USDA has finally announced details regarding the Pandemic Assistance Revenue Program (PARP). Unlike the Emergency Relief Program (ERP) phase one where a farmer did not have to do anything other than sign up for the program, PARP is much more difficult to calculate.
THE FINE DETAILS
First, this program is only for the 2020 crop year, and it must be based on a calendar year. The farmer will calculate Allowable Gross Revenue (AGR) for one of two benchmark years, either 2018 or 2019. It will then multiply this AGR by a factor to arrive at the base revenue to compare to 2020 AGR. If benchmark revenue is greater than 2020 disaster year revenue, the farmer will qualify for a payment.
Beginning, limited resource, socially disadvantaged or veteran farmers or ranchers use a 90% factor and all other farmers and ranchers use an 80% factor.
This equates to about an overall 85% ratio. Any estimated claim will then be reduced by any 2020 CFAP, PLIP, SMHPP or ERP payments received by the farmer or rancher (even if they were collected after 2020).
ERP was primarily for assistance for crops grown by farmers. However, PARP allows a farmer to include livestock sales in their equation.
This will let hog farmers and other livestock producers receive additional pandemic assistance who might otherwise not have been paid under the Coronavirus Food Assistance Program (CFAP). Vegetable and fruit producers might also receive more assistance.
AGR will include all the crop and livestock related revenues for each year. It also includes the following major income items:
- Crop insurance proceeds
- Commodity Credit Corporation loans if the farmer elects to include it as income
- Revenue from raised breeding stock
- Revenue from a cattle feeder operation
- Cooperative proceeds for payments to farmers for crops
Other income items are included in the PARP fact sheet. Major income items not included are various pandemic assistance programs such as CFAP, PLIP, SMHPP and 2020 ERP payments. Hedging gains and losses are also excluded from AGR along with all custom hire income.
PAYMENT LIMITS
The payment limit is $125,000 per entity per owner, and each is subject to the 2020 $900,000 AGI limitation. There is no extra payment limit for farmers whose farming AGI is more than 75% of overall AGI.
Finally, the regulations issued by USDA expect farmers to have about $2.5 billion of claims under PARP, however, USDA has only allocated $250 million for the program. This means that many farmers will only receive 10% of estimated claims.
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