small Aquaculture and
                         Nursery Producers’ Participation in Disaster Assistance
                         Programs                                                                   19
                       FSA and SBA Efforts to Collaborate on Disaster Assistance to
                         Small Aquaculture and Nursery Producers Are Limited                        26
                       Conclusions                                                                  29
                       Recommendations for Executive Action                                         30
                       Agency Comments                                                              30

Appendix I             Objectives, Scope, and Methodology                                           32



Appendix II            Federal Disaster Assistance Programs                                         35



Appendix III           GAO Contacts and Staff Acknowledgments                                       38



Related GAO Products                                                                                39



Tables
                       Table 1: 10 FSA and SBA Disaster Assistance Programs and Types
                                of Losses Covered                                                   10
                       Table 2: FSA Cash Assistance Programs                                        11
                       Table 3: FSA and SBA Disaster Loan Programs                                  16
                       Table 4: Disaster Assistance Programs That Cover Aquaculture and
                                Nursery Losses                                                      19




                       Page i                                 GAO-12-844 Agriculture Disaster Assistance
Abbreviations

ELAP                       Emergency Assistance for Livestock, Honeybees,
                           and Farm-raised Fish Program
FEMA                       Federal Emergency Management Agency
FSA                        Farm Service Agency
NAP                        Noninsured Crop Disaster Assistance Program
RMA                        Risk Management Agency
SBA                        Small Business Administration
SURE                       Supplemental Revenue Assistance Payments
                           Program
TAP                        Tree Assistance Program
the 2008 farm bill         Food, Conservation, and Energy Act of 2008
USDA                       U.S. Department of Agriculture




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Page ii                                        GAO-12-844 Agriculture Disaster Assistance
United States Government Accountability Office
Washington, DC 20548




                                   September 11, 2012

                                   The Honorable Mary L. Landrieu
                                   Chair
                                   Committee on Small Business and Entrepreneurship
                                   United States Senate

                                   Dear Madam Chair:

                                   Farmers and other agricultural producers are exposed to natural
                                   disasters, such as droughts, floods, hurricanes, and tornadoes. Small
                                   agricultural producers, which the U.S. Department of Agriculture (USDA)
                                   describes as a diverse group that produces a range of food and fiber and
                                   that can include family farms, commodity producers, aquaculture (such as
                                   farmed fish and shellfish) producers, nursery producers (such as trees
                                   and plants), and other farmers and ranchers. These producers are
                                   particularly vulnerable to disasters because they tend to have less control
                                   over their economic security than larger producers, and natural disasters
                                   can exacerbate this economic insecurity. In the aftermath of such natural
                                   disasters, federal disaster assistance programs can provide an important
                                   safety net for these producers. However, after past natural disasters,
                                   some small agricultural producers, particularly aquaculture and nursery
                                   producers, reported challenges in obtaining this assistance. For example,
                                   following the Gulf Coast hurricanes in 2005 and 2006 and other natural
                                   disasters, some crawfish, oyster, and catfish producers whose operations
                                   were severely damaged reported that they did not have the safety net that
                                   they expected.

                                   Both USDA, through its Farm Service Agency (FSA), and the Small
                                   Business Administration (SBA) are major sources of disaster assistance,
                                   but there is little overlap in the populations served by the FSA and SBA
                                   programs. Specifically, FSA provides financial assistance in the form of
                                   cash payments and reimbursements, as well as loans to help agricultural
                                   producers recover from damages sustained in natural disasters. It
                                   provides this assistance for producers who have sustained crop and
                                   livestock losses resulting from natural disasters through five supplemental
                                   disaster assistance programs authorized under Title XV of the 2008 farm




                                   Page 1                                 GAO-12-844 Agriculture Disaster Assistance
bill, as well as three other programs. 1 These programs only cover losses
incurred as a result of a disaster that occurred on or before September
30, 2011, but payments are currently being made for disaster losses
incurred from January 1, 2008, through September 30, 2011. A new farm
bill was being debated as of August 2012, and the final bill may
reauthorize some of these programs and may include retroactive
assistance for damages resulting from natural disasters occurring after
September 30, 2011. In addition, while SBA disaster loans primarily serve
nonagricultural entities, SBA also has authority to and does provide loans
to help some small agricultural producers and businesses that support
agriculture recover from disasters. However, after past natural disasters,
some stakeholders, including certain industry groups and others, raised
concerns that some small agricultural producers, including aquaculture
and nursery producers, have been found ineligible for both agencies’
disaster assistance programs. In addition, it is not clear whether FSA and
SBA are collaborating effectively to ensure that these producers are
served.

In this context, you asked us to examine the disaster assistance
programs available to small agricultural producers. In this report, our
objectives were to (1) examine FSA and SBA disaster assistance
programs and the coverage they provide small producers; (2) identify the
main factors, if any, that may limit small aquaculture and nursery
producers’ participation in disaster assistance programs from FSA and
SBA; and (3) examine FSA and SBA efforts to collaborate in providing
disaster assistance to small aquaculture and nursery producers.

To address these objectives, we reviewed the 10 FSA and SBA disaster
assistance programs we identified for agricultural producers and
businesses that support agriculture that become available following a
natural disaster and that provide direct financial assistance in cash
payments, reimbursements, or loans to agricultural producers and
businesses that support agriculture that have experienced natural
disasters. We use the term “agricultural producers” to refer to family
farms, commodity producers, aquaculture producers, nursery producers,
and other farmers and ranchers. Businesses that support agriculture
refers to businesses that provide support activities for agriculture that do



1
 Food, Conservation, and Energy Act of 2008, Pub. L. No. 110-246, § 15101, 122 Stat.
1651, 2246-2262.




Page 2                                       GAO-12-844 Agriculture Disaster Assistance
not lead to agricultural production. Examples of support activities include
such duties as cotton ginning, soil preparation, planting, and breeding
services for animals. Our primary focus was on small agricultural
producers as described by USDA. We included family farms and other
farmers and ranchers whose size makes them particularly vulnerable to
natural disasters and in turn to economic insecurity. 2 We used available
FSA- or SBA-established agricultural producer size criteria for program
eligibility in our review. To determine the types of small agricultural
producers the 10 FSA and SBA programs cover, we reviewed agency
documents, authorizing statutes, and implementing regulations to obtain
information about each program, including eligibility requirements, and
interviewed FSA and SBA officials. When analyzing whether any gaps in
coverage exist, we analyzed major categories of agricultural producers
involved in the production of food and fiber, including commodities such
as wheat, feed grains, cotton, rice, oilseeds, and peanuts; specialty crops
such as fruits, vegetables, tree nuts, and nursery crops including
floriculture; livestock; and aquaculture. We believe that this analysis of
major categories allowed us to reasonably identify where any gaps in
coverage may be present. However, we recognize that we may not have
detected additional gaps in coverage that may exist. We focused our
second objective on the factors limiting small aquaculture and nursery
producers’ participation in these disaster assistance programs because
aquaculture and nursery producers are covered by at least one of the
disaster assistance programs offered by both FSA and SBA. Other
agricultural producers are not covered by the SBA programs. To identify
any factors limiting small nursery and aquaculture producers’ participation
in these disaster assistance programs, we reviewed the eligibility criteria
for the programs that pertain to them and interviewed FSA and SBA
officials. We assessed the agencies’ outreach policies and practices
against our prior reports on reaching a program’s intended recipients. 3


2
 For individual borrowers, FSA’s definition of “family farm” specifies that the majority of
day-to-day, operational decisions and all strategic management decisions be made by the
borrower or a relative, and a substantial amount of labor to operate the farm be provided
by the borrower or a relative. For corporations, partnerships, or other entities, the majority
of day-to-day, operational decisions, and all strategic management decisions must be
made, and a substantial amount of labor to operate the farm be provided by the members
responsible for operating the farm.
3
 GAO, Designing Evaluations: 2012 Revision, GAO-12-208G (Washington, D.C.: Jan. 31,
2012) and GAO, Managing for Results: Views on Ensuring the Usefulness of Agency
Performance Information to Congress, GAO/GGD-00-35 (Washington, D.C.: Jan. 26,
2000).




Page 3                                           GAO-12-844 Agriculture Disaster Assistance
             We also interviewed state-level FSA officials and industry representatives
             in seven selected states about the main factors that may limit participation
             in disaster assistance programs from FSA and SBA. We selected these
             states because the nursery and aquaculture industries have a significant
             presence in them. In selecting them, we also considered the geographic
             distribution of the states to ensure that a variety of places experiencing
             different types of natural disasters was included. Because we selected a
             nonprobability sample of states, the information we collected from them
             cannot be generalized to all states; however, the information provides
             useful examples of the factors that may limit participation in disaster
             assistance programs from FSA and SBA in those states. The states we
             selected were California, Florida, Louisiana, Michigan, Mississippi, North
             Carolina, and Washington. To determine how FSA and SBA collaborate
             to provide disaster assistance to small nursery and aquaculture
             producers, we reviewed FSA and SBA documents and interviewed
             national- and state-level agency officials to obtain information about the
             agencies’ policies and practices for collaborating on disaster assistance.
             We also examined the degree to which the agencies’ collaborative efforts
             reflected key practices we previously identified that can help enhance and
             sustain collaboration among federal agencies. 4 Appendix I provides more
             information on our objectives, scope, and methodology.

             We conducted this performance audit from September 2011 to
             September 2012 in accordance with generally accepted government
             auditing standards. Those standards require that we plan and perform the
             audit to obtain sufficient, appropriate evidence to provide a reasonable
             basis for our findings and conclusions based on our audit objectives. We
             believe that the evidence obtained provides a reasonable basis for our
             findings and conclusions based on our audit objectives.


             Natural disasters, such as droughts, floods, hurricanes, and other
Background   adverse weather events, pose risks to agricultural producers. The federal
             government has played an active role in mitigating those risks through a
             variety of disaster assistance programs. USDA provides a basic safety
             net of permanently authorized and regularly funded programs to help
             agricultural producers recover financially from losses resulting from



             4
              GAO, Results-Oriented Government: Practices That Can Help Enhance and Sustain
             Collaboration among Federal Agencies, GAO-06-15 (Washington, D.C.: Oct. 21, 2005).




             Page 4                                      GAO-12-844 Agriculture Disaster Assistance
                              natural disasters. Congress has historically supplemented these ongoing
                              programs in an ad hoc manner by providing one-time payments through
                              disaster assistance programs that compensate producers for disaster-
                              related crop and livestock losses they sustained. The aquaculture and
                              nursery industries are two growing agricultural industries covered by
                              federal disaster assistance.


