Author: Amy Hagerman

  • Depopulation as a Tool for Highly Contagious Animal Disease Control 

    Depopulation as a Tool for Highly Contagious Animal Disease Control 

    Highly pathogenic avian influenza (HPAI) has been in the news regularly due to high egg prices and limited quantities of eggs on grocery store shelves. These effects have mostly been driven by large numbers of table egg layers depopulated due to HPAI (see Figure 1). Depopulation is “the rapid destruction of a population of animals in response to urgent circumstances with as much consideration given to the welfare of animals as practicable” (USDA APHIS, 2022). Depopulation is a key response to HPAI and other highly contagious diseases for two reasons. First, HPAI is deadly to poultry, causing high rates of death within a matter of days and rapid spread through a flock given even minimal contact. Second, when HPAI is allowed to circulate in poultry populations it can easily spread to other farms and potentially to farm workers. Despite rapid depopulation of farms where HPAI is detected, ongoing exposure threats exist due to virus circulation in wild bird populations. 

    Currently, HPAI circulates in all four wild bird flyways (Pacific Flyway, Central Flyway, Mississippi Flyway, and Atlantic Flyway) that extend across the Western Hemisphere and overlap into the Eastern Hemisphere. For example, the Pacific Flyway overlaps the East Asian and Australasian Flyway. This overlap created the origins of the 2014-2015 Eurasian H5N8 HPAI outbreak in the U.S. from migratory birds moving along the Pacific Flyway (USA APHIS, 2016). HPAI strains mutate rapidly, and most recently in 2024 H5N1 HPAI spilled over into dairy cattle. However, dairy cattle are less susceptible with much lower rates of inflection within herds (<10% of cows), less significant clinical signs, and very low rates of death (AVMA, 2024). This has allowed dairies to isolate and quarantine infected dairy cows until they recover and can be cycled back into production, barring any complications in the cow’s recovery. As a result, depopulation has not been pursued for HPAI control in dairy production. Rather there is a greater interest in the use of vaccination, which is still in the development process and is not commercially viable at this time. 

    There are other highly contagious diseases for which depopulation would likely be used to reduce disease spread. The first example is foot-and-mouth disease (FMD), which has not been found in the U.S. since 1929 but circulates in wildlife and livestock populations in other parts of the world. Unlike HPAI, FMD has a low rate of mortality. However, FMD has a very high (almost 100%) rate of infection from relatively low exposure and rapid spread through herds. FMD is also a hardy virus that lingers in an environment for some time. For that reason, FMD is another disease for which the baseline response is depopulation of infected animals. 

    The second example is African swine fever (ASF), which is also highly contagious with high rates of spread, as well as serious clinical signs and high rates of mortality among young pigs. ASF response would also likely involve depopulation of infected herds. The danger of ASF to swine industries was highlighted by the outbreak in China in 2018. China is the largest swine producer in the world, and also the largest pork consumer. The estimates of the Chinese swine herd that died or were depopulated due to ASF were reported as 40.5% with a 39.3% decline in the breeding herd (Ma et al., 2021); for perspective, the 12.3 million head death loss in China’s breeding herd was roughly twice the size of entire U.S. swine breeding herd in that same year (6.17 million head). In the following 2 years, as the herd was rebuilt, China depended heavily on imported pork from a variety of trading partners. Neither FMD nor ASF are zoonotic diseases, with the potential to spill over into humans, and neither FMD nor ASF is currently in the U.S. 

    Depopulation is expensive, with depopulation costs associated with the destruction of animals, the disposal of contaminated carcasses, and the indemnities to compensate producers for depopulated livestock or poultry. However, this is offset by some benefits, mainly associated with maintaining consumer confidence in the safety of the food supply as well as maintaining access to international markets. For an industry that exports a significant amount of meat or animal product into the world market, the loss of export market share can be very expensive. However, if outbreaks can be constrained geographically export losses can be minimized through the application of regionalization. Regionalization is a general term for allowing trade to continue from disease free areas. Regionalization requires transparent reporting of the disease and eradication measures, which typically includes extensive quarantine, movement restrictions, depopulation of infected premises, and surveillance. Bilaterally, trading countries can place regionalized trade bans of different extents and durations, which could be a control zone within 20 km of an infected herd, a county, or a state or multi-state region. A national trade ban can occur, but is used by fewer countries where proof of geographic containment can be provided. 

