The Secretary of Agriculture can authorize emergency programs to
deal with outbreaks of new and established invasive agricultural
pests when such outbreaks entail potentially serious economic or
environmental consequences. These emergency programs are managed
by USDAs Animal and Plant
Health Inspection Service (APHIS).
The overall goal of an emergency program typically is eradication
of the pest. APHIS can offer payments to producers to compensate
them for expenses and lost income when emergency program activities
include the destruction of animals or plants. Compensationor
indemnitypayments are mandatory for destroyed livestock and
optional for plants.
In recent years, there has been a significant increase in the level
of indemnities paid out in APHIS emergency programs. Indemnities
have been included in the programs for three invasive crop pestsKarnal
bunt, citrus canker, and plum pox. Historically, APHIS has not compensated
crop producers for income losses related to controlling pest outbreaks.
These two trends raise three important questions related to invasive
pest policy. Are we seeing a:
- Greater incidence of invasive pests?
- Due to increased trade between countries and regions
- Due to climate change or other ecological factors
- Greater detection of invasive pests?
- Due to increased search efforts for invasive species
- Greater public willingness to insure farmers?
- Due to expanded definitions of natural disaster
- Due to greater willingness to reimburse producers for any
given loss event
While there are good reasons for these expansions, assigning a
relative importance to each question requires big-picture understanding
of trends in natural disaster assistance and underlying economic
factors. Recent trends in APHIS emergency expenditures can be compared
to trends in national disaster assistance, farm sector disaster
assistance, and crop insurance programs. Data on land values, commodity
prices, farm program payments, and farm disaster assistance can
be examined to see if recent trends in APHIS indemnity payments
can be explained by these economic factors.
emergency indemnities on the rise
Since 1996, expenditures on APHIS "extraordinary emergency"
programs and their related indemnities have increased markedly relative
to the first half of the 1990s. Average annual spending on APHIS
emergency programs rose from $10.4 million from 1991 to 1995, to
$232.3 million in 1999-2001.
other disaster programs
The recent growth in APHIS emergency program payments appear similar
to the trends in national disaster assistance, farm sector disaster
assistance, and crop insurance payments. All have had significantly
higher expenditures since the mid 1990s. All have increased the
frequency at which assistance is offered.
other economic factors
Indemnity payments for eradication programs might be higher if
local environmental conditions, commodity market conditions, or
a lack of coverage by other farm assistance programs meant that
farmers experiencing the emergency are under economic stress already.
Focusing on counties affected by Karnal bunt, citrus canker, and
plum pox, low growth rates in agricultural land values may
reflect a decline in the economic health of each region's farm sector.
Declining commodity prices over time may reflect decreasing
demand for a commodity that would also stress producers. Low farm
program payments may suggest recent APHIS indemnity payments
have gone to areas where other forms of farm assistance are not
available. Consistently high levels of crop insurance and
disaster assistance payments may induce farmers to plant
crops that are risky to grow.
Land values in affected States appreciated much less than
the average for all U.S. agricultural land. Land values for counties
affected by citrus canker appreciated much less than for the rest
of Florida. Karnal bunt counties actually lost value. Land value
evidence suggests that farms in these areas were already under some
economic stress, which may have been aggravated by the emergencies.
Percent change in land values, 1992-97
|
Species and area |
Affected counties
|
Other counties
|
Citrus canker, Florida |
-0.5
|
6.3
|
Plum pox, Pennsylvania 1 |
10.3
|
10.0
|
Karnal bunt, Arizona/New Mexico |
-2.8
|
16.4
|
U.S. average |
na
|
24.5
|
1 Plum pox identified in
1999.
na not available.
|
Commodity prices were generally flat for stone fruit,
and down for grapefruit and wheat. Producers of stone fruit, affected
by plum pox, have not been facing declining prices. Pennsylvania
peaches were the highest value stone fruit. Grapefruit growers,
affected by citrus canker, have been facing declining prices. Among
Florida grapefruit, red seedless tend to be the highest valued.
Wheat prices have been declining since 1996, when the Karnal bunt
program began. Thus, the citrus and wheat industries were undergoing
economic stress even without invasive pest emergencies.
Total payments to farmers tend to be above average in counties
with Karnal bunt, but are less than average in counties with citrus
canker or plum pox. Crop insurance and disaster assistance payments
have been above average in counties affected by citrus canker, and
similar to the rest of the U.S. for counties with Karnal bunt and
plum pox. Government payments to citrus and plum pox areas, beyond
the emergency programs, are below the national average. There is
little evidence that insurance and disaster payments are provoking
risky agricultural activity.
In summary, some affected areas or commodities have
faced declining economic trends. Emergency program payments may
have been used to offset other declining sources of revenues. However,
the evidence of correlation is not overwhelming.
Trends
in economic data |
Citrus
canker |
Plum pox
virus |
Karnal
bunt |
Low
growth in land values |
X |
X |
X |
Falling commodity
prices |
X |
|
X |
High
natural disaster assistance |
X |
|
|
Low
total government payments |
X |
X |
|
for more information, contact:
Jan Lewandrowski
web administration: webadmin@ers.usda.gov
page updated: April 1, 2003
|