Federal Crop Insurance        The Federal Crop Insurance Program and the Noninsured Crop Disaster
and Noninsured Crop           Assistance Program (NAP) offer agricultural producers protection against
Disaster Assistance           crop losses if they enroll in the programs prior to experiencing a loss. 5
                              Federal crop insurance, administered by USDA’s Risk Management
Programs Provide a Basic
                              Agency (RMA), protects participating farmers against financial losses
Safety Net for Agricultural   because of production risks—droughts, floods, and other natural
Producers                     disasters—as well as other risks. Under the Federal Crop Insurance
                              Program, farmers can choose various levels and types of insurance
                              protection: they can insure against losses caused by poor crop yields,
                              declines in crop prices, or both, for each insurable crop they produce.
                              These crops include major crops—such as corn, cotton, soybeans, and
                              wheat, which accounted for three-quarters of the acres enrolled in the
                              program in 2011—as well as nursery crops and certain fruits and
                              vegetables. RMA is also conducting pilot aquaculture crop insurance
                              projects for clams and oysters. For crops for which federal crop insurance
                              is not available, farmers can obtain coverage through FSA’s NAP, which
                              provides cash payments to producers when natural disasters are
                              responsible for low crop yields or loss of value or prevent planting from
                              occurring. NAP is limited by statute to include crops for which the
                              catastrophic risk protection level of crop insurance is not available and
                              that are grown for food and fiber, and other crops such as floriculture,
                              ornamental nursery, Christmas tree crops, turfgrass sod, and
                              aquaculture.

                              Disaster declarations are required to trigger some federal disaster
                              assistance programs. For agricultural disaster assistance programs,
                              disaster declarations can be made by the President, the Secretary of




                              5
                               We previously reported on the costs of the federal crop insurance program. See GAO,
                              Crop Insurance: Savings Would Result from Program Changes and Greater Use of Data
                              Mining, GAO-12-256 (Washington, D.C.: Mar. 13, 2012).




                              Page 5                                       GAO-12-844 Agriculture Disaster Assistance
                             Agriculture, or the SBA Administrator. 6 The Robert T. Stafford Disaster
                             Relief and Emergency Assistance Act authorizes the President to issue
                             major disaster or emergency declarations in response to catastrophes in
                             the United States that overwhelm state and local governments. Such
                             declarations result in the distribution of a wide range of federal aid to
                             individuals and families, certain nonprofit organizations, and public
                             agencies (see app. II). The Federal Emergency Management Agency
                             (FEMA), in the Department of Homeland Security, is responsible for
                             coordinating federal response and recovery efforts under presidential
                             disaster declarations. FEMA works with other federal, state, and local
                             agencies to assist individuals after major disasters, and volunteer
                             organizations, such as the American Red Cross, also participate in these
                             efforts. 7 Following a presidential disaster declaration, FEMA will open
                             disaster recovery centers where individuals can meet with representatives
                             from federal agencies, including FSA and SBA; obtain information about
                             the recovery process; and register for federal disaster assistance.


Federal Disaster             In addition to crop insurance and NAP, which are purchased before a
Assistance Programs That     disaster, FSA provides eight disaster assistance programs that become
Become Available to          available to producers after a natural disaster. Title XV of the Food,
                             Conservation, and Energy Act of 2008 (the 2008 farm bill) established five
Agricultural Producers and   disaster assistance programs that provide assistance to agricultural
Businesses That Support      producers who suffer crop and livestock losses incurred as a result of a
Agriculture Following a      disaster, adverse weather, or other environmental condition that occurred
Natural Disaster             on or before September 30, 2011. 8 Agricultural producers may apply for
                             this assistance following a natural disaster. USDA’s FSA administers
                             these programs and funds them through the Agricultural Disaster Relief


                             6
                              The President can issue a major disaster or emergency declaration in response to a
                             catastrophe that overwhelms state and local governments. The Secretary of Agriculture
                             can make a determination that there has been a natural disaster. The SBA Administrator
                             can declare a disaster because of various physical damages or economic injuries.
                             7
                              Presidentially declared disasters require that FEMA have overall responsibility for
                             coordinating federal assistance, but there are several other types of disaster declarations,
                             such as those made by the Secretary of Agriculture or SBA, that do not involve FEMA.
                             Such declarations instead make various disaster assistance from SBA, FSA, and other
                             state and local authorities available to producers.
                             8
                              We evaluated past ad hoc disaster assistance programs to inform FSA’s implementation
                             of the 2008 farm bill disaster assistance programs. See GAO, USDA Crop Disaster
                             Programs: Lessons Learned Can Improve Implementation of New Crop Assistance
                             Program, GAO-10-548 (Washington, D.C.: June 4, 2010).




                             Page 6                                          GAO-12-844 Agriculture Disaster Assistance
Trust Fund providing approximately $3.6 billion in assistance through the
end of calendar year 2011 to agricultural producers of all sizes. 9

The five programs are the following:

•   The Supplemental Revenue Assistance Payments Program (SURE)
    provides cash assistance for agricultural producers with crop
    production losses or crop quality losses.
•   The Tree Assistance Program (TAP) provides partial cost
    reimbursements to orchard and nursery producers for replanting or
    rehabilitating lost or damaged trees, bushes, or vines.
•   The Livestock Indemnity Program provides cash assistance to
    producers for livestock deaths.
•   The Livestock Forage Disaster Program provides cash assistance to
    livestock producers when their livestock are prevented from grazing
    due to drought or fire on federally managed land.
•   The Emergency Assistance for Livestock, Honeybees, and Farm-
    raised Fish Program (ELAP) provides cash assistance to eligible
    producers who have losses that are not covered under the other 2008
    farm bill programs due to adverse weather and disease, among other
    things.
FSA also administers three other disaster assistance programs that
producers can apply for following a disaster. These programs are
generally funded through annual appropriations and are as follows:

•   The Emergency Forest Restoration Program, which also was created
    in the 2008 farm bill, provides payments to eligible owners of
    nonindustrial private forestland to carry out emergency measures to
    restore land damaged by a natural disaster. This program was
    implemented in 2010 to cover disasters starting in January 2010. It
    has provided $2 million from fiscal years 2010 through 2011.
•   The Emergency Conservation Program provides funding and
    technical assistance for farmers and ranchers who carry out
    emergency measures to rehabilitate farmland damaged by natural
    disasters and for carrying out emergency water conservation
    measures in periods of severe drought. This program provided $345
    million from fiscal years 2008 through 2011.



9
 Funds are appropriated to the Agricultural Disaster Relief Trust Fund from the general
fund of the Treasury based on agricultural trade duties.




Page 7                                         GAO-12-844 Agriculture Disaster Assistance
                          •    The Emergency Loan Program helps agricultural producers recover
                               from production and physical losses. Unlike FSA’s other disaster
                               assistance programs, the Emergency Loan Program is available only
                               to small agricultural producers, which USDA classifies as family-sized
                               farms. FSA obligated $32 million for the Emergency Loan Program in
                               fiscal year 2011.
                          By law, SBA is prohibited from providing disaster loans to most
                          agricultural producers. However, SBA has two loan programs that are
                          relevant to agriculture and provided 103 loans totaling about $15 million in
                          disaster loans to eligible small aquaculture producers, nursery producers
                          affected by drought, and businesses that support agriculture that reported
                          losses to SBA from October 2007 through the end of 2011. 10 The two
                          programs are the following:

                          •    The Economic Injury Disaster Loan Program provides working capital
                               loans for disaster-related needs to meet financial obligations that
                               could have been met had the disaster not occurred. Small businesses
                               or private nonprofit organizations are eligible for these loans if they
                               have suffered substantial economic injury—i.e., the business cannot
                               meet its obligations or pay necessary operating expenses—as a direct
                               result of a declared disaster. Aquaculture producers and nursery
                               producers affected by drought may qualify for these loans.
                          •    The Business Physical Disaster Loan Program provides loans for a
                               business to repair, rehabilitate, or replace damaged property,
                               including real estate, equipment, inventory, and fixtures. Any
                               business, other than an agricultural enterprise, or private, nonprofit
                               organization (large or small) located in a declared disaster area that
                               has incurred damage during the disaster may apply for these loans,
                               including businesses that support agriculture.

Characteristics of        The 10 USDA and SBA disaster assistance programs have slightly
Aquaculture and Nursery   different definitions for aquaculture. USDA defines aquaculture as the
Industries                production and rearing of aquatic species under controlled or selected
                          environments. SBA uses a definition from the U.S. Department of
                          Commerce’s National Oceanic and Atmospheric Administration, which
                          defines aquaculture as the propagation and rearing of aquatic organisms
                          in controlled or selected aquatic environments for any commercial,


                          10
                            SBA provided another 199 loans totaling $7.7 billion to nonfarm fishing, hunting and
                          trapping businesses over that same time period.




                          Page 8                                         GAO-12-844 Agriculture Disaster Assistance
                       recreational or public purpose. A 2012 Congressional Research Service
                       report stated that, until recently and with a few exceptions, U.S.
                       aquaculture has been considered a minor industry. 11 USDA’s 2005
                       Census of Aquaculture reported that U.S. sales of aquaculture products
                       were approximately $1.1 billion. Aquaculture crops include fish for human
                       consumption, such as catfish, salmon, and trout; crustaceans such as
                       crawfish; mollusks such as oysters and clams; and ornamental fish and
                       baitfish. Fish for human consumption and baitfish are normally grown in
                       freshwater. Crawfish are grown in freshwater, and farm-raised oysters
                       and clams are grown in coastal areas of the United States.

                       Nursery producers grow a variety of trees and plants, such as oak trees,
                       shrubs, and potted plants, with some producers growing hundreds of
                       varieties. USDA has reported that, since the 1970s, the greenhouse and
                       nursery industry had been growing more rapidly than all other agricultural
                       commodities, in terms of cash receipts. Cash receipts for the top five
                       greenhouse and nursery producing states were nearly $10 billion in 2006.


                       The 10 FSA and SBA disaster assistance programs we identified that
Disaster Assistance    small agricultural producers and businesses that support agriculture can
Programs Leave Few     use to recover from natural disasters provide assistance that can cover
                       most losses. FSA provides cash assistance to agricultural producers,
Gaps in Coverage for   including small producers, for crop and livestock losses and damages to
Small Agricultural     land. FSA also provides disaster loans to these producers to cover
                       production losses, while SBA provides disaster loans to cover physical
Producers              damages and economic injury losses to businesses that support
                       agriculture and economic injury to a limited aquaculture sector and for
                       nurseries only when a drought is declared. Together, the FSA and SBA
                       disaster assistance programs are fragmented, but they leave few gaps in
                       the assistance available to most small agricultural producers in the wake
                       of a natural disaster. 12 Table 1 lists the 10 cash assistance and loan
                       programs we identified and the types of losses they cover.



                       11
                         Congressional Research Service, Fishery, Aquaculture, and Marine Mammal Issues in
                       the 112th Congress (Washington, D.C.: May 9, 2012).
                       12
                         Fragmentation refers to those circumstances in which more than one federal agency (or
                       more than one organization within an agency) is involved in the same broad area of
                       national interest. For more information, see GAO, 2012 Annual Report: Opportunities to
                       Reduce Duplication, Overlap and Fragmentation, Achieve Savings, and Enhance
                       Revenue. GAO-12-342SP (Washington, D.C.: Feb. 28, 2012).