    Most recently, there is discussion of investing in vaccination strategies for highly contagious animal diseases in order to reduce spread and consequently reduce the need to depopulate. There are a few considerations for vaccination to think about. First, a vaccine needs to match the circulating virus well to be effective. This is why viruses that are fairly stable can be effectively eradicated through vaccination. The highly contagious animal diseases mentioned here mutate quickly. A viable vaccine is available for FMD, and the U.S. has invested in a FMD vaccine bank that can be quickly deployed in the event of an outbreak. However, no approved vaccine is currently available for ASF. The threat of HPAI in both poultry and dairy cattle has accelerated the development of vaccines, and the ability to match an HPAI vaccine is improving even with a quickly mutating virus. Licensed HPAI vaccines are not commercially available and there are aspects of an HPAI vaccination policy that are yet to be worked out. For all of the potential benefits, vaccination will likely come at a high cost also.

    Trade partners generally will treat eradication or prevention through vaccination campaigns with similar trade bans to outbreaks. This is because vaccination can prevent signs of clinical illness but may not prevent infection. As a result, extensive surveillance requirements are needed to assure that infection is not being spread to areas outside of the vaccination zone through the movements of animals or products. Bilateral discussions with trading partners will be needed to agree to protocols for ensuring disease freedom status. This can be expensive, both in terms of budget and also in terms of trained personnel to track vaccinated animals. If vaccination is expected to be ongoing due to external disease pressure, as is the case with HPAI in wild bird reservoirs, costs will accrue on an annual basis. The logistics of applying a vaccine may be challenging. FMD and HPAI vaccines require two doses to be fully effective, requiring animals to be handled multiple times. In long lived species like cattle, the vaccination must be repeated for protective immunity. Vaccination is unlikely to ever be used to prevent a disease from entering a country due to these expenses and complex policy implications. However, for a disease like HPAI where risk of introduction is ongoing via wild bird exposures, vaccination may well be a viable response strategy. 

    Figure 1. Table Egg Layer Inventory (left axis) and Real Egg Price Per Dozen Egg (right axis) from 2013 to 2024, with HPAI Outbreaks Highlighted In Each Box

    Data Source: USDA National Agricultural Statistics Service; Outbreak Dates: USDA Animal and Plant Health Inspection Service

    References: 

    United States Department of Agriculture Animal and Plant Health Inspection Service (USDA APHIS). 2022. “HPAI response: Response goals & depopulation policy” Available online: https://www.aphis.usda.gov/sites/default/files/depopulationpolicy.pdf

    United States Department of Agriculture Animal and Plant Health Inspection Service (USDA APHIS). 2016. “Final report for the 2014–2015 outbreak of highly pathogenic avian influenza (HPAI) in the United States.” Veterinary Services Surveillance, Preparedness, and Response Services Animal and Plant Health Inspection Service. Available online: https://www.aphis.usda.gov/media/document/2086/file

    American Veterinary Medical Association (AVMA). 2024. “Avian influenza virus type A (H5N1) in U.S. Dairy Cattle.” Website: https://www.avma.org/resources-tools/animal-health-and-welfare/animal-health/avian-influenza/avian-influenza-virus-type-h5n1-us-dairy-cattle

    Ma, M., H.H. Wang, Y. Hua, F. Qin, J. Yang. 2021. “African swine fever in China: Impacts, responses, and policy implications.” Food Policy, 102(102065). 


    Hagerman, Amy. “Depopulation as a Tool for Highly Contagious Animal Disease Control.Southern Ag Today 5(11.2). March 11, 2025. Permalink

  • Bracing for Change: Stacking Risk Management Tools for 2024

    Bracing for Change: Stacking Risk Management Tools for 2024

    The weather outlook for the Southern Great Plains and Southeast regions in 2024 and beyond signals a heightened risk of intense downburst events and extended periods without rainfall[1]. This shift poses a big challenge for rainfed farms, especially with the transition from La Nina to El Nino ENSO patterns, which could mean too much rain in certain southern areas.

    The timing of these weather events is crucial for farming success. Farmers recognize this and use various strategies like crop insurance, safety net programs like Agricultural Risk Coverage (ARC) and Price Loss Coverage (PLC), and disaster programs. Combining these tools strategically, following program guidelines, helps strengthen individual farms’ resilience against unpredictable weather.

