COVID Relief

GOP Lawmakers Want Answers from USDA Over Pure Prairie's Bankruptcy

Tue, 29 Oct 2024 17:33:08 GMT

Republican lawmakers have called on USDA to provide explanations regarding the oversight of Pure Prairie Poultry, Inc., which filed for bankruptcy shortly after receiving substantial USDA funding. The situation has raised concerns about the department’s management of grants and loans, as well as its impact on farmers and the poultry industry.

A group of Senators, including Sen. Jonie Ernst (R-Iowa), sent a letter to USDA this week.

As AgDay reported on Tuesday, the Iowa Department of Agriculture euthanized roughly 1.33 million chickens.
That’s after Pure Prairie Poultry said in late September that due to its bankruptcy, it could no longer afford to buy feed for its flock living on 14 Iowa farms. It’s estimated the process cost USDA $2 million.

The company also contracted with farmers in Wisconsin and Minnesota who were also affected.

Company Received $45 Million from USDA

Ernst says Pure Prairie Poultry was only in business for a few short years, and in that time, she says the company received $45 million dollars in grants and loans from USDA .

Nearly $7 million of that was from USDA’s Meat and Poultry Processing Expansion program.
The company also received a $38.7-million loan from USDA’s Food Supply Chain Guaranteed Loan Program , which is part of President Biden’s “ Build Back Better ” plan.

According to a White House Fact Sheet , this was tied to the Biden-Harris administration’s plan to promote competition in the American economy and “create a fairer, more resilient, and more dynamic economy.”

The $45 million was used by Pure Prairie Poultry to help expand and renovate a shuttered processing plant in Charles City, Iowa. USDA issued a press release in July of 2024 to celebrate the investments.

Lawmakers’ Demands

According to the lawmakers’ letter, which is demanding accountability and answers, close to 2-million chickens were “left without feed or any processing option.”

The letter requests explanations on several key points:

The oversight process for loan and grant guarantees
USDA’s awareness of Pure Prairie Poultry’s financial situation
Steps taken to assist affected growers and state agriculture departments
Efforts to salvage the Charles City plant

In the letter, lawmakers said, “Over the past two years, USDA has provided $223 million in loan guarantees and grants to 30 meat and poultry processing companies. A press release from the USDA celebrated this funding as part of the Biden-Harris Administration’s ‘commitment to strengthen critical food supply chain infrastructure to create more thriving communities for the American people.’ Unfortunately, this investment has instead resulted in the loss of income, jobs, and poultry across three states.”

“Pure Prairie Poultry’s abrupt closure shows the importance of proper vetting and oversight at USDA to ensure the agency’s multi-million dollar grants and loans are actually helping producers, rather than being flushed down the drain and harming entire rural communities in the process,” Ernst says. “Encouraging the growth of meat processing and strengthening our supply chain is a cause I can support, but this lack of accountable spending hurts our farmers, livestock, and taxpayers.”

USDA Defends Grants an Programs

A USDA spokesperson defended the department’s programs, saying they have worked to “rebuild and create new markets for U.S. farmers” after challenges posed by trade wars and the Covid-19 pandemic.

The spokesperson also urged lawmakers to focus on passing the overdue farm bill: “Rather than trying to score political points, those members of Congress should work with USDA to reopen the facility and pass a new Farm Bill, which is now two years late.”

More Background on Pure Prairie Poultry

More than 1 million birds had to be culled in Iowa due to the company’s inability to care for them.
Contracted farmers in Wisconsin and Minnesota were also affected.
According to the lawmakers’ letter, approximately 2 million chickens were “left without feed or any processing option.”

The lawmakers have requested USDA respond to their questions by Nov. 8.

Your Next Read: Senator Stabenow “Holds The Keys” to the Farm Bill Getting Done in 2024

ERP Phase 2 Dispersal Hits $2 Million

Tue, 11 Jul 2023 18:07:58 GMT

The Emergency Relief Program (ERP) Phase 2 has dispersed $2.015 million among 1,065 recipients by July 9, eclipsing the $2 million threshold. However, these disbursements are significantly lower than what had been projected by the USDA for this program.

The Phase 1 ERP payments remain fairly constant, adding up to a cumulative total of $7.43 billion, comprised of $6.30 billion for non-specialty crops and $1.14 billion for specialty crops.

Meanwhile, USDA reduced the payment amounts under the Coronavirus Food Assistance Program 2 (CFAP 2). Latest reported figures indicate $19.43 billion total disbursements, a slight drop from the initially reported $19.48 billion.

The breakdown now consists of initial CFAP 2 payments at $14.50 billion (lowered from $14.55 billion), and top-up payments at $0.92 billion, which show a significant reduction from the previous $4.93 billion.

Related story: Key Differences Between ERP Phase 2 and PARP

USDA has not extended the due date for ERP Phase 2 and PARP. They are both due this Friday, July 14.

As for 2022 ERP, a USDA official told us:

“It certainly helps us get to the end goal but there are other policies that are area based that need to be finalized prior to 2022 ERP going live; not to mention that we still will be required to publish a NOFA announcing 2022 provisions in the Federal Register before sign up is announced.”

3 Topics Producers Should be Tracking in the Farm Bill

Wed, 31 May 2023 15:23:48 GMT

It’s no secret that conservation and insurance will be heavy topics of discussion in ongoing farm bill debates this year. But it’s difficult to understand the exact role each title will play in legislation.

There might be some insight from House Ag Committee Chairman Glenn Thompson (R-Pa.).

“We don’t need to rewrite the entire farm bill,” Thompson says. “We’re comfortable with many parts of the 2018 bill and there aren’t many tweaks or changes, instead things we need to protect and invest in more.”

With Thompson’s words in tow, Kala Jenkins, Pinion ag consultant, and her colleague Bill Penn, Director of Farm Program Services, have carved out their own theories on what to expect in farm bill 2023.

Here’s a highlight of what they’re tracking as we move through the year.

1. Program Limitations with FSA

USDA defines a small farm as one that sees gross cash farm income under $250,000. According to the agency’s 2021 data, large farms—operations that gross more than $250,000—account for 85% of ag’s market value.

But these income brackets often leave small producers emptyhanded when it comes to disaster programs, according to Senator Chuck Grassley (R-IA).