                       Page 9                                        GAO-12-844 Agriculture Disaster Assistance
Table 1: 10 FSA and SBA Disaster Assistance Programs and Types of Losses Covered

Program                                                                                                        Crops         Livestock    Land   Other
FSA Supplemental Revenue Assistance Payments Program (SURE)                                                       X
FSA Tree Assistance Program (TAP)                                                                                 Xa
FSA Livestock Indemnity Program                                                                                                    X
FSA Livestock Forage Disaster Program                                                                                              Xb
                                                                                                                    c
FSA Emergency Assistance for Livestock, Honeybees, and Farm-raised Fish Program                                   X                X
(ELAP)
FSA Emergency Forest Restoration Program                                                                                                   X
FSA Emergency Conservation Program                                                                                                         X
FSA Emergency Loan Program                                                                                                                        X
SBA Economic Injury Disaster Loan Program                                                                                                         X
SBA Business Physical Disaster Loan Program                                                                                                       X
                                        Sources: GAO review of federal disaster assistance program information provided by FSA and SBA.
                                        a
                                         FSA’s Tree Assistance Program does not cover crop production losses but provides partial cost
                                        reimbursements to replant or rehabilitate trees, bushes, and vines.
                                        b
                                            This refers to the loss of grazing land for livestock.
                                        c
                                            For the purposes of this table, we define crops to include honeybees and farm-raised fish.


FSA Provides Cash                       Agricultural producers, including small producers, such as family farms,
Assistance for Crop and                 can apply for cash assistance under seven FSA programs that provide
Livestock Losses and                    cash payments and reimbursements for losses resulting from natural
                                        disasters to a wide variety of crops and livestock, as well as damages to
Damages to Land                         farmland and forests (table 2). Qualifying natural disasters generally
                                        include adverse weather events such as droughts, floods, hurricanes, and
                                        blizzards; however, each program specifies the types of disasters that it
                                        covers. Five of the seven programs—(1) SURE, (2) TAP, (3) the
                                        Livestock Indemnity Program, (4) the Livestock Forage Disaster Program,
                                        and (5) ELAP—were authorized by Title XV of the 2008 farm bill and
                                        cover losses and damages resulting from natural disasters that occurred
                                        from January 1, 2008, through September 30, 2011. 13 They have several
                                        common eligibility requirements. For example, producers must have
                                        purchased crop insurance or enrolled in NAP prior to incurring damages
                                        or, for crop years 2008 and 2009, must obtain a waiver from those
                                        requirements from USDA to receive benefits under SURE, ELAP, and
                                        TAP. However, limited resource (i.e., having limited gross farm sales or


                                        13
                                          The SURE program covers losses beginning with the 2008 crop year. A crop year is
                                        determined by USDA based on when the crop is normally harvested.




                                        Page 10                                                            GAO-12-844 Agriculture Disaster Assistance
household income), socially disadvantaged (i.e., belonging to a racial or
ethnic group subject to racial or ethnic prejudice), and beginning farmers
and ranchers (i.e., not having operated a farm or ranch for more than 10
consecutive years) may be exempted from this requirement. The other
two programs—the Emergency Forest Restoration Program and the
Emergency Conservation Program—are authorized in separate legislation
and cover losses on an ongoing basis from funds generally made
available through the appropriations process.

Table 2: FSA Cash Assistance Programs

    Program                          Description                                            Covered losses
    SUREa                            Cash payments for agricultural producers               Crops and some
                                     with qualifying crop production losses or              aquaculture
                                     crop quality losses.
    TAPa                             Partial reimbursement for qualifying         Orchards and
                                     orchardists and nursery producers to replant nurseries
                                     or rehabilitate eligible trees, bushes, and
                                     vines.
    Livestock Indemnity              Cash assistance for livestock deaths in                Livestock,
    Programa                         excess of normal mortality due to adverse              including some
                                     weather.                                               aquaculture, and
                                                                                            honeybees
    Livestock Forage                 Cash assistance for livestock grazing losses
    Disaster Programa                caused by qualifying drought conditions or a
                                     fire on federal land used for grazing.
    ELAPa                            Cash assistance for livestock feed and
                                     grazing losses and deaths; honeybee
                                     colony, hive and feed losses; and farm-
                                     raised fish deaths and feed losses that are
                                     not covered by other farm bill disaster
                                     assistance programs.
    Emergency Forest                 Partial reimbursement for owners of                    Land
    Restoration Program              nonindustrial private forest land in order to
                                     carry out emergency measures to restore
                                     damaged land.
    Emergency                        Partial reimbursement for agricultural
    Conservation Program             producers to rehabilitate farmland that has
                                     been severely damaged.
Sources: GAO review of federal disaster assistance program information provided by FSA.
a
 These programs, authorized under the 2008 farm bill, cover only losses incurred as a result of
disasters that occurred on or before September 30, 2011. Payments are currently being made for
disaster losses that occurred from January 1, 2008, through September 30, 2011.




Page 11                                                             GAO-12-844 Agriculture Disaster Assistance
Crop Losses   Two programs cover crop losses:

              •   SURE covers crops for which federal crop insurance or NAP is
                  available, including corn and other commodities, fresh produce,
                  organic crops, apples and other fruit, and nursery products. Losses to
                  catfish, crawfish, and other aquaculture species are also covered
                  under SURE; however, livestock losses are not covered. Agricultural
                  producers who have suffered a 10 percent crop loss on at least one
                  crop of economic significance on their farm are eligible if they are
                  located in a declared disaster county or a county adjacent to a
                  disaster county. 14 In addition, producers who have lost 50 percent or
                  more of the normal production on their farms from a natural disaster
                  may also qualify for SURE, even if they are not located in a declared
                  disaster county or contiguous county. Reductions in crop quantity and
                  quality due to natural disasters are counted as losses and, in some
                  cases, losses that occur because a natural disaster prevented a
                  producer from planting a crop are also counted. The amount of the
                  SURE payment is a percentage of the difference between the SURE
                  guarantee and the total farm revenue for the producer’s entire farm,
                  not the value of lost crops. The SURE guarantee is calculated based
                  on the level of crop insurance or NAP coverage the producer has and
                  historic production or value of lost crops. In general, the more
                  insurance purchased, the higher the SURE payment.
              •   TAP is a cost-reimbursement program that provides cost-share
                  payments to orchard and nursery producers for replanting or
                  rehabilitating lost or damaged trees, bushes, or vines for commercial
                  purposes. Nursery trees that are produced for commercial sale,
                  including ornamental trees, fruit and nut trees, and Christmas trees,
                  are also covered. Trees used for pulp or timber are not covered. To
                  receive benefits, a producer must have sustained a loss in excess of
                  15 percent of the trees, bushes, or vines in an individual stand—a
                  contiguous acreage of the same type of plant—after adjusting for
                  normal mortality or damage. TAP reimburses producers for 70 percent
                  of the cost of replanting trees, bushes, and vines, and 50 percent of
                  the costs to remove, prune, or other costs to salvage damaged trees,
                  bushes, and vines, or to prepare the land to plant new ones.




              14
                Crop of economic significance means any crop that contributed, or is expected to
              contribute, 5 percent or more of the total expected value of all crops grown by the
              producer.




              Page 12                                        GAO-12-844 Agriculture Disaster Assistance
Livestock and Livestock-   The following three programs cover livestock and livestock-related losses:
Related Losses
                           •   The Livestock Indemnity Program provides cash assistance to
                               livestock producers for the deaths of a wide variety of livestock that
                               are produced or maintained for commercial use, ranging from cattle,
                               poultry, and swine to alpacas and reindeer, among others. Producers
                               who raise poultry and swine under contracts can also receive
                               assistance. Deaths must be in excess of normal mortality for the
                               animal and have been caused by adverse weather, including extreme
                               heat or cold and other weather events. Deaths resulting from drought
                               are not covered. 15 Producers are paid 75 percent of the fair market
                               value of the livestock. The Livestock Indemnity Program does not
                               cover aquaculture.
                           •   The Livestock Forage Disaster Program provides cash assistance to
                               livestock producers when their livestock are prevented from grazing
                               because the land or pasture they normally graze on has been affected
                               by a drought. To be eligible, producers’ land must be physically
                               located in a county affected by a qualifying drought during the normal
                               grazing period, as determined by the U.S. Drought Monitor, a joint
                               federal-academic system for classifying drought severity according to
                               a range of abnormally dry to exceptional drought, produced on a
                               weekly basis. Payment for drought-related grazing losses is based on
                               the severity of the drought and the cost of feed. In addition, the
                               Livestock Forage Disaster Program provides cash assistance to
                               producers who have been prevented from grazing on federally
                               managed rangeland because of fire when they normally would have
                               been permitted to. Payment for fire-related grazing losses is
                               calculated by multiplying 50 percent of the monthly feed cost by the
                               number of days the producer is prohibited from grazing, for up to 180
                               days.
                           •   ELAP provides cash assistance to eligible producers who have losses
                               from disease, adverse weather, or other conditions that are not
                               covered under SURE, the Livestock Indemnity Program, or the
                               Livestock Forage Disaster Program. FSA officials told us it is a
                               catchall program meant to fill gaps left by the other programs. For
                               example, ELAP has covered livestock losses from wolf attacks.
                               According to the officials, livestock being killed by gray wolves that



                           15
                             Because feed can be purchased or otherwise obtained in the event of a drought,
                           drought is not an eligible adverse weather event except when anthrax, resulting from
                           drought, causes the death of eligible livestock.




                           Page 13                                        GAO-12-844 Agriculture Disaster Assistance
                      were recently reintroduced into the western United States is fairly
                      common, and producers cannot hunt the wolves because they are a
                      protected species. In addition, honeybee producers are eligible for
                      ELAP if they have colony or hive losses from adverse weather or
                      other eligible loss conditions, including colony collapse disorder, an
                      unexplained phenomenon in which, other than a live queen, there are
                      no other or a low number of adult honeybees present in a hive. ELAP
                      also covers farm-raised fish feed losses and death losses of eligible
                      farm-raised game or sport fish for aquaculture producers and livestock
                      feed and grazing losses that result from natural disasters other than
                      drought or fires on federally managed lands. Depending on the type of
                      loss, payment amounts are calculated based on 75, 60, or 50 percent
                      of the value of the loss. However, the farm bill limits the amount of
                      assistance that can be approved each year under the program to
                      $50,000,000. FSA may prorate payment amounts to reduce the total
                      expected paid out.