    Recent events, especially those resulting in financial support, strongly influence farmers’ decisions—this is known as ‘recency effects.’ A study in the Southern Great Plains[2] found that when a weather disaster triggered a government program payment in the previous year, farmers were more likely to buy crop insurance the next year. This effect was even stronger for farmers already using crop insurance who had received both indemnity and a government program payment. Interestingly, as D2 drought weeks increased, policy sales also rose by a factor of 1.017, underlining the impact of recent experiences on risk management choices.

    Farmers also stack safety net programs based on expected weather challenges. A recently published analysis[3] showed that combining a safety net program with crop insurance led to better financial outcomes under a wide range of potential yields compared to relying on any one program alone. For rainfed wheat farmers, the best strategy involved combining PLC and revenue protection multi-peril crop insurance, along with planting a double crop of summer soybeans or grain sorghum alongside winter wheat. This not only maximized net returns but also reduced return variability.

    PLC wasn’t triggered for the 2022 crop year, and commodities triggering a PLC payment rate were limited in 2020 and 2021 due to high commodity prices. ARC payments depended on county-level yields, reflecting weather-related damages to crops. As a result, many farmers have widely chosen ARC County (ARC-CO) coverage for 2023. Combining ARC-CO election with crop insurance has proven to yield higher net returns than relying solely on crop insurance, although payment limits can result in lower payments than PLC when the price program triggers.

    With deadlines for 2023 disaster programs approaching in January, followed by ARC/PLC election and crop insurance deadlines later in the spring, the importance of whole-farm risk management is clear. Navigating these challenges requires farmers to carefully combine available tools, adapt to evolving climate projections, and strengthen their operations against future uncertainties.

    Days with Excess Precipitation (Greater than 3 inches) in the Southeast over time. (Figure 19.3 from the IPCC 2018) 

    Source: Carter, L., A. Terando, K. Dow, K. Hiers, K.E. Kunkel, A. Lascurain, D. Marcy, M. Osland, and P. Schramm, 2018: Southeast. In Impacts, Risks, and Adaptation in the United States: Fourth National Climate Assessment, Volume II [Reidmiller, D.R., C.W. Avery, D.R. Easterling, K.E. Kunkel, K.L.M. Lewis, T.K. Maycock, and B.C. Stewart (eds.)]. U.S. Global Change Research Program, Washington, DC, USA, pp. 743–808. doi: 10.7930/NCA4.2018.CH19

    [1] Intergovernmental Panel on Climate Change (IPCC), 5th Assessment. https://www.ipcc.ch/report/ar5/wg2/north-america/

    [2] Unpublished study by Hagerman, A.D., L.H. Lambert, and M. Fan “Recency effects of drought and government disaster payments on crop insurance decisions in the Southern Great Plains.” Presented at the Agricultural and Applied Economics Association Annual Meeting, Austin, TX: August, 2021.

    [3] Westbrook, L., D.M. Lambert, A.D. Hagerman, L.H. Lambert, E.A. DeVuyst, and C.A. Maples. 2023. “Should Producers of Rainfed Wheat Enroll in Agricultural Risk Coverage or Price Loss Coverage?” Choices Magazine. Vol 38(Q4). Available online at: https://www.choicesmagazine.org/choices-magazine/submitted-articles/should-producers-of-rainfed-wheat-enroll-in-agricultural-risk-coverage-or-price-loss-coverage

  • Pecan Risk Management

    Pecan Risk Management

    Fall is right around the corner, and for many of us that means baking goodies with pecans. Pecans are native to the Southern region of the US, particularly along the Mississippi River flood plain. In 2022, Georgia was the top producer of improved varieties of pecans, contributing almost 43% of the US value of production[1].  Native pecans are a much smaller portion of total US pecan production. Oklahoma was the top producer of native varieties of pecans, contributing 72% of the US value of production1

    Pecan producers, like other agricultural sectors, have been faced with rising input costs in the last 3 years. Pests, diseases, and predation are big challenges in pecan production, and the costs of managing those challenges are forcing producers to make hard management decisions.  Native pecan grove owners have been particularly hard hit since their groves also have lower yields as compared to improved pecan varieties. This, along with higher maintenance costs for existing trees, leads to issues for those hoping to draw a profit from their pecan harvest. Higher input costs open producers to greater risks when it comes to price and yield declines. Insurance exists to help cover essential costs should a disaster event happen.