“The 2018 Farm Bill was intentionally written to help the largest farmers receive sometimes millions of dollars of subsidies from the federal government each year,” Grassley said to USDA Secretary Tom Vilsack in a Senate Ag Committee hearing. “I’m asking that you would now work with me to stop this needless abuse of taxpayer dollars.”

Related story: Crop Insurance, Production Costs, ERP Among Key Topics at Senate Ag Farm Bill Hearing

Penn, who formerly served as USDA’s Assistant Deputy Administrator from 1985 to 1993, doesn’t see the aid differences as abuse and wants aid to go to the producers who make the biggest difference.

“Congressmen always like to talk about how 10% of the producers are getting 70% of the payments, but those 10% of growers are producing 85% of our supply,” Penn says. “If the goal of aid is to ensure America’s needs are met, we have to offer protections to those that put in the work.”

2. AGI Calculations

Adjusted gross income (AGI) is used to determine eligibility for disaster programs, through means testing.

Penn formerly served as USDA’s assistant deputy administrator from 1985 to 1993. He says in the 1980’s, disaster programs means testing was determined through gross receipts rather than AGI. Penn believes AGI is a better test for means testing than gross receipts because it is a “net income” number rather than a gross revenue number.

Related story: Paul Neiffer: PARP – Will You Get Anything?

However, in the recent WHIP+ and ERP Programs, USDA used AGI as a test to determine if someone was a farmer. In Penn’s view, gross receipts is a better measure of who is a farmer when compared to AGI.

“If a farmer has a bad disaster year, he might have a negative net income or AGI. But his wife, a schoolteacher who has a $70,000 positive, non-farm income would push them out of WHIP+ eligibility for increased limitations due to their AGI,” he says.

Penn says when the government is carving-out a disaster aid plan, it must be careful what question it is trying to answer with balance sheet numbers, or aid won’t be inclusive.

But, Penn is concerned if AGI limitations are applied to crop insurance.

3. Crop Insurance Coverage

In the past 20 years, the Federal Crop Insurance Program has covered an average of 87% of all U.S. croplands that were eligible for the program.

So, is a climate angle how crop insurance should be viewed? Jenkins isn’t convinced. She says the bottom line is in making programs voluntary.

“If we focus solely on climate and conservation in all our farm bill initiatives, could we miss something in the literature that could make certain practices mandatory instead of voluntary? That’s the concern we’re hearing from growers now.”

Related story: Commodity Programs Might See a 12% Cut in the Proposed $1 Trillion Farm Bill

Beyond conservation, Jenkins hears whispers of Title XI programs taking an entirely different direction in 2023.

“I’ve heard chatter about whether we need to change the way some of these programs work today, like whole farm crop insurance programs versus the noninsured crop disaster assistance program.” she says. “Then there are also some stakeholders questioning whether we need to link insurance to conservation, while others don’t want it to be the main focus. The needle is all over the board.”

It's Official - ERP Phase 2 and PARP deadline extended to July 14, 2023

Fri, 26 May 2023 18:19:18 GMT

USDA announced today that the deadline for filing ERP Phase 2 and PARP has been extended about six weeks to July 14, 2023.

We had heard from various tax preparers being behind in getting these applications done for their farm clients. The FSA continues to tout how easy these applications are but we are the first to admit that it is not a simple matter to calculate these claims when crop insurance, federal payments, and livestock related revenue is involved.

This new deadline should give farmers sufficient time to get these claims calculated, but we believe most farmers will find they do not qualify for much since their Allowable Gross Revenue has not fallen enough to qualify.

We will keep you posted.

2022 ERP & ELRP Have Been Announced

Mon, 22 May 2023 19:55:41 GMT

On Friday, USDA announced some details for 2022 Emergency Relief Program (ERP) and Emergency Livestock Relief Program (ELRP). The actual program has not been released as far as how to apply, etc. but we can review what we know now.

2022 ERP for Crop Producers

This will be very similar to 2020 and 2021 ERP. If you participated in crop insurance and received a payment, they will automatically increase the payment. We don’t know by how much or other details, but it will be streamlined just like previous ERP.

For those who did not collect crop insurance proceeds, we now have the dreaded Allowable Gross Revenue (AGR) to deal with. You will need to show some type of decrease in revenues due to a qualifying disaster, but we don’t know what the reference year or years will be. Will it again by the higher of 2018 or 2019 or will it refer to 2020 or 2021.

The issue with using tax return information to compare years is that farmers typically defer income in good years and bring in part of that deferred income in bad years. This tends to distort the amount of “loss” that a farmer might show. It appears that FSA continues to not understand this principle and relies only on tax information. Until they fix this issue, the amount of payment under “phase 2” will be likely lower than their expectations.

We think this will happen with 2020 and 2021 ERP Phase 2 payments. They will be lower than expected which means there may some type of top off on Phase 1 payments. Too soon to know for sure.

2022 ELRP for Livestock Producers and Close Out of ELRP for 2021

If a ranchers suffered at least a D2 drought (severe) or higher during 2022 for at least eight weeks, they will qualify for ELRP. Also, if wildfires destroyed their forage will be a qualifying event too. This assumes they had already applied for the 2022 Livestock Forage Program (LFP).

Producers will not be required to apply for payment. They essentially will have an increased payment automatically delivered to them.

Additional assistance will be issued to producers for 2021 drought or wildfires. No details on how or when on this assistance.

Timing

The release indicates that additional details will be available in the “coming months.”

USDA Announces Second Round of Debt Relief to "Distressed" Borrowers

Tue, 28 Mar 2023 20:02:43 GMT

USDA announced another $123 million in payments will be made in April under the Inflation Reduction Act (IRA) to provide debt relief for borrowers.

Focus for the second round of payments is on those who were:

• Past due on a qualifying direct loan as of Sept. 30, 2020, but by fewer than 60 days and are still delinquent
• Restructured a qualifying loan after Feb. 28, 2020, through primary loan servicing at FSA
• Owe more interest on a direct loan than the level of principal owed.

“In too many cases, the rules surrounding our farm loan programs may actually be detrimental to helping a borrower get back to a financially viable path. As a result, some are pushed out of farming and others stuck under a debt burden that prevents them from growing or reacting to opportunities,” said USDA Secretary Tom Vilsack. “Loan programs for the newest and more vulnerable producers must be about providing opportunity and tailored to expect and manage stumbles and hurdles along the way.”

According to Vilsack, this relief focuses on “long-term stability and success” of borrows that are in distress.