Damages to Land   Two programs cover damages and losses to land. FSA has set a national
                  minimum qualifying restoration cost of $1,000 for these programs,
                  although FSA state-level offices are authorized to set a higher minimum.
                  However, according to FSA officials, the national qualifying minimum cost
                  of restoration for Emergency Conservation Program participants who
                  claim limited resource status is $250. These two programs are as follows:

                  •   The Emergency Forest Restoration Program is a cost-reimbursement
                      program that provides payments to owners of nonindustrial private
                      forestland that has been damaged by a natural disaster. The land
                      must have, or had, tree cover immediately before the natural disaster
                      and the damages, if not addressed, must be expected to impair or
                      endanger the natural resources on the land and materially affect its
                      future use. The program is not limited to agricultural producers, but
                      FSA officials told us that many of them participate in it. For example,
                      producers have used it to remove farm equipment and debris that a
                      natural disaster blew off their farmland into their adjacent forestland.
                      The Emergency Forest Restoration Program covers up to 75 percent
                      of the qualifying cost to implement FSA-approved practices to repair
                      damage to natural resources and restore forest health and forest-
                      related resources on the land.
                  •   The Emergency Conservation Program generally reimburses
                      agricultural producers for up to 75 percent of the cost to rehabilitate
                      farmland that has been severely damaged by a natural disaster.
                      Qualified limited resource producers may receive up to 90 percent.
                      Land must be expected to have annual agricultural production, be



                  Page 14                                 GAO-12-844 Agriculture Disaster Assistance
                                used as a windbreak or shelterbelt, or a farm access road. This
                                includes grazing land for commercial livestock production, land used
                                for producing agricultural commodities, and privately owned land used
                                for commercial aquaculture; however, certain types of land, including
                                state-owned coastal waters that aquaculture producers lease, do not
                                qualify. The Emergency Conservation Program also covers
                                commercial orchards, land used for container-grown nursery stock,
                                and Christmas tree farms but does not cover land used for timber
                                production. Land that is subject to frequent damage or susceptible to
                                severe damage is also excluded.

FSA and SBA Disaster        FSA provides disaster loans to small agricultural producers that have
Loans Cover Production      experienced production losses or physical losses, while SBA provides
Losses, Physical Damages,   loans for small businesses, small agricultural cooperatives, and private
                            nonprofit organizations that have suffered substantial economic injury
and Economic Losses         (table 3). Officials from both agencies told us that agricultural producers
                            generally apply for disaster loans only when crop insurance or cash
                            assistance is insufficient or unavailable to cover their losses because,
                            unlike a loan, these other sources of disaster assistance do not have to
                            be repaid. Nonetheless, officials said that the loans are an important
                            source of assistance for those producers who need them. As of July 11,
                            2012, USDA announced that the interest rate for FSA’s Emergency Loan,
                            which is set by the Secretary of Agriculture, would decrease from 3.75
                            percent to 2.25 percent, which the agency says will make the rates more
                            comparable to other rates in the market. Interest rates for SBA’s loans are
                            set when the disaster declaration is made but are capped at 4 percent
                            unless SBA determines that the applicant can obtain a loan from a
                            commercial bank. To prevent duplication of benefits, the FSA and SBA
                            loan programs require that disaster assistance funds received from other
                            sources be deducted from the amount of an applicant’s qualified loan
                            amount.




                            Page 15                                GAO-12-844 Agriculture Disaster Assistance
Table 3: FSA and SBA Disaster Loan Programs

    Program                       Provisions                                        Covered losses
    FSA’s Emergency               Provides up to $500,000 to help                   Crops, livestock, equipment,
    Loan Program                  agricultural producers recover                    and other farm property
                                  from production and physical
                                  losses from drought, flooding,
                                  other natural disasters, or
                                  quarantine.
    SBA’s Economic       Provides up to $2 million in                               Working capital for small
    Injury Disaster Loan working capital for disaster-                              businesses, including small
    Program              related needs until the business                           aquaculture enterprises, small
                                   a
                         recovers.                                                  nurseries affected by a
                                                                                    drought disaster declaration,
                                                                                    small agricultural
                                                                                    cooperatives, and businesses
                                                                                    that support agriculture
    SBA’s Physical                Provides up to $2 million for a                   Businesses that support
    Disaster Loan                 business to repair, rehabilitate, or              agriculture and nonagricultural
    Program                       replace damaged property,                         components of agricultural
                                  including real estate, equipment,                 businesses (e.g., a processing
                                  inventory, and fixtures.a                         facility)
Sources: GAO review of federal disaster loan program information provided by FSA and SBA.
a
 The aggregate loan limit for economic injury and physical disaster loans cannot exceed the lesser of
the uncompensated economic injury and physical loss or $2 million. The SBA Administrator may
increase the $2 million loan limit based on appropriate economic indicators for a region.


FSA and SBA disaster loans are a backup option for small agricultural
producers and businesses that do not qualify for commercial loans.
However, applicants must still demonstrate that they will be able to repay
the loans and, with some exceptions, they must provide collateral. In
addition, each of the loan programs has additional eligibility requirements.

To qualify for an FSA Emergency Loan, aquaculture and nursery
producers must meet the “family farm” size criteria. In addition, the
producer must have suffered at least a 30 percent loss in crop production,
or any amount of physical loss to real estate or farm property, such as
equipment or livestock. The farm or ranch must be located in a declared
disaster county or qualifying nearby county. Small aquaculture and
nursery producers are eligible for FSA Emergency Loans, provided that
they meet the general program requirements.

Small aquaculture and nursery producers are also eligible for SBA’s
Economic Injury Disaster Loans; however, other types of agricultural
producers are not. Under SBA operating procedures, small aquaculture
producers whose businesses can be classified as aquaculture enterprises



Page 16                                                            GAO-12-844 Agriculture Disaster Assistance
                          within the North American Industry Classification System codes and meet
                          the general loan requirements are eligible for Economic Injury Disaster
                          Loans. The North American Industry Classification System is the standard
                          used by Federal statistical agencies in classifying business
                          establishments for the purpose of collecting, analyzing, and publishing
                          statistical data related to the U.S. business economy. However, small
                          nursery producers are only eligible when they are affected by drought
                          disasters designated by the Secretary of Agriculture. Small agricultural
                          cooperatives and businesses that support agriculture, such as planting
                          and animal breeding services, are also eligible for Economic Injury
                          Disaster Loans. SBA’s Physical Disaster Loans are not available to
                          agricultural producers, including aquaculture and, according to SBA
                          officials, nurseries that derive at least half of their annual income from
                          producing and selling nursery products. However, if an agricultural
                          producer also has a separate component to the business, such as a
                          processing facility, the separate business may be eligible for assistance.


Gaps in Disaster          There are few gaps in the disaster assistance available to most small
Assistance Coverage Are   agricultural producers after a natural disaster occurs, according to our
Few                       review of FSA and SBA disaster assistance programs. The agencies’
                          cash assistance and loan programs supplement the assistance provided
                          through the Federal Crop Insurance Program and NAP. In other cases,
                          exclusions or limitations specified in one disaster assistance program
                          may be covered in another disaster assistance program. For example,
                          crawfish, catfish, or many other aquaculture losses are covered by SURE
                          but not other FSA disaster assistance programs because, as previously
                          noted, these programs specify that benefits cannot be duplicated.
                          Similarly, exclusions and limitations that arise in some of the other FSA
                          disaster assistance programs are often covered by another disaster
                          assistance program. For example, agricultural producers whose farms are
                          larger than family farms are not eligible for FSA’s Emergency Loans but
                          may still be able to obtain assistance under one of FSA’s cash assistance
                          programs, which do not have similar size requirements.

                          FSA and SBA disaster assistance programs for agricultural producers do
                          not cover all disaster scenarios, however. FSA officials stated that FSA’s
                          disaster assistance programs generally only cover losses resulting from
                          natural disasters. For example, according to FSA officials, FSA programs
                          generally will not cover plant and animal diseases and insect infestations
                          unless they were directly caused or exacerbated by a natural disaster.
                          Officials told us that disasters resulting from human error or negligence,
                          such as an oil spill or some wildfires, are also not covered by FSA,


                          Page 17                                GAO-12-844 Agriculture Disaster Assistance
although SBA’s disaster loans may cover some of these losses. In
addition, FSA’s disaster assistance programs do not cover economic
losses caused by a decrease in demand for a product, even if the low
demand is linked to a natural disaster. Likewise, according to SBA
officials, SBA’s disaster assistance programs do not cover such losses if
the decrease in demand is both temporary and the result of a declared
disaster. However, SBA officials said that if a drought decreases demand
for a nursery producer’s stock because consumers do not want to
purchase plants when water is scarce, the lost working capital necessary
to pay recurring expenses that the business could have generated had
the disaster not occurred is an eligible loss. Furthermore, several of
FSA’s disaster assistance programs require that agricultural producers
experience a minimum level of losses and, according to FSA officials,
practice standard farm management practices to qualify for assistance.
For example, the Livestock Indemnity Program does not cover poultry
deaths when adverse weather causes equipment, such as cooling fans
for poultry houses, to fail, and the producer did not follow certain
management practices, such as having backup electrical generators in
place. However, both FSA and SBA have other loan programs that
agricultural producers can use when they do not qualify for disaster
assistance and want to restore their operations. Producers can use FSA’s
Operating Loans to cover farm operating expenses, including farm
supplies such as seeds and equipment, to make repairs, and to make
essential purchases such as livestock and feed. SBA’s 7(a) Loan
Guaranty Program is available to small agricultural producers to purchase
land, inventory, and supplies, and provide working capital, among other
things. 16

FSA programs prohibit payment duplication, preventing producers from
receiving multiple payments for the same or similar losses. However,
these nonduplication clauses do not prevent producers from enrolling in
multiple programs to cover their losses. According to FSA officials, in the
event of major disasters, such as hurricanes and tornadoes, producers
may obtain assistance through more than one of the eight FSA programs
to address all of their damages (see tables 1 through 3 for information on
program purposes and covered losses).




16
  SBA’s 7(a) loan program guarantees loans made by commercial lenders—mostly
banks—to small businesses for working capital and other general business purposes.




Page 18                                      GAO-12-844 Agriculture Disaster Assistance
                           Three main factors may limit small aquaculture and nursery producers’
Awareness and              participation in the 6 of the 10 disaster assistance programs for which
Eligibility Issues Limit   they could be eligible. First, many producers did not apply for the
                           assistance because they were not aware of these programs. Second,
Small Aquaculture          some producers did not apply for it because they sought relief through
and Nursery                other options, such as other federal grants and private loans. Third, some
Producers’                 producers applied but did not qualify because they did not meet certain
                           program requirements. Table 4 shows the six disaster assistance
Participation in           programs—four cash assistance and two loan programs—that small
Disaster Assistance        aquaculture and nursery producers could apply for.