    Whether a producer is involved in managing a native pecan grove or an improved pecan orchard, the risks for each can be equally damaging to profitability. Insurance can be combined with disaster programs in many cases in extreme events. There are many risks that affect the health and yield of a pecan operation; however, some of the main factors are listed below:

    • Freeze – An early fall freeze prior to shuck split can reduce yields. Shucks may be frozen and incapable of opening to release the pecans.
    • Drought – Oklahoma has been in a drought for several years. This can stunt the growth of trees, trigger nut drop, and cause yield reductions for 3-5 years. 
    • Insects – The pecan weevil and other pests can be controlled with approved pesticides and maintenance practices. View additional fact sheets for more information here.  
    • Disease – Make sure to spray fungicides at the proper rate and time for maximum effectiveness.
    • Predation – Utilize various methods including sound deterrents, trapping, or hunting for multiple species, and make sure to pick up harvested nuts as quickly as possible to reduce loss.

    Pecans are considered to be a specialty crop which means they are not eligible for commodity safety net programs like Agricultural Risk Coverage and Price Loss Coverage. Pecan producers are primarily dependent on crop insurance, disaster programs like the Tree Assistance Program (TAP), and more traditional risk management like operation diversification. USDA RMA offers a variety of insurance coverage plans for specialty crop producers. How much insurance a farm will need is determined, in part, by the level of costs that are “essential” in any given year. This will vary widely from farm to farm. An improved pecan farm that does its own processing and sells directly to retail will have quite different risks and costs of production than a native pecan farm selling primarily wholesale.  

    In Oklahoma, pecans can be insured if the grove or orchard is at least one acre and the insured trees have produced a minimum production, which is: 600 pounds in one of the last 4 years for improved variety pecans in irrigated orchards, and 300 pounds in one of the last 4 years for native pecans or improved variety pecans without irrigation. The Pecan Revenue Insurance product covers unfavorable weather, declines in market prices, irrigation failure, fire, insects, disease, and other acts of God. If you are interested in Pecan Revenue Insurance, ask your neighbors about nearby crop insurance agents that offer that coverage. 

    Pecan Revenue Insurance can provide a needed safety net in the event of a significant weather event. As shown in the figure, the 2018 drought which was severe for Southwestern pecan producers, in particular, resulted in insurance payouts to help cover production costs. Similarly, Pecan Revenue Insurance meant the difference in paying the bills for producers in Oklahoma that were impacted by drought in 2022. As an example of how the insurance product might work, consider an improved variety pecan operation based in Northeast Oklahoma. Starting with an estimated production cost for 2023 of $1,546 per acre for a producer that has irrigated, improved pecan groves and sells in the premium market. In a year where the weather cooperates and prices are reasonable (not the best but not the worst), the producer might make a net profit of $506/acre. However, what about a drought year that reduces yield by 26% and prices remain around the same level? That producer could experience a 163% reduction in net returns or a net loss of $800 per acre. What if they purchase Pecan Revenue Insurance? In this particular scenario, the producer has a cost of insurance that reduces the net return per acre in a typical year to $369/acre; however, in a drought year, the producer experiences a shallower financial loss (132% reduction in net returns).

    Risk management for specialty crop producers has come up in several of the 2023 farm bill listening sessions. Supply chain disruptions and restaurant closures hit the pecan sector in 2020, followed by severe weather events that impacted regional production. It takes years for pecan groves to recover from tree damage or to establish replacement trees. Risk management is individual to a farm, and insurance may play a role in that overall risk management plan. For more information on Pecan Revenue Insurance in your local area, contact your local crop insurance agent. 

    Data sources: (1) United States Department of Agriculture National Agricultural Statistics Service, Pecan Production Utilized (QuickStats). (2) United States Department of Agriculture Risk Management Agency, Summary of Business by Crop; all pecan insurance product indemnities, but the primary insurance product purchased is Pecan Revenue Insurance. 