USDA’s Other Aid

The agency is still working on the payments that are to go to farmers who suffered discrimination in FSA loan programs. This falls under some $3.1 billion in debt relief that was included in the IRA.

USDA in October 2022 released more than $800 million in automatic relief payments, the first tranche from the program. That money went to about 11,000 borrowers 60 days or more delinquent on Farm Service Agency loans and 2,100 borrowers who had their collateral liquidated but still owed. The agency has been paying out more complicated cases on a case-by-case basis.

Crop Insurance, Production Costs, ERP Among Key Topics at Senate Ag Farm Bill Hearing

Fri, 10 Feb 2023 21:00:25 GMT

A Senate Ag Committee hearing Thursday on the new farm bill raised a issue that is now evident: the Title 1 farm bill safety net can no longer deal with the current ag environment of rising production costs and relatively high prices for some commodities. USDA officials also faced criticism about its handling of Phase 2 payments via the Emergency Relief Program (ERP).

Other topics that have previously surfaced included Republican concerns about climate and conservation changes to crop insurance, while Democrats continued to urge expansion of the program to more producers.

Need for change

Senate Ag Chair Debbie Stabenow (D-Mich.) said the 2018 Farm Bill largely lived up to expectations, but she suggested its successor must deal with several challenges: increasingly damaging natural disasters and accelerated costs of production.

“There are still gaps in the farm safety net as farmers continue to face global market uncertainty and climate-fueled weather disasters,” she said. “While many commodity prices are at historic highs, which is good, we also know that land and fertilizer and input costs are also near record highs.”

Farm safety net gaps

Ranking Member John Boozman (R-Ark.) said a focus on boosting nutrition and climate programs has obscured the fact that farm safety net programs like Price Loss Coverage (PLC) are ill equipped to deal with the current situation.

Related articles: Stepped-Up Basis Leaning in Favor of Rural America on House Ways and Means Panel

“Prices for many of our major commodities would have to drop sharply before the current Title 1 Price Loss Coverage safety net would start to work,” Boozman said, noting corn prices would need to plummet 46% before PLC would provide enrolled farmers any assistance. “By the time corn prices fell that low, the significant damage would have already been done.”

Sen. Tommy Tuberville (R-Ala.) asked if USDA had looked at how the two safety net programs respond to inflation, such as adjusting reference prices — which trigger payments under the PLC program.

“I will tell you my legislative staff is always quick to tell me to emphasize that Congress writes the farm bill, and then that’s going to be important here too, obviously those reference prices are in statute,” USDA Undersecretary for Farm Production and Conservation Robert Bonnie told Tuberville. “When we talk to producers, there’s lots of concern about obviously rising input costs,” he added, but then emphasized USDA can only operate farm safety net programs as dictated by Congress.

USDA disaster aid implementation was both praised and criticized

Democrats and Republicans agreed with farmers who have complained about USDA’s methodology for payments under Phase 2 of the ERP, saying they do not adequately compensate farmers for their losses. “I appreciate USDA’s efforts through Phase 1 of ERP, which generally worked well in supporting producers with crop losses and [2020 and 2021],” said Sen John Thune (R-S.D.). “But the Phase 2 methodology… often does not accurately reflect crop losses that Congress meant to cover.”

Thune urged USDA consider reverting to the approach used in Phase 1 of the ERP effort for 2022 losses, a suggestion echoed by Sen. Amy Klobuchar (D-Minn.), who said farmers in her state “are grateful for the quick and effective approach taken during the implementation of ERP Phase 1,” but “a number of them have been less enthusiastic of the income tax-based approach taken during the rollout of ERP Phase 2.”

Bonnie said USDA’s approach on ERP Phase 2 focused on ensuring more producers had access to aid, but said if there are resources remaining after the effort the department may look at a shallow loss effort to address some of the concerns with Phase 2.

Related articles: The Cost of a Farm Bill: 2023 Row Crop Priorities

Bonnie said ad hoc programs like ERP have helped farmers facing disaster-related losses, but he stressed that federal crop insurance remains a key risk management tool, and that USDA has worked to expand the program to cover more producers.

Crop insurance and climate intersect

Boozman again raised a concern voiced by many Republicans about any move to use crop insurance to incentivize climate or conservation practices — which GOP members contend could undermine the actuarial soundness of the program and move it away from its core focus as a risk management tool.

“Can you commit to making sure that any efforts to expand the crop insurance programs are science based, peer reviewed, and protect the integrity of the program,” he asked Bonnie, saying a “one-size fits all” approach that elevates certain practices like cover cropping could disadvantage farmers in areas where those practices are not practical.

Bonnie responded that “with respect to crop insurance, everything we have to do has to be actuarially sound as we’ve got to maintain the integrity of crop insurance.” He said recent incentives offered to farmers for cover cropping have taken the form of premium rebates — not changes to premiums or the overall premium subsidy paid by the government.

Stabenow praised federal crop insurance, calling it “the number one risk management tool for producers.” However, improvements are needed, she said, promising improvements to the program, “including specialty crop growers, organic producers, beginning and diversified farmers.”

Regarding prevent plant coverage

Sen. Ben Ray Lujan (D-N.M.) asked if USDA was looking at expanding prevented plant coverage under crop insurance, which pays farmers when they are unable to plant an insured crop due to extreme weathers. He noted eligibility currently hinges on a farmer being able to plant, insure and harvest crops in one of the four preceding crop years — known as the four-in-one rule — and some farmers in the West are at more risk of losing coverage due to prolonged drought conditions.

“One in four is very regionalized in a lot of cases,” acknowledged USDA Administrator Marcia Bunger. “So, for this coming year, we’ve made an exception for several western states to step outside of that one and four,” adding USDA would consult with stakeholders over the next year about a potential long-term solution to the issue.

Related articles: How USDA’s $2.8 Billion Climate-Smart Investment Might Impact Your Operation

USDA climate program efforts were raised by Sen. Chuck Grassley (R-Iowa), who noted concern over USDA’s move to tap more than $3 billion from the Commodity Credit Corporation (CCC) to fund its Partnerships for Climate-Smart Commodities (PCSC) effort that funds climate-smart ag pilot projects.

“Spending over $3 billion without input from Congress is a serious concern for everybody in the Congress,” Grassley stated.