Programs                   Table 4: Disaster Assistance Programs That Cover Aquaculture and Nursery
                           Losses

                            Program                                                            Aquaculture       Nursery
                            FSA SURE                                                                X               X
                            FSA TAP                                                                                 X
                            FSA ELAP                                                                X
                            FSA Emergency Conservation Program                                      X               X
                            FSA Emergency Loan Program                                              X               X
                            SBA Economic Injury Disaster Loan Program                               X               X
                           Sources: GAO review of disaster assistance programs.




Small Producers Do Not     Many small aquaculture producers and some small nursery producers did
Apply Primarily Because    not apply for disaster assistance because they were not aware of FSA’s
They Are Not Aware That    or SBA’s programs, according to aquaculture and nursery industry
                           representatives and FSA and SBA officials we interviewed. According to
Assistance Is Available    most state-level aquaculture industry representatives and, to a lesser
                           extent, nursery industry representatives, aquaculture and nursery
                           producers in their states were generally not aware of FSA’s or SBA’s
                           disaster assistance programs or that they could be eligible for financial
                           assistance through these programs. For example, a representative of a
                           state-level aquaculture association said its members were either not
                           aware they could be eligible for, or were misinformed about, FSA disaster
                           assistance programs and did not use SBA programs. Several FSA and
                           SBA officials told us that both small aquaculture and nursery producers
                           fall outside of their usual customer bases and may not be aware of their
                           disaster assistance programs. In general, these producers do not have a
                           past or current relationship with FSA or SBA. However, in two states
                           where aquaculture producers also grow other crops and participate in
                           other FSA programs, FSA officials said these producers were more likely



                           Page 19                                                GAO-12-844 Agriculture Disaster Assistance
to become aware of FSA’s disaster assistance programs. For example,
FSA officials in one large aquaculture state told us that some of the
state’s small aquaculture producers are aware of FSA because they grow
other crops covered by FSA’s agriculture support programs. In addition, a
catfish producer we spoke with had worked with FSA on other issues and
was familiar with FSA disaster assistance programs but was not aware of
SBA Economic Injury Disaster Loans. In contrast, a representative of a
state nursery industry association said that he had not considered going
to FSA for nursery-related matters, despite having experience working
with FSA on matters affecting other types of agricultural producers. He
also said that nursery producers in his state may not be aware of disaster
assistance programs and do not identify themselves as agricultural
producers, so do not think of FSA as a resource when a disaster occurs.

Participation among small aquaculture and nursery producers was low in
certain FSA disaster assistance programs, according to FSA officials, and
few aquaculture producers applied for SBA’s Economic Injury Disaster
Loan Program, according to SBA officials. For example, FSA officials we
interviewed in one state with aquaculture and nursery farms numbering in
the top 10 compared with other states, as of 2009 and 2007, respectively,
reported receiving only 1 aquaculture and 3 nursery applications out of a
total of nearly 2,500 applications for SURE between January 2011 and
June 2012. In addition, they reported receiving only 2 aquaculture and 2
nursery applications out of a total of nearly 2,750 for Emergency
Conservation Program assistance during 2011. FSA national-level loan
officials also said that they received few applications for Emergency
Loans from aquaculture and nursery producers. For example, FSA
officials from a state with large aquaculture and nursery industries
reported that they did not receive any Emergency Loan applications from
aquaculture producers and only 7 applications from nursery producers in
fiscal years 2010 through 2011. Similarly, SBA officials told us, as of July
2012, they had received only 3 Economic Injury Disaster Loan
applications from aquaculture producers since the Small Business Jobs
Act of 2010 extended eligibility to aquaculture producers.

We have reported that reaching a program’s intended recipients is an
important measure of program performance. 17 Outreach is one approach


17
  GAO, Designing Evaluations: 2012 Revision, GAO-12-208G (Washington, D.C.: Jan. 31,
2012) and GAO, Managing for Results: Views on Ensuring the Usefulness of Agency
Performance Information to Congress, GAO/GGD-00-35 (Washington, D.C.: Jan. 26,
2000).




Page 20                                     GAO-12-844 Agriculture Disaster Assistance
to increasing awareness of federal programs among intended recipients.
Both FSA and SBA conduct outreach related to their disaster assistance
programs, but their methods do not help to ensure that small aquaculture
and nursery producers are aware of their potential eligibility for the
programs. Therefore, aquaculture and nursery producers may be missing
opportunities to receive assistance that could help them maintain a viable
business after experiencing a natural disaster. Specifically, FSA’s
outreach activities include notifying local media outlets; minority, civic,
and business organizations; and FSA’s existing customers about FSA’s
disaster assistance programs. In addition, FSA national-level officials told
us that the public may sign up for disaster assistance e-mail updates on
the FSA website. However, FSA national-level officials told us FSA’s
outreach approach does not directly target aquaculture and nursery
industry organizations. In addition, aquaculture and nursery producers are
often not in FSA’s customer database, so they would not receive FSA
newsletters that contain information about disaster assistance. For
example, FSA officials in a state with a large nursery industry said that
they do not conduct outreach to the nursery industry, although they reach
out to other agricultural producers. Therefore, aquaculture and nursery
producers may not see all information FSA releases. In addition, those
who receive disaster assistance information may not realize they could be
eligible for assistance from FSA because some do not identify as a part of
the agriculture industry.

Similarly, SBA provides information to disaster victims; current SBA
customers; media outlets; Small Business Development Centers;
Chambers of Commerce; and federal, state, and local officials about SBA
disaster loans. SBA national-level officials told us they have not contacted
small aquaculture or nursery producers or their industry representatives
directly about SBA disaster loans. While SBA developed postdisaster
procedures that include contacting aquaculture industry associations,
officials told us that, as of July 2012, they had not contacted any
aquaculture industry associations. They told us there has been little
disaster activity affecting aquaculture producers since they became
eligible for SBA Economic Injury Disaster Loans, but that they would
follow these procedures for future disaster declarations. As a result,
aquaculture and nursery producers may not be aware they could be
eligible for SBA disaster assistance.

FSA and SBA have indicated a willingness to help aquaculture and
nursery producers seek disaster assistance when asked. Several
representatives of state-level aquaculture and two nursery industry
associations said they have requested and received help from FSA field


Page 21                                GAO-12-844 Agriculture Disaster Assistance
                          offices on numerous occasions about disaster assistance eligibility and
                          payment issues. Of these, most noted they have a good relationship with
                          the agency. For example, one state’s aquaculture association
                          representative noticed that his producers were not aware they could be
                          eligible for, or were misinformed about, FSA disaster assistance. He
                          requested FSA’s help in educating producers about disaster assistance.
                          As a result, FSA may participate in the industry’s annual conference to
                          increase producers’ familiarity with FSA services. Similarly, SBA national-
                          level officials told us they were interested in helping aquaculture
                          producers obtain access to SBA’s Economic Injury Disaster Loans and
                          have taken steps to bring these producers to SBA. For example, SBA’s
                          disaster loan announcements specify that aquaculture producers are
                          eligible for their Economic Injury Disaster Loan Program.


Some Producers Do Not     Some small aquaculture and nursery producers may not apply for FSA or
Apply for Disaster        SBA disaster assistance programs for which they could be eligible
Assistance Because They   because they have other options for assistance, including other federal
                          grant programs and other federal or private loans, according to FSA
Have Other Options        officials and industry representatives. FSA national-level officials told us
                          that one reason they had received few applications for ELAP from
                          aquaculture producers to cover disaster-related feed losses was because
                          many aquaculture producers had received assistance for historically high
                          feed costs through FSA’s Aquaculture Grant Program, which was active
                          in 2008 and 2009. Aquaculture producers who receive 2008 or 2009
                          Aquaculture Grant Program payments are not eligible for aquaculture
                          feed losses under ELAP for the same species for which the grant benefits
                          were received because producers cannot receive duplicate payments for
                          the same loss under multiple programs. FSA officials also noted that
                          SURE covers physical losses for the majority of aquaculture species,
                          while ELAP only covers physical losses of game fish and baitfish.
                          Therefore, FSA received few ELAP applications from aquaculture
                          producers. In addition, some small nursery producers in particular do not
                          apply for FSA Emergency Loans or SBA Economic Injury Disaster Loans
                          because they apply for other loans or prefer not to take out a loan,
                          according to most loan officials and several nursery representatives. For
                          example, some FSA officials said that some small nursery producers
                          choose to apply for FSA Operating Loans rather than Emergency Loans.
                          According to FSA national-level officials, Operating Loans may be more
                          attractive to these producers because their interest rates are currently
                          lower than Emergency Loans, and they do not require applicants to
                          document disaster losses. The Operating Loan interest rate has been
                          below the Emergency Loan interest rate since November 2008—1.25


                          Page 22                                 GAO-12-844 Agriculture Disaster Assistance
                            percent as of July 2012 and 3.75 percent since January 1994,
                            respectively. However, as previously noted, USDA announced in July
                            2012 that the Emergency Loan rate would be reduced to 2.25 percent.
                            The Operating Loan rate is tied to the government’s cost of borrowing,
                            and FSA officials told us it is historically low because of the economic
                            downturn. However, FSA officials noted that Emergency Loans remain an
                            important option for some producers who have exhausted their Operating
                            Loan statutory term limits by receiving an Operating Loan in 7 different
                            years or have reached the statutory loan size limit of $300,000 and need
                            additional funds. SBA officials said that some aquaculture producers’
                            disaster losses may be covered sufficiently by insurance or they may
                            seek out grants rather than loans. In addition, two nursery industry
                            representatives said that small nursery producers affected by disasters
                            may take out private loans because they are familiar with their local
                            banks. Another nursery industry representative said that other small
                            nursery producers do not take out any loans because they do not want to
                            take on more debt.


Some Small Producers Do     Some small aquaculture and nursery producers did not receive disaster
Not Meet Certain            assistance from FSA or SBA primarily because (1) their losses were less
Requirements for Disaster   than the required minimums, (2) they did not meet the crop insurance or
                            NAP coverage requirement, or (3) they did not meet loan eligibility
Assistance                  requirements. First, three programs available to aquaculture and nursery
                            producers—SURE, TAP, and the Emergency Loan Program—set
                            minimum loss requirements as a condition of receiving assistance. As a
                            result, some small aquaculture and nursery producers did not experience
                            the required levels of losses. Several FSA officials told us this was
                            primarily because they tend to have more control over their operating
                            conditions relative to other types of agricultural producers, which tends to
                            limit damage from a disaster. For example, FSA officials in a state with a
                            large aquaculture industry told us that catfish ponds tend to experience
                            little damage from flooding. In addition, FSA officials in another state
                            denied five of six SURE applications from nursery and aquaculture
                            producers last year because controlled operating conditions limited
                            disaster losses. Therefore, these applicants did not meet the SURE
                            requirement that they experience at least a 10 percent crop loss on at
                            least one crop of economic significance on their farm if they were located
                            in a declared disaster county or a county adjacent to a disaster county or,
                            at least a 50 percent loss of the normal production on their farms from a
                            natural disaster if they were not located in a declared disaster county or
                            contiguous county. Similarly, FSA national-level officials told us that small
                            nursery producers often do not qualify for TAP because their trees or


                            Page 23                                 GAO-12-844 Agriculture Disaster Assistance
plants were damaged but not destroyed in a disaster. Only trees that are
destroyed or damaged such that it would be more cost-effective to
replace them are considered in determining whether the loss threshold is
met and, therefore, whether an applicant will receive a payment. As
previously mentioned, to qualify for TAP, a producer must have sustained
a loss in excess of 15 percent of the trees, bushes, or vines in an
individual stand—a contiguous acreage of the same type of plant—after
adjusting for normal mortality or damage.