    [1] USDA NASS Pecan Production Report https://downloads.usda.library.cornell.edu/usda-esmis/files/5425kg32f/n5840623x/ww72cn927/pecnpr23.pdf


    Hagerman, Amy. “Pecan Risk Management.” Southern Ag Today 3(35.4). August 31, 2023. Permalink

  • Drought Related Livestock Sales and Tax Reporting Options

    Drought Related Livestock Sales and Tax Reporting Options

    Livestock producers are making hard decisions this summer and fall as widespread drought conditions limit pasture, hay, and, in some places, water availability across the southern and western states. Drought losses can result in additional costs for purchased hay (for those who can find a hay source), selling calves early, retaining fewer replacement heifers, or culling cows to reduce pressure on pasture and rangeland. Drought disaster programs are available to help offset some of the additional costs. For example, the Emergency Assistance for Livestock, Honey Bees and Farm-Raised Fish (ELAP) program can help offset the added cost of transporting hay from greater distances this year. Forage management and supplementation can also stretch available grazing to reduce the need for winter hay feeding in some areas. However, in many cases, producers will be reducing herd sizes through additional cattle sales. 

    Drought related costs and losses will be reflected on 2022 tax returns for many producers across the country. Understanding how those losses must be reported come tax season and what documentation to retain will aid in properly reporting expenses and program payments. Drought related farm expenses and payments from drought disaster programs are fairly straightforward. For example, if a producer purchases hay in 2022 sourced from farms in states at a greater distance than previous years, they may be eligible for the ELAP transportation cost offset mentioned previously. The producer would report the cost of hay and hauling as farm expenses. The ELAP disaster payment for excess transportation cost would be reported as income. For more information on USDA disaster program documentation requirements, see factsheet: https://extension.okstate.edu/fact-sheets/usda-program-recordkeeping-requirements.html

    Cattle sales will also be reported on tax returns, but these decisions are a little more complicated. Gains from breeding, dairy or draft cattle sales in excess of normal due to drought may be deferred for up to two years, as long as the dollar value of the cattle are replaced within those two years. Record keeping is critical. The producer can only defer cattle sales that are above what would typically be sold under normal production conditions. Two tax provisions exist to avoid the adverse tax consequences of selling more animals than normal due to weather related conditions. One applies only to breeding, dairy and draft animals that will be replaced. The second applies to market animals where the income from the additional animals sold are reported in the year that they would have normally been marketed.

    Consider an example for breeding animals: Over the past 3 years, my cattle operation sold 30 calves weighing 650 pounds and 4 cull cows as an annual average. Due to drought in 2022, I sell 5 replacement heifers I would ordinarily have retained and 10 cows (6 more than the average) for $10,000. I can defer reporting the $10,000 of income from the excess animal sales (the 5 replacement heifers and the 6 cows) by electing to replace those sold by buying at least $10,000 of replacement breeding animals by December 31, 2024. If I do not spend at least $10,000 on replacement animals, I must amend the 2022 return and report the difference as income in that year. Should my county or a contiguous county be declared a federal disaster area, the replacement period is extended to 4 years and the animals will not have to be replaced until the end of 2026. The replacement animals must also be of the same type and purpose of the animals sold (dairy animals for dairy animals or breeding for breeding). This tax provision is under Internal Revenue Code Section 1033(e).

    Now consider an example for the sale of any livestock (other than poultry) due to weather related conditions, and this time the county I raise cattle in is declared a federal disaster area (which is a requirement for this provision). Using the same facts as the prior example, I sold 6 more cows and 5 replacement heifers plus 15 head of calves (that would have normally been sold in 2023) for $20,000. Combined, this is more livestock than what would have normally been sold had the drought conditions not existed. This tax law provision allows me to elect to report the $20,000 of income in 2023 instead bunching this excess income in 2022. This tax provision is under Internal Revenue Code Section 453(g). 

    Documentation is critical for all drought related losses. Specifically for your taxes keep the following in your tax records: 

    • Evidence of the weather-related conditions that forced the sale or exchange of animals.
    • Number and kind of livestock sold or exchanged.
    • Number of livestock of each kind that would have been sold or exchanged under normal business circumstances (generally, the average number of animals sold over the three preceding years).
    • The amount of gain realized on the sale or exchange.
    • The amount of income to be postponed

    It will be important to discuss the application of these tax provisions with your income tax advisor. Sources of drought information include the Drought Monitor Maps which indicate drought intensity by state and region. In addition, USDA reports which counties are currently considered drought disaster areas and are eligible to receive federal disaster programs, and disaster declarations generally are available from State and Federal government websites and stakeholder announcements. Tax season seems like it is far off on the horizon still, but better understanding how drought related losses will be reported may aid in documentation of losses today. 