Grassley then asked Bonnie if USDA had any plans to tap CCC for additional USDA programs. Bonnie reiterated what USDA Secretary Tom Vilsack has said — that PCSC falls within the CCC’s charter as it looks to expand and create new markets for ag commodities.

However, Bonnie ultimately said there were no plans for new CCC-backed programs under the Farm Production and Conservation (FPAC) mission area.

How Should Crop Insurance Deferral Be Reported for ERP and PARP?

Tue, 07 Feb 2023 22:00:12 GMT

FSA issued new FAQs on January 23, 2022 regarding the Emergency Relief Program (ERP) Phase 2 and many of the FAQs answers some of our questions, there is one dealing with crop insurance deferral that actually creates more questions than it answers.

Farmers who receive crop insurance for yield losses have an option to elect to report that income in the next year. Many farmers take advantage of this, and it appears that FSA tried to address how to report this revenue for ERP Phase 2 and PARP as follows:

Q. How will deferred revenue and crop insurance proceeds be addressed?

A. Revenue is based on tax year and is specific to each applicant. The revenue would go with the applicable tax year the applicant would have reported for tax purposes. ERP Phase 2 is a producer certification-based program, specific questions on revenue reporting should be addressed with the producer’s individual tax preparer. FSA cannot provide casual advice for how income could or should have been reported. The FSA-521 table contains what is considered allowable gross revenue.

I have bolded the section that needs to be clarified. Crop insurance proceeds received in any applicable tax year is then reported on line 6a of Schedule F. However, actual taxable crop insurance proceeds for the year are reported on line 6b and then any deferred from the previous year are reported on line 6c.

Bottom Line

It appears that the FAQ indicates you report crop insurance proceeds based on line 6b plus 6c, however, it is our opinion line 6a is likely the correct amount of crop insurance proceeds to be reported. When determining adjusted gross income (AGI) for the $900,000 annual AGI limit, we use line 6b plus 6c. Is FSA suggesting we use the same or use line 6a.

We need better clarity on this before calculating allowable gross revenue (AGR). Here is an example:

Sue has benchmark revenue of $2 million for 2018 and 2019. In 2020, she has crop revenue of $1 million and received $700,000 of crop insurance proceeds which she elected to defer to 2021. 70% of $2 million is $1.4 million and if Sue does not include the $700,000 of crop insurance proceeds in 2020 as part of AGR, she will qualify for up to $400,000 of ERP Phase 2 (before any payment limits). However, if AGR is based on crop insurance proceeds received during 2020 reported on line 6a, she would qualify for no ERP Phase 2 payments.

As you can see, the reporting of these proceeds can be material to the calculations. The same issue applies to PARP. We will keep you posted.

ARC or PLC - Which Do I Choose for 2023

Mon, 23 Jan 2023 22:05:48 GMT

Most farmers that grow corn, soybeans or other major crops will be making their decision between Agricultural Risk Coverage (ARC) and Price Loss Coverage (PLC).

PLC is a price program that only pays if the final mid-year average price drops below an effective reference price. ARC is a combination of price and county yield similar to Revenue Protection crop insurance. It only pays if the final “revenue” is at least 14% lower than the benchmark revenue.

The 2014 Farm Bill first introduced ARC and PLC with a reference price. The 2018 Farm Bill allowed the reference price to increase by up to 15%. That is why it is now called the effective reference price.

Most of the major crops would still need to see a major increase in cash prices for the reference price to increase. Some other crops such as chickpeas have seen their price increase by up to the 15% maximum.

An Example

We are starting to see some increase in the Olympic average price that is used for benchmark revenue. As an example, the corn Olympic average price for the 2022 crop year was $3.70 which is also the reference price. The Olympic average price cannot drop below the reference price. Olympic average takes the last five years of price and yield and eliminates the high and the low.

Finally, in 2023 we see that the Olympic average price has now increased to $$3.98. If we assume that the final 2022/23 mid-year average price is $6.80 (the current FSA projection), then the benchmark price for 2024 corn will increase to $4.74 (average of $3.70, $4.53 and $6.00). This will likely make it easier to pick ARC-CO for the 2024 crop. However, we are dealing with the 2023 crop signup and that is more problematic.

We would estimate that neither ARC or PLC will make a payment this year for corn and soybeans unless the county has a substantial decrease in yields under ARC-CO.

Neiffer’s Projections

Let’s review how much yields would need to go down in order for ARC-CO to make a payment. Let’s assume the county yield is 200 bpa. Benchmark revenue is equal to $796 (200 X $3.98) and guarantee revenue is 86% of this number or $685 (rounded). FSA is not estimating the 2023 mid-year price yet but let’s assume that it averages the current December 2023 price of $5.86.

In order for final revenue to be less than $685 with a price of $5.86, the final county yield would need to be about 117 bushels. The chance of this happening is slim at best since final yields would need to be 83 bushels less or about a 40% reduction. It can happen, but not likely.

For PLC to pay, the mid-year price would have to drop from “$5.86” to less than $3.70. If that occurred, the last thing you would want is to collect a PLC payment. However, SCO is only allowed if you elect PLC.

Bottom Line

For 2023, if you have multiple farms, it might be wise to hedge your bets and elect PLC on some and ARC-CO on the others. Of if you want SCO, make sure to elect PLC. The chances of either paying this year is remote, at least for corn and soybeans (although almost all of the other crops have the same issue).

We Have a Fact Sheet on Phase 2 of ERP

Tue, 17 Jan 2023 17:38:28 GMT

We finally found the Fact Sheet for Phase 2 of the Emergency Relief Program. It has answered some of our questions. Also, if any farmer needs help on Phase 2 of the Emergency Relief Program, I will be providing that service. My bill to review your operation to determine if you qualify will be $750 and if you need me to help prepare the application, the bill would be an extra $1,500. If you are interested, please email me at farmcpa@outlook.com.

The application appears to be based solely on Schedule F information (or equivalent) for a calendar or fiscal year. This means that only the income that is reported on that form will be picked up as Allowable Gross Revenue (AGR) when filling out Form FSA-521 (we still can’t find this form yet). You will need to review your Schedule F for each year to determine the best benchmark year to use, either 2018 or 2019.