Furthermore, because aquaculture and nursery producers have more
control over their operating conditions compared with other types of
agricultural producers, FSA expects these producers to follow certain
management practices to decrease their risk of disaster losses. If they fail
to do so, FSA may deny a request for assistance. For example, according
to FSA officials in one state, they did not approve an application for SURE
from a tilapia producer because they determined that the producer could
have prevented the tilapia losses. That is, the tilapia died because the
water in their tank was too hot, and the producer could have controlled
the water temperature. Similarly, FSA disaster assistance programs
typically do not cover nursery losses from drought because irrigation is a
standard practice for nursery producers. FSA officials in a state with a
large nursery industry also told us that nursery producers can control the
location of their potted trees and plants. As such, producers could avoid
losses from a freeze by moving the pots indoors.

Second, several representatives from state-level nursery industry
associations said that small nursery producers often did not receive
disaster assistance because they did not enroll in crop insurance. As
previously mentioned, enrolling in crop insurance or purchasing NAP are
generally prerequisites for several FSA disaster assistance programs.
FSA officials in some states in which we conducted interviews also said
that nursery producers often do not meet this requirement. FSA national-
level officials told us that because crop insurance coverage is widely
available to nurseries, there are few instances when nurseries would use
NAP. National-level officials from USDA’s RMA told us that nursery
producers may not enroll in crop insurance because they see little risk of
disaster losses because they operate under controlled conditions. In
addition, RMA officials told us that both aquaculture and nursery
producers continuously plant and harvest their crops, reducing their risk
of losing an entire year’s crops to a single natural disaster. According to
one state’s nursery industry representative, some producers do not
realize that crop insurance is a prerequisite for receiving disaster
assistance under several of the FSA programs. FSA national-level


Page 24                                 GAO-12-844 Agriculture Disaster Assistance
officials said that because disaster assistance programs only recently
included crop insurance or NAP enrollment as a eligibility requirement,
many producers are just beginning to see the connection between having
crop insurance and obtaining disaster assistance. Small aquaculture
producers’ participation in crop insurance and NAP tended to vary by
state, according to state aquaculture representatives.

Third, some small aquaculture and nursery producers did not meet the
requirements of FSA’s Emergency Loan or SBA’s Economic Injury
Disaster Loan Programs. According to most FSA state-level loan officials,
small aquaculture and nursery producers did not receive assistance from
the Emergency Loan Program primarily because they could not
demonstrate an ability to repay the loan. The program requires that
applicants submit a farm operating plan as part of their loan application to
demonstrate their ability to pay back the loan according to a set schedule.
The farm operating plan includes applicants’ projected cash flow budget
reflecting production, income, expenses, and loan repayment plan. FSA
reviews the farm operating plan along with other application documents. If
FSA officials determine the plan is not feasible, they will deny the loan
request. For example, an FSA loan official in one state with a large
nursery industry told us that the small nursery producer applicants who
were denied Emergency Loans were often in tenuous financial positions
prior to the disaster and, once the disaster hit, did not have the means to
repay a loan.

Similarly, SBA national-level officials told us they declined Economic
Injury Disaster Loans to some small nursery producers because
applicants could not demonstrate the ability to repay the loan. SBA loan
officials assess applicants’ repayment ability by evaluating financial
information submitted by Economic Injury Disaster Loan applicants. In
addition, SBA denied two of the three Economic Injury Disaster Loan
applications submitted by small aquaculture producers nationwide: one
because the business did not meet the small size requirement and the
other because it was located in a coastal barrier resource area. 18 Federal
law generally prohibits the federal government from lending in a coastal



18
  The Coastal Barrier Resources Act of 1982, and later amendments, removed the federal
government from financial involvement associated with building and development in
undeveloped portions of designated coastal barriers (including the Great Lakes). These
areas were mapped and designated as Coastal Barrier Resources System units or
“otherwise” protected areas.




Page 25                                      GAO-12-844 Agriculture Disaster Assistance
                         barrier resource area. The third application was withdrawn by the
                         applicant before SBA began processing it.


                         FSA and SBA engaged in some efforts to collaborate in providing disaster
FSA and SBA Efforts      assistance to small aquaculture and nursery producers, but the efforts
to Collaborate on        were limited to referring producers from one agency to the other without
                         identifying the assistance that may be available to these producers.
Disaster Assistance to   Specifically, FSA officials told us that when they collaborate with SBA, it is
Small Aquaculture        at the local level on a disaster-by-disaster basis or when a disaster event
                         is concentrated and losses are immediate. These collaborative efforts
and Nursery              generally are limited to presidentially declared disasters, where, both SBA
Producers Are            and FSA officials told us, the agencies have participated in multiagency
Limited                  disaster recovery centers established by FEMA. According to SBA
                         officials and as provided by SBA’s website, the agency also has taken
                         steps on its own to inform agricultural producers (including small
                         aquaculture and nursery producers) that FSA provides disaster
                         assistance. SBA posts some information on its website showing that FSA
                         administers and manages disaster assistance and loan programs through
                         a network of federal, state, and county offices and that producers eligible
                         for SBA assistance should also consider getting assistance from FSA.
                         SBA also mentions FSA and USDA in the disaster notices it publishes
                         following a Secretary of Agriculture-declared disaster. In addition,
                         according to SBA officials, SBA advises applicants orally and in writing to
                         check with FSA for assistance when they have been declined SBA
                         assistance because their affected businesses were primarily agricultural
                         and not covered by the statutes that extended eligibility to aquaculture
                         and nursery producers. However, SBA typically does not provide
                         producers information about the type of FSA disaster assistance.

                         We identified one primary reason for FSA’s and SBA’s limited
                         collaboration. Both FSA national-level officials and state-level Emergency
                         Loan officials told us that FSA field staff know little about SBA’s disaster
                         assistance programs, and SBA staff know little about what factors affect
                         whether an agricultural loan will be repaid. According to FSA national-
                         level officials, the FSA Emergency Loan and SBA disaster loan programs
                         have little in common, but FSA’s limited knowledge of SBA’s programs
                         may reduce the abilities of both agencies to meet the needs of small
                         aquaculture and nursery producers affected by disasters. FSA national-
                         level officials said that their loan officers at the state and county levels
                         may have some general knowledge of SBA’s disaster assistance
                         programs, but that those loan officers may not know the programs in
                         enough detail to inform a producer about them. They also said that FSA


                         Page 26                                 GAO-12-844 Agriculture Disaster Assistance
does not expect its county officials to be familiar with SBA’s disaster
assistance programs. Consequently, the national-level FSA officials said
that any knowledge their loan officers might have about SBA’s programs
is likely to occur in local FSA offices that know more about SBA. Similarly,
several state-level FSA loan officials we spoke with said that they were
aware that SBA had disaster assistance programs but were not
necessarily familiar with them. Also, FSA’s national-level office has not
provided any guidance explaining SBA’s programs to its staff. In contrast,
SBA national-level officials told us that they and their customer service
representatives were generally familiar with FSA’s disaster assistance
programs; however, they also told us that they have a limited
understanding of the factors that might lead small aquaculture and
nursery producers to repay their loans, which could make it challenging to
serve them. SBA officials also told us that, historically, SBA has not
focused on providing disaster assistance to aquaculture and nursery
producers because SBA is prohibited by law from providing disaster loans
to other agricultural producers. 19 Consequently, the officials told us, SBA
has not provided disaster assistance to many small aquaculture and
nursery producers. Similarly, the FSA officials said that they and SBA
understand the small aquaculture and nursery industries differently, giving
them little reason to collaboratively provide assistance. However, both
FSA and SBA provide assistance to aquaculture and nursery producers
that is complementary, but they have not established compatible policies,
procedures, and other means to coordinate their programs. In the
absence of such practices, collaboration between FSA and SBA has been
informal.

In June 2010, we reported that, by using informal coordination
mechanisms, agencies may rely on relationships with individual officials
to ensure effective collaboration and that these informal relationships
could end once personnel move to their next assignments. 20 Without
written procedures, agencies’ roles and responsibilities are not clearly
defined. We reported that agencies can strengthen their commitment to


19
  With the enactment of the Small Business Jobs Act of 2010, small enterprises engaged
in aquaculture are eligible for Economic Injury Disaster Loans. SBA has implemented this
change in the law by allowing aquaculture enterprises that are small businesses to apply
for Economic Injury Disaster Loans for economic injury covered under disaster
declarations issued on or after the effective date of the act (September 27, 2010).
20
 GAO, National Security: Key Challenges and Solutions to Strengthen Interagency
Collaboration, GAO-10-822T (Washington, D.C.: June 9, 2010).




Page 27                                       GAO-12-844 Agriculture Disaster Assistance
work collaboratively by articulating their roles and responsibilities in
formal documents to facilitate decision making. Such formal documents
can include memoranda of understanding, interagency guidance, or
interagency planning documents, signed by senior officials in the
respective agencies. These documents can clarify which agencies will be
responsible for particular activities and how they will organize their joint
and individual efforts. As we reported in October 2005, agencies that
have complementary programs can enhance the value of these programs
through interagency collaboration. 21 Among the key practices we
identified were (1) defining and articulating a common federal outcome;
(2) establishing strategies that are mutually reinforcing or joint to help the
agencies align their activities, core processes, and resources to
accomplish their common outcome; (3) agreeing on roles and
responsibilities; (4) establishing compatible policies, procedures, and
other means to operate across agency boundaries; and (5) including
collaboration competencies in designing performance management
systems and set performance expectations for collaboration to reinforce
individual accountability for collaborative efforts. In the absence of such
practices, collaboration between FSA and SBA has been based on limited
information and not guided by any formal collaborative policy, guidance,
or process. FSA and SBA have not adopted formal or written memoranda
of understanding or interagency policies regarding their collaboration on
disaster assistance programs. Both FSA and SBA national-level officials
told us that they have no central guidance in place to facilitate
collaboration with SBA on implementing their assistance programs. The
SBA officials added that they did not see any need for written guidance
because, in their view, the FSA and SBA disaster assistance programs do
not overlap, and thus there are no “gray” areas that would require formal
collaboration.