    For more information see the Rural Tax Center factsheet http://ruraltax.org/files-ou/RTE_2021-05_Weather_Related_Sales_of_Livestock.pdf


    Hagerman, Amy, and JC Hobbs. “Drought Related Livestock Sales and Tax Reporting Options.” Southern Ag Today 2(38.4). September 15, 2022. Permalink

  • USDA Launches New Disaster Program for 2020 and 2021 Crop Years

    USDA Launches New Disaster Program for 2020 and 2021 Crop Years

    So far, 2022 has been a stressful weather year with large portions of the country suffering from first severe cold and then severe drought. Spring storms and tornados have destroyed farm equipment, buildings, and fence lines. Weather risk is something all producers think about and should manage in some way. This could mean diversification of crops, adoption of production practices to mitigate the impacts of extreme weather, and participation in crop insurance. 

    Weather risk management is more critical than ever. The number of extreme weather events has increased since the turn of the century. Between 1980 and 2019, states in the southern climate region (AR, KS, LA, MS, OK and TX) were affected by 182 weather-related disasters with multi-state impacts totaling $660B (NOAA). The average number of events per year increased to 6.6 disasters per year from 2000 to 2019 compared to 2.6 disasters per year from 1980 to 1999. These types of extreme weather events affect households and agricultural producers years into the future. 

    Ad hoc disaster assistance has been reported by USDA-Economic Research Service since 1998. From 2000 to 2019, ad hoc disaster programs resulted in $46B in payments to agricultural producers and averaged $2B per year. Ad hoc payments were about 15% of the total direct payments to producers on average but varied widely by year. Nationally, these programs have addressed damages due to hurricanes, drought, extreme heat and cold, flooding, blizzards, and severe weather. Programs include

    • Crop Insurance
    • Noninsured Crop Disaster Assistance Program
    • Tree Assistance Program
    • Livestock Indemnity Program
    • Emergency Assistance for Livestock, Honeybees and Farm-Raised Fish
    • Livestock Forage Program
    • Emergency Conservation Program

    In September 2021, as part of the continuing resolution to fund the Federal government, Congress provided an additional $10 billion in disaster assistance for crop and livestock producers.  In response, USDA launched a new Emergency Livestock Relief Program and Emergency Relief Program for producers affected by qualifying weather disasters in 2020 (ERP) and 2021 (ELRP and ERP). Like the recent Wildfire and Hurricane Indemnity Program-Plus (WHIP+), ERP is tied to risk management decisions. Row crop producers eligible for a Phase I ERP must have participated in crop insurance and received an indemnity in a qualifying event on their crop. Payment factors are tied to the level of coverage producers participated in, like WHIP+, as shown in the table. It is also tied to future risk management. To receive the Phase I ERP payment producers will also agree to purchase crop insurance for the next two crop years. Producers who participated in NAP will be addressed in additional phases of the ERP but no details are available at this time. As we draw closer to the 2023 Farm Bill discussions, these ad hoc disaster programs and the increased tie between risk management and program payments may be a point of further discussion.  

    Coverage Level   WHIP+ FactorERP Factor
    Uninsured   70% Not included at this time
    Catastrophic 75% 75%
    NAP Basic 75% 75%
    NAP 50 75% 80%
    NAP 55  75% 85%
    NAP 60 NA 90%
    NAP 65 NA 95%
    50% – <55%  77.5% 80%
    55% – <60%  80% 82.5%
    60% – <65%  82.5% 85%
    65% – <70%  85% 87.5%
    70% – <75%  87.5% 90%
    75% – <80%  92.5% 92.5%
    > = 80%  95% 95%
    Supplemental Coverage Option 95% Not included at this time

    Source: USDA FSA www.farmers.gov

    Hagerman, Amy. “USDA Launches New Disaster Program for 2020 and 2021 Crop Years“. Southern Ag Today 2(22.4). May 26, 2022. Permalink