Page 4 and 5 of the Fact Sheet lists the lines off of Schedule F and whether that income is allowed or excluded. Let’s review each of those line items:

Line 1C is the net income from purchasing crops or livestock for resale. The only income allowed from this line is crop income that has changed due to growth. Example is purchasing a plant that is 2 inches and growing it to 14 inches.
Line 2 - Sales of livestock, produce, grains, etc. Here is some of the key income that is not allowed:
- Eggs
- Milk
- Revenue from animals for show, sport, or recreational purposes
- Revenue from raised breeding stock either reported on Form 4797 or Schedule F
- Sales of ag products resulting from value added reported on Schedule C or equivalent. An example would be a winery that has grape sales reported on Schedule F and wine sales reported on Schedule C.
Line 3A - Cooperative Distributions. We got our answer on this income. You essentially only report per-unit allocations for sales to the cooperative. It appears you do not report any patronage dividends since that was income earned by the cooperative and not derived by activities of the farmer.
Line 4A - Agricultural Program Payments. The Fact Sheet lists the payments that are included in AGR and ones that are not. Key payments not required to be part of AGR are CFAP1, CFAP2, Pandemic Livestock Indemnity Program (PLIP) and Spot Market Hog Pandemic Program (SMHPP) payments. This will likely help farmers since most of these payments are included in the disaster year not the benchmark year.
Line 5A-5C - CCC Loans. You will include this as part of AGR if these proceeds are reported on these lines.
Line 6 - Crop Insurance Proceeds. You will include most crop insurance and equivalent payments as part of AGR. However, many of the USDA programs such as ELAP, LFP, LIP, QLA, etc. will excluded from AGR. This may or may not be helpful to farmers. For example, assume a farmer received $1 million of crop insurance in 2018 but elected to defer the income to 2019 where the farmer also received $1 million of crop insurance proceeds that was not deferred. This may result in the farmer showing a very high benchmark AGR which is good.
Line 7 - Custom Hire Income is not included as part of AGR.
Line 8 - Other Income. Most of this income will not be part of AGR including hedging gains or losses. As we mentioned in previous posts, this may help or hurt the farmer in their application. The only income that might be included is commodity specific income from a state or local government or other crop related income not shown on any other line.

Producers with eligible revenue losses in both disaster years will utilize the following procedures:

Both disaster years will be on the same application,
The same benchmark year may be used for both disaster years,
Participants cannot use the same tax year for more than one disaster year. This is likely related to entities with fiscal year-ends such as a corporation with a June 30 year-end. An entity with a June 30, 2021, year-end will have both 2020 and 2021 AGR. If the farmer picks June 30, 2021, for its 2020 disaster year, it must then pick June 30, 2022, for the 2021 disaster year (at least that is my reading of the fact sheet), and
Disaster year revenue must consist of consecutive years.

It appears that adjustments can be made if the farm size materially changed between the benchmark and disaster years. Still not exactly sure how this will be calculated but assume it may be based on some type of per acre AGR calculation. For example, assume a farmer farms 2,000 acres in 2018 and 2019, but then farms 4,000 acres in 2020 and 2021. Their benchmark AGR per acre is $1,000 times 70% is $700. Their disaster year AGR is $500 per acre. They would qualify for $200 per acre times 4,000 acres or $800,000 subject to the overall payment limit.

We will keep you posted.

USDA is Making Additional CFAP 2 Payments

Fri, 13 Jan 2023 18:11:34 GMT

USDA has begun issuing additional payments under the Coronavirus Food Assistance Program 2 (CFAP 2) effort to underserved farmers and ranchers using Commodity Credit Corporation (CCC) funds except for those to tobacco farmers where payments will be funded by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

Read more: Vilsack Lists USDA’s 4 Policy Objectives for 2023

The additional payments will be equal to 15% of the producer’s previous CFAP 2 payments. The payments were to be processed and made available to county FSA offices to certify around Jan. 11. USDA said the payments would be issued within 30 days.

Read more: We Have ERP Phase II

Contract growers are not eligible for these additional payments.

The payments were part of a final rule on CFAP and other aid efforts released Jan. 11 and are expected to total $325 million.

Read more: Secure 2.0 Finally Arrives

Vilsack Lists USDA's 4 Policy Objectives for 2023

Wed, 11 Jan 2023 14:16:20 GMT

USDA Secretary Tom Vilsack has a history of making key announcements during visits, and that was the case during his appearance at the American Farm Bureau Federation’s annual meeting in Puerto Rico.

Some of them include:

1. ERP Phase 2

Vilsack announced Phase 2 of the ERP, which will provide help to producers for production and quality losses of eligible crops, utilizing calculations of a producer’s decrease in gross revenue.

Those were about to be released months ago but were pulled back at the last minute due to lawmaker and farmer complaints. USDA eventually announced anyway.

USDA said in documentation on file at the Federal Register that using that approach will reflect the losses “without requiring the more extensive calculations and documentation required under previous programs” for disaster-related crop losses. USDA said this streamlines the aid to minimize the burden on producers and processing of applications by county FSA offices. Using that process also means it will address losses for a qualifying disaster event whether it happened before or after harvest.

ERP Phase 2 will be available for a decrease in gross revenue in 2020 or 2021, primarily to those with losses not covered by Federal Crop Insurance or the Noninsured Assistance Program (NAP).

The application period is Jan. 23-June 2. USDA has already paid out $7.31 billion under ERP Phase 1 as of Jan. 8, up from $7.28 billion the prior week, including $6.23 billion for non-specialty crops ($6.21 billion prior) and $1.09 billion for specialty crops ($1.08 billion prior). A total of $10 billion was earmarked for ERP.

USDA projects outlays for ERP Phase 2 payments will be $1.2 billion and will likely be pro-rated as USDA projects total gross outlays at $1.5 billion.

Phase 2 Reflection

Phase I was highly successful and it worked well. Phase 2 has tons of problems. Comparing schedule F in relevant years to past years doesn’t reflect losses. A farmer may have had to sell land or livestock when they didn’t want to. They may have sold a previous year’s crop in the year in question. These and other things skew the schedule F. There is also the issue of forcing farmers to share schedule F info with local FSA offices.

2. Pandemic Assistance Revenue Program (PARP)

Vilsack announced PARP payments for producers that suffered a 15% or greater decrease in allowable gross revenue for the 2020 calendar year compared with either 2018 or 2019. This effort, Vilsack said, aims to “fill in gaps” for losses covered by either Phase 1 or Phase 2 of ERP.