With limited information and no documented approach or policy to guide
their collaboration, FSA and SBA personnel have not consistently referred
applicants for disaster assistance to the other agency and, in turn, there
has been little opportunity for small aquaculture and nursery producers to
get assistance for which they may qualify. FSA national-level officials told
us that they have discussed SBA disaster assistance with FSA field staff
but have not provided written guidance on when or how its staff should
refer producers, including aquaculture and nursery producers, to SBA.



21
 GAO-06-15.




Page 28                                 GAO-12-844 Agriculture Disaster Assistance
              Further, FSA officials from two states said that, while they had referred
              large agricultural producers to SBA for other assistance, they had not
              done so for disaster assistance. They also said that because of their
              limited understanding of SBA’s disaster assistance programs and little
              contact with SBA, they were not clear about the circumstances under
              which they should refer producers to SBA. Officials from four FSA state
              offices also told us that such referrals are either few and decreasing or
              not made in their states. Similarly, SBA national-level officials told us that
              while their loan officers may advise applicants to check with FSA for
              assistance, they do not routinely refer applicants to FSA. Consequently,
              small aquaculture and nursery producers likely have had less of an
              opportunity to get the disaster assistance for which they may qualify than
              they would have if FSA and SBA consistently referred producers to the
              other agency. In addition, several representatives of the aquaculture and
              nursery industries told us that they were not sure whether or how FSA
              and SBA coordinated their disaster programs, and a representative from
              another nursery association was not aware of any nursery producers that
              had been referred by either agency to the other. However, a
              representative from another nursery association noted that SBA had
              referred some producers to FSA, and the representative of another
              nursery association recalled that FSA had referred producers to SBA.
              Officials with one FSA state office told us that nursery producers who
              sought assistance from FSA or SBA could get bounced back and forth
              between the agencies while they determined whether the producers were
              eligible for assistance. Without more formal collaboration, applicants for
              disaster assistance may not be consistently referred by one agency to the
              other, leading to fewer opportunities for these small producers to get
              assistance for which they otherwise might qualify, and the value of these
              disaster assistance programs is diminished for aquaculture and nursery
              producers.

              FSA’s and SBA’s 10 disaster assistance programs serve largely different
Conclusions   populations but can provide an important safety net to help small
              agricultural producers recover from disasters. However, even though six
              FSA and SBA disaster assistance programs are open to small
              aquaculture and nursery producers, these producers are missing
              opportunities to receive such assistance. Small aquaculture and nursery
              producers are not using these programs as much as other agricultural
              producers, in part, because of their unique operations, such as the
              controlled growing environments that inherently mitigate disaster losses.
              Furthermore, they are not fully aware of the opportunities that exist.
              Because they do not apply for and receive assistance for which they
              could be eligible, small aquaculture and nursery producers’ disaster


              Page 29                                  GAO-12-844 Agriculture Disaster Assistance
                      losses have the potential to significantly affect their ability to maintain a
                      viable business. Both FSA and SBA conduct outreach related to their
                      disaster assistance programs, but their methods do not help to ensure
                      that small aquaculture and nursery producers are aware of their potential
                      eligibility for the programs. In addition, FSA and SBA engaged in some
                      efforts to collaborate in providing disaster assistance to such producers,
                      but the efforts were limited. Moreover, FSA’s general lack of awareness
                      about SBA’s disaster assistance programs and SBA’s limited
                      understanding of the factors that might lead small aquaculture and
                      nursery producers to repay their loans reduce both agencies’ abilities to
                      fully serve these producers. Without a more formal collaborative approach
                      between the agencies such as through a memorandum of understanding
                      and further education of staff about the other agency’s disaster
                      assistance programs, applicants for disaster assistance may not be
                      consistently referred by one agency to the other, leading to fewer
                      opportunities for these small producers to get assistance for which they
                      otherwise might qualify.


                      To help ensure that small aquaculture and nursery producers are aware
Recommendations for   of the disaster assistance programs available to them, we recommend
Executive Action      that the Secretary of Agriculture and the Administrator of the Small
                      Business Administration direct FSA and SBA officials to take the following
                      two actions:

                      •   Conduct targeted outreach to small aquaculture and nursery
                          producers, for example, by building on existing agency outreach
                          programs.
                      •   Develop a strategy to better formalize collaboration through means
                          such as developing a memorandum of understanding on interagency
                          collaboration and educating staff about the other agency’s disaster
                          assistance programs.

                      We provided the Secretary of Agriculture and the Administrator of the
Agency Comments       Small Business Administration with a draft of this report for review and
                      comment. The departments did not provide official written comments to
                      include in our report. However, in e-mails received August 23, 2012, the
                      USDA and SBA liaisons stated that USDA and SBA generally concurred
                      with our recommendations. USDA and SBA also provided written
                      technical comments, which we incorporated into the report as
                      appropriate.




                      Page 30                                 GAO-12-844 Agriculture Disaster Assistance
As agreed with your office, unless you publicly announce the contents of
this report earlier, we plan no further distribution until 30 days from the
report date. At that time, we will send copies to the Secretary of
Agriculture, the Administrator of the Small Business Administration, the
appropriate congressional committees, and other interested parties. In
addition, the report will be available at no charge on the GAO website at
http://www.gao.gov.

If you or your staff members have any questions about this report, please
contact Lisa Shames at (202) 512-3841 or shamesl@gao.gov or William
B. Shear at (202) 512-8678 or shearw@gao.gov. Contact points for our
Offices of Congressional Relations and Public Affairs may be found on
the last page of this report. Key contributors to this report are listed in
appendix III.

Sincerely yours,




Lisa Shames
Director, Natural Resources and
Environment




William B. Shear
Director, Financial Markets and
Community Investment




Page 31                                 GAO-12-844 Agriculture Disaster Assistance
Appendix I: Objectives, Scope, and
              Appendix I: Objectives, Scope, and
              Methodology



Methodology

              Our objectives for this engagement were to (1) examine selected U.S.
              Department of Agriculture (USDA) Farm Service Agency (FSA) and Small
              Business Administration (SBA) disaster assistance programs and the
              types of small agricultural producers that they cover; (2) identify the main
              factors, if any, that may limit small aquaculture and nursery producers’
              participation in disaster assistance from FSA and SBA; and (3) examine
              FSA and SBA efforts to collaborate in providing disaster assistance to
              small aquaculture and nursery producers.

              To address these objectives, we reviewed 10 FSA and SBA disaster
              assistance programs for agricultural producers and businesses that
              support agriculture and interviewed the FSA and SBA officials responsible
              for managing and administering each program. We reviewed these 10
              programs because they become available to agricultural producers and
              businesses that support agriculture following a natural disaster and
              provide direct financial assistance in the forms of cash payments and
              reimbursements, as well as loans to agricultural producers and
              businesses that support agriculture that have experienced losses due to
              disasters. We use the term “agricultural producers” to refer to family
              farms, commodity producers, aquaculture producers, nursery producers,
              and other farmers and ranchers. Businesses that support agriculture
              refers to businesses that provide support activities for agriculture that do
              not lead to agricultural production. Examples of support activities include
              such duties as cotton ginning, soil preparation, planting, and breeding
              services for animals. Our primary focus was on small agricultural
              producers. While there is no one definition that covers all small
              agricultural producers, we included family farms and other farmers and
              ranchers whose size makes them particularly vulnerable to disasters
              because they tend to have less control over their economic security in
              general, and disasters can exacerbate that insecurity. 1 When FSA or SBA
              established specific size criteria for program eligibility, we used those
              criteria in our review. FSA administers 8 of the 10 programs, including the
              5 disaster assistance programs that were authorized by Title XV of the
              2008 farm bill, the Emergency Forest Restoration Program, the


              1
               For individual borrowers, FSA’s definition of “family farm” specifies that the majority of
              day-to-day, operational decisions and all strategic management decisions be made by the
              borrower or a relative, and a substantial amount of labor to operate the farm be provided
              by the borrower or a relative. For corporations, partnerships, or other entities, the majority
              of day-to-day, operational decisions, and all strategic management decisions must be
              made, and a substantial amount of labor to operate the farm be provided by the members
              responsible for operating the farm.




              Page 32                                          GAO-12-844 Agriculture Disaster Assistance
Appendix I: Objectives, Scope, and
Methodology




Emergency Conservation Program, and the Emergency Loan Program. 2
The programs authorized by Title XV of the 2008 farm bill are the
Emergency Assistance for Livestock, Honeybees, and Farm-raised Fish
Program, the Livestock Forage Disaster Program, the Livestock
Indemnity Program, the Supplemental Revenue Assistance Payments
Program, and the Tree Assistance Program. SBA administers the
remaining two disaster assistance programs, including the Economic
Injury Disaster Loan and Physical Disaster Loan Programs. We also
reviewed documents about the USDA Risk Management Agency (RMA)
crop insurance program and FSA Noninsured Crop Disaster Assistance
Program and interviewed RMA and FSA officials about how these
programs interact with the disaster assistance programs in our study.

To determine the types of small agricultural producers the FSA and SBA
programs cover, we reviewed agency documents, authorizing statutes,
and implementing regulations to obtain information about each program,
including eligibility requirements, and interviewed FSA and SBA officials.
When analyzing whether gaps in coverage exist, we reviewed and
analyzed FSA technical program handbooks and SBA program
summaries and interviewed FSA and SBA officials. We analyzed major
categories of agricultural producers involved in the production of food and
fiber, including commodities, specialty crops, orchard and nursery
products, and livestock, including aquaculture producers. We believe that
this has enabled us to identify gaps in coverage, but we recognize that
there could be additional gaps that we did not detect in this analysis.

We focused our second objective on the factors limiting small aquaculture
and nursery producers’ participation in these disaster assistance
programs because aquaculture and nursery producers are covered by
both FSA and SBA disaster assistance programs. Other agricultural
producers are not covered by the SBA programs. We identified the
factors limiting small nursery and aquaculture producers’ participation in
these disaster assistance programs by reviewing the eligibility criteria for
the programs that pertain to them and by interviewing FSA and SBA
officials about eligibility criteria and outreach policies and practices. We
also interviewed state-level FSA officials and industry representatives in
seven states about the factors that may limit small aquaculture and
nursery producers’ participation in disaster assistance, including program



2
Food, Conservation, and Energy Act of 2008, Pub. L. No. 110-246, 122 Stat. 1651.




Page 33                                     GAO-12-844 Agriculture Disaster Assistance
Appendix I: Objectives, Scope, and
Methodology




participation and outreach practices. We assessed the agencies’ outreach
policies and practices against prior GAO reports on reaching a program’s
intended recipients. 3 The industry representatives we selected for
interviews were heads of aquaculture or nursery industry associations or
others who could represent the views of producers in their states. The
states we selected were California, Florida, Louisiana, Michigan,
Mississippi, North Carolina, and Washington. We selected these states
because they have a significant nursery industry or aquaculture industry
presence based on the number of nursery and aquaculture farms and
annual sales, as reported by the 2007 USDA Census of Agriculture. We
also considered the geographic distribution of the states to ensure that a
variety of places experiencing different types of natural disasters was
included. We did not conduct a nationwide study on this issue.

