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Congress must send aid to those who really need hurricane relief

Congress must send aid to those who really need hurricane relief
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Hurricane Michael was a catastrophic event with horrific consequences for thousands of families. Lives and homes were lost, hundreds of businesses located near the Florida shores of Mexico City and Panama City were destroyed or heavily damaged, and farmers in southern Georgia lost their crops. Agriculture Secretary Sonny PerdueGeorge (Sonny) Ervin PerdueTrump, California battle over climate and cause of fires EPA just tossed farmers a lifeline to protect crops US soybean sales to China down 94 percent amid Trump tariffs: report MORE is following the understandably compassionate tradition of making a strong push for new emergency aid funds for these and other farmers. But who should be at the front of the line when hurricane relief aid needs are determined? Should it be farmers, home owners, or business owners?

Many of the working families who lost their homes to Hurricane Michael are in dire financial straits today. Not only are their property and personal belongings gone, but also their jobs in the near future, if not forever. The hotels, restaurants, service stations, retails outlets, and other local businesses at which they worked have disappeared. Those remaining no longer have any customers as the tourist trade has been hit hard.

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It will be many months before any significant financial aid is available for those families and businesses, if it is even available at all. That is because addressing family needs and determining whether individuals are eligible for help takes time, no matter how efficiently the Federal Emergency Management Agency functions. If home owners or business owners had viable coverage, private sector insurance companies will also need time to assess losses and write checks.

A little more north in Georgia, Hurricane Michael wrecked the cotton harvest for several farmers. Some producers lost their entire 2018 crops, while other “more fortunate” farm businesses were able to harvest up to 40 percent of their expected yields. The difference with many of the families who lost everything, is that the Mitchell County and Colquitt County cotton producers in southern Georgia will receive help from the government very promptly through the federal crop insurance program.

Almost every acre planted with cotton in Mitchell County and Colquitt County has been insured against yield or revenue losses under the federal crop insurance program. While the Agriculture Department does not yet have data on how much cotton was planted in those counties in the past three years, farmers planted cotton in approximately 53,400 acres in Mitchell County and 47,500 acres in Colquitt County. In 2018, the Agriculture Department reports that cotton growers insured around 56,200 acres in Mitchell County and 51,700 acres in Colquitt County. Most farmers probably insured close to 100 percent of what they planted.

Thus, farmers in Mitchell County and Colquitt County will most likely be made good within 60 days of when Hurricane Michael damaged or destroyed their crops. The extent of the help is the next question. Farmers have the option of different levels of insurance coverage for their crops, ranging from 50 percent to 85 percent of the expected value. Farmers in Mitchell County insured over 70 percent of the area planted with cotton at or above the 75 percent coverage level. In Colquitt County, over 50 percent of the cotton acreage was insured at the 80 percent or 85 percent level. But farmers pay substantially less than 50 percent of the full cost of insuring their crops because of government subsidies.

What does it mean in practical terms? In a recent news article, a farmer from Mitchell County was quoted as saying he had lost a crop worth at least $2.1 million dollars. Another said he had lost at least $500,000 dollars. With the lowest 75 percent coverage, the farmer with the $2.1 million crop loss should be receiving soon a check for over $1.5 million to compensate him for damage from the hurricane. The other farmer, whose loss was $500,000, may even already have received a check for $375,000 or more. Neither farmer will have to incur cotton harvesting or ginning costs because they have no crop to harvest or gin, although they will have costs associated with cleaning up the fields damaged by the hurricane.

By comparison, other businesses such as stores and restaurants can only wish they had such direct and timely access to government loans and grants to help them get back on their feet. The plight of many families who have lost everything in the midst of lost incomes and limited resources is heartbreaking. But no federal government program checks for hundreds of thousands of dollars are likely to come to their aid. With that context in mind, pleas by farmers and farm advocates to be at the front of the line for more government help seems worrying.

Vincent H. Smith is a visiting scholar and director of agricultural studies at the American Enterprise Institute. He is also a professor and director of the Agricultural Marketing Policy Center at Montana State University.