The payments will have a factor of 80% (90% for underserved farmers and ranchers) and will be reduced by 2020 ERP payments, and pandemic assistance under either the Coronavirus Food Assistance Program (CFAP) 1 or 2 and other pandemic aid.

Payments will be limited to $125,000 per person or entity and USDA may set a lower maximum payment amount per person if total payments exceed available funding and USDA expects that to be the case — PARP outlays are projected at $250 million with gross outlays pegged at $2.66 billion.

USDA also will expand payments under prior efforts such as CFAP 2 and others. The total payments USDA projects under the ERP Phase 2, PARP and expanded other programs is $1.82 billion with gross amounts at $4.54 billion.

3. U.S.-Made Fertilizer

USDA will seek public comment on 21 potentially viable projects totaling up to $88 million to boost U.S. fertilizer production via the first round of USDA’s Federal Production Expansion Program, a $500 million effort announced earlier this year.

The projects are in Alabama, Arizona, Colorado, Florida, Iowa, Louisiana, Massachusetts, Minnesota, Missouri, Montana, Ohio, Oregon, Texas, Washington, and Wisconsin. USDA is seeking comments through Feb. 8 on the environmental impacts of the projects.

4. Meat and Poultry Processing

Vilsack announced three projects in Ohio, Michigan and Minnesota which will expand independent meat and poultry processing capacity via the Meat and Poultry Processing Expansion Program.

The projects total $12 million and are in addition to other recently announced efforts in the sector.

More on policy:

We Have ERP Phase II
Policy and Payments: What Producers Can Expect in 2023

We Have ERP Phase II

Tue, 10 Jan 2023 18:31:14 GMT

USDA released the details on Emergency Relief Program Phase 2 (ERP) and Pandemic Assistance for Producers (PARP). The original guidance on Phase 2 indicated that producers would be relying on income tax information to be provided to the local FSA office. This has now been eliminated and changed to filling out Form FSA-521, Emergency Relief Program Phase 2 application. As of the time of writing this post I was unable to download a copy of this Form. I am guessing it will be released later since you can’t apply for this program until January 23. The final deadline is June 2, 2023 unless extended.

Now for some of the key details.

The producer will need to calculate their Allowable Gross Revenue (AGR) for both a benchmark year and the applicable disaster year. The producer can elect either 2018 or 2019 as their benchmark year. The applicable disaster year is either 2020 or 2021.

AGR is comprised primarily or crop or livestock revenues plus crop insurance, almost all types of other FSA assistance, cooperative proceeds, CCC loans if treated as income on the tax return. For the benchmark year you also need to include all 2018, 2019 and 2020 WHIP+ and QLA payments even not collected in that year. Items that are not included in revenue that may create an issue for the producer (or a benefit) is as follows:

Hedging gains or losses,
Custom hire income,
Any resale items where no additional maturity has occurred,
Conservation program payments
Contract producers

The calculation of the payment amount can be very complicated, but I will try to review and explain it here:

We take the producer’s benchmark revenue and multiply it by a factor of 70%, then subtract
The producer’s disaster year benchmark revenue, then subtract
Any Phase 1 payments received for the applicable disaster year, then subtract
Net CFAP, net WHIP+, net 2020 Quality Loss Adjustment payments, if the calculation is for the 2020 disaster year.

The producer will need to provide the percentage of revenue for each year that is specialty crops and non-specialty crops since each of these have separate payment limits.

The initial payment is the LESSER of:

The amount calculated above, or
$2,000

This means the maximum initial payment will be $2,000, however, it will then be reduced by any Phase 1 payments already received by the producer. Based on the expectations in the Regulations, it is estimated that only about 80% of overall payments will be allowed. The table shows total qualifying payments of $1.504 billion but only paying $1.2 billion.

Let’s review a very simple example:

Jane has benchmark revenue in 2018 of $1.5 million and has benchmark revenue in 2019 of $2 million. She elects to use 2019 as her benchmark revenue. Her AGR for 2020 is $1.5 million and for 2021 it is $1.3 million. 70% of $ 2 million is $1.4 million. She is not eligible for any 2020 payment but is eligible for $100,000 payment for 2021. Her initial payment is $2,000 and perhaps she may get another $75-80,000 of payments plus or minus. Nobody knows the final percentage payout since it will be determined by FSA after all applications are processed. They have allocated about $1.2 billion to Phase 2. If Jane is an underserved farmer, then her percentage will be 15% higher than non-underserved farmers.

The Regulations do clarify that if an entity is trying to qualify for increased payments based on their farm AGI being over 75% of total AGI, then each owner of the entity must also qualify. If not, the payment will be reduced by their applicable ownership percentage.

Also, note that if you have already maximized your payments from Phase 1, there is no reason to apply for Phase 2 since the payment limit applies in the aggregate to both Phase 1 and Phase 2.

Phase 2 was only allowed if the producer had at least a 30% reduction in AGR. PARP will make a payment if the producer had at least a 15% reduction in AGR. The payment will then be multiplied by 90% for underserved producers and 80% for all others. However, FSA is only allocating $250 million for PARP, so my guess is that payments will be substantially limited since their Regulations estimate total qualifying payments of $2.662 billion with a limit of $250 million. Therefore, you should estimate that you will only receive about 10% of your calculated payment amount.

The definitions for PARP is very similar to ERP, however, there is a $900,000 AGI limit for PARP unless your AGI in the disaster year is under that level. You may need to do additional paperwork if you are over the limit.

The bottom line is if you received a large Phase 1 payment, it may not be worth applying for Phase 2 or PARP. If you did not receive any Phase 1 payments, then you should take a quick look at your revenues for those 4 years to determine if you qualify for a payment. If you have large hedging gains or losses, you must back those out to determine your AGR. It appears this based solely on sold items, therefore inventories are year-end are ignored unless you are on the accrual method.

I am sure there will be more details that come out, but this will give you an idea as to how this will work.

Policy and Payments: What Producers Can Expect in 2023

Thu, 05 Jan 2023 14:00:38 GMT

The calendar flip to 2023 signals a new Congress and, this year, a new farm bill. With that comes unpredictability. Jim Wiesemeyer, Pro Farmer policy analyst, lays out what could be ahead for ag policy in coming months.

Passing a Farm Bill

Rep. Glenn Thompson (R-Pa.), the new House Ag Committee Chairman, intends to hit the ground running on the farm bill as early as next week, with the first farm bill hearing taking place in his home state of Pennsylvania on Saturday.