To determine how FSA and SBA collaborate to provide disaster
assistance to small nursery and aquaculture producers, we reviewed
authorizing statutes and FSA and SBA documents and interviewed FSA
and SBA officials to obtain information about the agencies’ policies and
practices for collaborating on disaster assistance. We also interviewed
state-level FSA officials in seven states and industry representatives
about their experience with the agencies’ collaboration. We examined the
degree to which the agencies’ collaborative efforts reflected key practices
we previously identified that can help enhance and sustain collaboration
among federal agencies. 4 In addition, we interviewed officials at the
Department of Homeland Security’s Federal Emergency Management
Agency about its role in coordinating disaster assistance.

We conducted this performance audit from September 2011 to
September 2012 in accordance with generally accepted government
auditing standards. Those standards require that we plan and perform the
audit to obtain sufficient, appropriate evidence to provide a reasonable
basis for our findings and conclusions based on our audit objectives. We
believe that the evidence obtained provides a reasonable basis for our
findings and conclusions based on our audit objectives.




3
GAO-12-208G and GAO/GGD-00-35.
4
GAO-06-15.




Page 34                                GAO-12-844 Agriculture Disaster Assistance
Appendix II: Federal Disaster Assistance
                                           Appendix II: Federal Disaster Assistance
                                           Programs



Programs


Agency and program                                             Purpose
Department of Agriculture
Federal Crop Insurance Program                                 Federally subsidized insurance program that covers crop and
                                                               livestock losses due to natural disasters as well as other risks.
Disaster Set-Aside Program                                     Provides producers in disaster counties declared or contiguous to
                                                               disaster counties who have existing direct loans with FSA and are
                                                               unable to make loan payments with the opportunity to set aside up to
                                                               1 full year’s payment to the end of the loan.
Disaster Supplemental Nutrition Assistance Program             Provides food assistance specifically for disaster survivors following a
                                                               presidentially declared disaster.
Emergency Assistance for Livestock, Honeybees, and Farm-       Provides cash assistance for livestock feed losses and deaths that
                    a
raised Fish Program                                            are not covered by other FSA disaster assistance programs, farm-
                                                               raised fish, and honeybee deaths and feed losses.
Emergency Conservation Program a                               Provides partial reimbursement for agricultural producers to
                                                               rehabilitate farmland that has been severely damaged.
Emergency Forest Restoration Programa                          Provides partial reimbursement for owners of nonindustrial private
                                                               forestland (including farmers and ranchers) in order to carry out
                                                               emergency measures to restore damaged land.
Emergency Loan Programa                                        Provides loans up to $500,000 to help small agricultural producers
                                                               recover from production and physical losses due to drought, flooding,
                                                               other natural disasters, or quarantine.
Emergency Haying and Grazing of Conservation Reserve           Allows livestock producers enrolled in the program to hay or graze
Program                                                        Conservation Reserve Program acreage during an emergency in
                                                               counties that have suffered a 40 percent or greater loss in normal
                                                               hay and pasture production due to drought or excessive moisture.
Livestock Forage Disaster Programa                             Provides cash assistance for livestock grazing losses caused by
                                                               qualifying drought conditions or a fire on federal land used for
                                                               grazing.
Livestock Indemnity Programa                                   Provides cash assistance for livestock deaths in excess of normal
                                                               mortality due to adverse weather.
Noninsured Crop Disaster Assistance Program                    Provides coverage for crops for which crop insurance is not available.
                                                               Results in cash payments to preenrolled producers when low yields,
                                                               loss of inventory, or prevented planting occur due to natural
                                                               disasters.
Supplemental Revenue Assistance Payments Programa              Provides cash assistance for agricultural producers with qualifying
                                                               crop production losses or crop quality losses.
Tree Assistance Programa                                       Provides partial reimbursement for qualifying orchardists and nursery
                                                               producers to replant or rehabilitate eligible trees, bushes, and vines.
Department of Health and Human Services
The Substance Abuse and Mental Health Services                 Provides disaster behavioral health technical assistance grant
Administration Disaster Technical Assistance Center            support to eligible states, territories, and federally recognized tribes;
                                                               supports FEMA’s Crisis Counseling Assistance and Training
                                                               Program.




                                           Page 35                                          GAO-12-844 Agriculture Disaster Assistance
                                           Appendix II: Federal Disaster Assistance
                                           Programs




Agency and program                                             Purpose
Department of Homeland Security
Crisis Counseling Assistance and Training Program              Supports short-term interventions that involve the counseling goals of
                                                               assisting survivors of a presidentially declared disaster in
                                                               understanding their current situation and reactions, mitigating stress,
                                                               assisting survivors in reviewing their disaster recovery options,
                                                               promoting the use or development of coping strategies, providing
                                                               emotional support, and encouraging linkages with other individuals
                                                               and agencies who may help survivors in their recovery process.
Disaster Legal Services                                        Provides legal assistance to low-income disaster survivors of a
                                                               presidentially declared disaster. Legal assistance generally includes
                                                               help with insurance claims, hospital bills, lost property, preparing lost
                                                               legal documents, and home repairs and contracts.
Individuals and Households Program–Housing Assistance          Provides assistance to individuals and households affected by a
                                                               disaster to enable them to address necessary expenses and serious
                                                               needs, which cannot be met through other forms of disaster
                                                               assistance or insurance. Forms of housing assistance include
                                                               temporary housing, repair, replacement, and
                                                               semipermanent/permanent housing construction.
Individuals and Households Program–Other Needs Assistance Provides assistance to individuals and households affected by a
                                                          disaster to enable them to address necessary expenses and serious
                                                          needs, which cannot be met through other forms of disaster
                                                          assistance or insurance. Forms of other needs assistance include
                                                          personal property, medical, dental, and funeral.
Department of Housing and Urban Development
203(h) Mortgage Insurance for Disaster Victims                 Helps survivors in presidentially designated disaster areas to obtain
                                                               mortgages to purchase a new home or rebuild their home that was
                                                               destroyed or damaged by a disaster.
Community Development Block Grant Disaster Recovery            Provides grants to states, local governments, American Indian tribes,
Assistance                                                     and other areas as a result of a presidentially declared disaster to
                                                               rebuild the affected areas and provide seed money to start the
                                                               recovery process. The grants are to primarily benefit low-income
                                                               residents.
Department of Labor
Disaster Unemployment Assistance                               Provides unemployment benefits to individuals who have become
                                                               unemployed as a result of a presidentially declared major disaster
                                                               and are not eligible for regular unemployment insurance benefits.
Department of the Interior
Bureau of Indian Affairs Emergency Assistance                  Provides cash payments to federally recognized American Indians
                                                               and Alaska Native tribe members who suffer from a burnout, flood, or
                                                               other destruction of their homes and loss or damage to personal
                                                               possessions.
Department of the Treasury
Internal Revenue Service Disaster Assistance and Emergency     Allows taxpayers to deduct nonreimbursed casualty losses in a
Relief Program                                                 presidentially declared disaster. Taxpayers may deduct the losses in
                                                               the year the disaster occurred or file an amended return to deduct the
                                                               loss in the year preceding the disaster.




                                           Page 36                                          GAO-12-844 Agriculture Disaster Assistance
                                         Appendix II: Federal Disaster Assistance
                                         Programs




Agency and program                                                   Purpose
Savings Bond Redemption and Replacement                              Allows bond owners in areas affected by a presidentially declared
                                                                     disaster to redeem bonds prior to the expiration of the initial 12-
                                                                     month holding period.
Small Business Administration
Economic Injury Disaster Loan Programa                               Provides working capital loans to small businesses or private,
                                                                     nonprofit organizations for up to $2 million in working capital to meet
                                                                     financial obligations that could have been met had the disaster not
                                                                     occurred.
Home and Property Disaster Loans                                     Provides loans to renters and homeowners up to $40,000 to repair or
                                                                     replace clothing, furniture, cars, appliances, etc. damaged or
                                                                     destroyed in a disaster and loans to homeowners up to $200,000 to
                                                                     repair or replace their primary residence to its predisaster condition.
Business Physical Disaster Loansa                                    Provides loans up to $2 million for a business to repair, rehabilitate,
                                                                     or replace damaged property, including real estate, equipment,
                                                                     inventory, and fixtures.
                                         Sources: GAO review of federal disaster assistance programs.
                                         a
                                          These programs are included in this GAO report and are those that become available to agricultural
                                         producers and businesses that support agriculture following a disaster and provide direct financial
                                         assistance.




                                         Page 37                                                        GAO-12-844 Agriculture Disaster Assistance
Appendix III: GAO Contacts and Staff
                  Appendix III: GAO Contacts and Staff
                  Acknowledgments



Acknowledgments

                  Lisa Shames, (202) 512-3841 or shamesl@gao.gov
GAO Contacts
                  William B. Shear, (202) 512-8678 or shearw@gao.gov


                  In addition to the individuals named above, Anne K. Johnson, Assistant
Staff             Director; Kay Kuhlman, Assistant Director; Lucas Alvarez; Kevin Bray;
Acknowledgments   Anna Carbino; John Forrester; Annamarie Lopata; Lindsay Read; Anne
                  Rhodes-Kline; and Carol Herrnstadt Shulman made significant
                  contributions to this report.




                  Page 38                                GAO-12-844 Agriculture Disaster Assistance
Related GAO Products
             Related GAO Products




             Crop Insurance: Savings Would Result from Program Changes and
             Greater Use of Data Mining. GAO-12-256. Washington, D.C.: March 13,
             2012.

             Hurricanes Katrina and Rita: Federally Funded Programs Have Helped to
             Address the Needs of Gulf Coast Small Businesses, but Agency Data on
             Subcontracting Are Incomplete. GAO-10-723. Washington, D.C.: July 29,
             2010.

             USDA Crop Disaster Programs: Lessons Learned Can Improve
             Implementation of New Crop Assistance Program. GAO-10-548.
             Washington, D.C.: June 4, 2010.

             Small Business Administration: Continued Attention Needed to Address
             Reforms to the Disaster Loan Program. GAO-10-735T. Washington, D.C.:
             May 19, 2010.

             Small Business Administration: Additional Steps Should Be Taken to
             Address Reforms to the Disaster Loan Program and Improve the
             Application Process for Future Disasters. GAO-09-755. Washington,
             D.C.: July 29, 2009.

             Gulf Coast Disaster Recovery: Community Development Block Grant
             Program Guidance to States Needs to Be Improved. GAO-09-541.
             Washington, D.C.: June 19, 2009.




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             Page 39                              GAO-12-844 Agriculture Disaster Assistance
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