“I think now the odds we could get a new farm bill this year because the sensitive issues such as climate change and food stamps weren’t totally settled in the omnibus spending bill ,” Wiesemeyer says.

Upon his election, Thompson said the committee will keep it’s “foot on the gas” to deliver a farm bill that will “prioritize” the needs of the farmers, ranchers and foresters.

The committee has six months to make headway on farm bill negotiations before Congressional recess starts in June.

Pandemic Assistance Programs Continue

The Office of Management and Budget (OMB) will also be busy aiding ag in 2023, as they formulate a plan to implement Phase Two of Emergency Relief Payments (ERP) .

Each Monday, the OMB releases an announcement to showcase how much funding has been dispersed through the phase. Phase Two will likely run on the same process, but have different operating components, according to Wiesemeyer.

“Farm groups still tell me, from the last thing they’ve heard from USDA, they won’t like how Phase Two operates,” he says. “We’ll see how this all plays out, pending any last-minute changes from USDA.”

According to Wiesemeyer, Phase One dispersal was slow and rocky, but the funding amount was plentiful.

Lock-In WOTUS

An official definition of Waters of the U.S. (WOTUS) is also on the horizon in 2023, following an interim definition proposed by the EPA last week. However, the final ruling might not be what some had hoped.

Wiesemeyer says some analysts feel, following the interim proposal, the government now has more room to interpret the court’s WOTUS decision. He sees how this could be the government’s strategy.

“A number of lawmakers did not want the EPA to come out with any ruling on WOTUS, no matter if it was interim or not,” Wiesemeyer says. “But you know lawyers—once they think they have more flexibility, they’ll use it.”

More on policy :

4 Ways to Advocate for Ag in the New Farm Bill
EPA Releases New WOTUS Rule, with the Supreme Court Ruling Pending

What's in it for Ag in the New Spending Bill?

Wed, 28 Dec 2022 03:26:54 GMT

The House on Friday averted a government shutdown by voting 225 to 201 in favor of the Consolidated Appropriations Act of 2023. The $1.7 trillion omnibus bill includes 12 separate bills that cover everything from natural disasters to military pay to foreign aid.

Sanford Bishop Jr., ag, rural development and food and drug administration subcommittee chairman, says the bill is “crucial” to America’s economic success.

“These federal programs make our country a world leader in agriculture, ensure that we have safe, abundant food and medicine to lead healthy lives, support America’s farmers and ranchers, and provide Americans with the materials that clothe us and build our communities,” Bishop says.

Here are highlights of the key ag-sector funding from the omnibus:

Insurance

• Directs USDA to index all administrative and operating expense in the crop insurance program for inflation.

Research

• Agricultural research: Ag research funding will increase by $175 million to $3.45 billion in 2023, including monies for Agricultural Research Service, National Institute of Food and Agriculture, Agriculture and Food Research Initiative, and Sustainable Agriculture Research and Education program.

Conservation

• Includes the SUSTAINS Act, which allows corporations and other private entities to contribute funding for conservation projects and authorize USDA to match the donations.

• Reauthorizes the Pesticide Registration Improvement Act, which imposes fees for maintenance and registration of active ingredients. It boosts registration and maintenance fees 30% and allows EPA to raise fees by 5% in 2024 and 2026.

Infrastructure

• $1.48 billion is included on top of annual appropriations funding for the Army Corps of Engineers to make emergency repairs and navigation improvements needed after extreme weather events, including low water on the Mississippi River.

“One of the best returns on investment is when we pump money into our infrastructure, especially the great waterway system,” Jim Wiesemeyer, ProFarmer policy analyst told AgriTalk Host Chip Flory. “This town [Washington, D.C.] has had a mindset change on pumping more money, not only in the new projects, but restoring some of the water transportation endeavors of the past. It’s good news.”

Relief Aid

• $3.7 billion in farm disaster aid, to cover eligible 2022 crop and livestock losses, with $494.5 million to be used for livestock losses due to drought or wildfires, as part of overall $40.6 billion for disasters.

• Requires USDA to make a one-time payment to each rice producer on a U.S. farm in the 2022 crop year. USDA will determine payment rates based on yield history and acreage.

• Authorizes $100 million for the USDA to make pandemic assistance payments to cotton merchandisers that purchased cotton from a U.S. producer from March 1, 2020, through the measure’s enactment date.

• $25 million for specialty crop equitable relief.

Broadband

• USDA’s ReConnect loan and grant program for rural broadband will get $348 million for fiscal 2023.

Food Assistance

• Make permanent a summer EBT (food stamp) program to provide up to $40 a month per child. It allows grab-and-go or home delivery of meals to kids in rural areas as an alternative to meals in group settings Any summer meals benefits issued to a household in the summer of 2023 couldn’t exceed $120 per child. USDA will be required to establish a program beginning in the summer of 2024 and annually thereafter to issue EBT benefits to eligible households to ensure continued access to food when school isn’t in session in the summer.

• Aid for Food for Peace ($1.8 billion) and McGovern-Dole International Food for Education ($248 million) programs.

Carbon

• Includes the Growing Climate Solutions Act, which authorizes USDA to oversee the registration of farm technical advisers and carbon-credit verification services

Wiesemeyer says the swift passage of the spending package signals the coming farm bill might be easier to pass than some had previously thought, despite the new congress moving in next week.

“Congress put more than a few dollars in this for farm bill-related topics, especially food stamps and some of the climate change funding,” he says. “I think this really increases the odds that both the Senate and the house should get a new farm bill done in 2023.”

The bill will now move to President Biden’s desk, where he is expected to sign it this week.

More on policy :

4 Ways to Advocate for Ag in the New Farm Bill
U.S. Defense Spending Bill Leads to China Taking Aim at Taiwan

How the $1.7 Trillion Omnibus Spending Package Might Impact Your Operation

Tue, 20 Dec 2022 17:19:29 GMT

Text of the $1.7 trillion omnibus spending package was released early Tuesday morning. The Senate will vote first and intends to pass the measure before Thursday, leaving the House no time to demand changes before the Christmas holiday.

Here are the details that might impact your farm:

Disaster Relief

• $250 million in aid to rice producers and $100 million to cotton merchandisers to make up for losses related to the pandemic or supply chain disruptions. USDA previously provided $80 million in aid to textile mills and other cotton users. For rice, USDA would determine payment rates based on yield history and acreage.

• $40.6 billion for drought, hurricanes, flooding, wildfire, natural disasters and other matters — $3.7 billion in disaster aid for farmers to cover 2022 crop and livestock losses.

Food Aid

• Funds two programs that provide foreign food aid. These include the Food for Peace Program (PL 480), which is funded at $1.8 billion, and the McGovern-Dole International Food for Education Program, which is funded at $248 million, for an increase of $11 million over fiscal year 2022.

• Summer Meals Program Modernization: Updates the summer food service program to permanently allow states to provide non-congregate meals and summer electronic benefit (EBT) options nationwide to eligible children in addition to meals provided at congregate feeding sites. Non-congregate meals, such as grab-and-go or home delivery, would be provided in rural areas to eligible children, and summer EBT benefits would be capped at $40 per child per month. This provision is fully offset and based largely on the Hunger-Free Summer for Kids Act, which Boozman authored and introduced earlier this Congress.

• Supplemental Nutrition Assistance Program (SNAP) EBT Skimming Regulations and Reimbursement: Requires USDA to coordinate with relevant agencies and stakeholders to investigate reports of stolen SNAP benefits through card skimming, cloning and other similar fraudulent methods. This provision aims to identify the extent of the problem, develop methods to prevent fraud and improve security measures, and provide replacement of benefits stolen through these fraudulent actions.

Conservation

• Cracks down on “conservation easements,” which allow tax breaks when land is dedicated for conservation purposes. The IRS has identified the transactions as a method for avoiding taxes. The conservation easement provision was expected to raise between $6 billion and $7 billion.

• SUSTAINS Act: Enacts a House bill that allows corporations and other private entities to contribute funding for conservation projects and authorizes USDA to match up to 75% in matching the donations.

Inputs

• Pesticide Registration Improvement Act (PRIA 5) Reauthorization: Reauthorizes pesticide registration and review process user-fee programs administered by the Environmental Protection Agency (EPA) and increases registration and maintenance fees to support a more predictable regulatory process, create additional process improvements, and provide resources for safety, training, bilingual labeling, and other services to advance the safe and effective use of pesticides.

• Pesticide Registration Review Deadline Extension: Extends deadline for EPA to complete registration review decisions for all pesticide products registered as of October 1, 2007. EPA is facing a significant backlog of pesticide registrations due to a variety of factors over the past several years, which raises potential implications for continued access to numerous crop protection tools. The agency will be allowed to continue its registration review work through October 1, 2026, as a result of this extension.

Climate

• Growing Climate Solutions Act: Incorporates updated language from the Growing Climate Solutions Act, which directs USDA to establish a program to register entities that provide technical assistance and verification for farmers, ranchers and foresters who participate in voluntary carbon markets with the goal of providing information and confidence to producers.

Farm Business

• $1.92 billion for farm programs, which is $55 million above the fiscal year 2022 enacted level. This includes $61 million to resolve ownership and succession of farmland issues, also known as heirs’ property issues. This funding will continue support for various farm, conservation, and emergency loan programs, and help American farmers and ranchers. It will also meet estimates of demand for farm loan programs.

• Funding for specialty crops and remarks on crop insurance/A&O. Some $25 million is being made available for specialty crop equitable relief and report language directing USDA to use its legal authority to index all A&O (crop insurance program) for inflation and provide equitable relief for specialty crops going forward.

Livestock

• Livestock Mandatory Reporting Extension (LMR) Extension: Extends livestock mandatory reporting requirements until September 30, 2023. LMR requires meat packers and importers to report the prices they pay for cattle, hogs, and sheep purchased for slaughter and prices received for meats derived from such species to USDA who then publishes daily, weekly, and monthly public reports detailing these transactions.

Markets

• Commodity Futures Trading Commission (CFTC) Whistleblower Program Extension: Enables CFTC to continue payment of salaries, customer education initiatives and non-awards expenses related to the whistleblower program to ensure it can continue to function even when awards obligated to whistleblowers exceed the program fund’s balance at the time of distribution.

Some ag sector items that did NOT make the omnibus package:

Nothing for the proposed farmworker labor reforms from Sen. Michael Bennet (D-Colo.) and others. The bill also left out legislation to reform cattle markets or appoint a special investigator at USDA to investigate possible anti-competitive behavior in the meatpacking sector.

We’ll be updating this article as more details become available.

More on policy :

Water Resources Bill Reauthorized with a Component that Will Impact Producers
European Union Clinches a Deal on a Carbon Border Tax
U.S.'s “Candid” GMO Corn Conversation With Mexico Results In Changes To Looming Trade Dispute
Senate Clears Annual Defense Policy, Pushing $858 Billion to Military

USDA Announces Phase 2 of ERP Along With New Aid Opportunities

Thu, 17 Nov 2022 15:05:21 GMT

USDA announced the launch of Phase 2 of its Emergency Relief Program (ERP) with Phase 1 paying out $7.15 billion to eligible producers.

Who Qualifies for ERP Phase 2?

Phase 2 is targeted to those who suffered losses in 2020 and 2021 but may not have received any payments under Phase 1 for losses in allowable gross revenue for traditionally insurable crops and specialty crops intended to be commercially marketed.

The payments will be based on the difference in farm revenue between a typical year and the disaster year and are to avoid windfall or duplicate payments.

USDA said that the signup deadline for Phase 1 ERP, which was previously extended indefinitely, will now be set to Dec. 16.

Can You Defer ERP Payments?

As you’ll recall from Paul Neiffer’s article , only certain ERP payments can be deferred.

According to Neiffer, if the payment relates directly to damage occurred in 2021, then the payment can’t be deferred until 2023. But if the damage if really for the crop that was harvested in 2022 and damage was for drought during the growing period, then it should be able to be deferred.

As a reminder, here are the three requirements to defer crop insurance proceeds:

• Farmer is on the cash method of accounting (almost all are),
• Farmer normally reports more than 50% of total sales in the year after harvest (most do), and
• The farmer can only defer to the year after the damage was incurred

The last item is what blows up any ability to defer Phase 1 payments. These payments are for damage that occurred in 2020 and 2021. 2022 is the latest you could defer 2021 payments and since you collected them this year, you are stuck with reporting these payments in 2022.

More Payment Opportunities

USDA also mentioned the new Pandemic Assistance Revenue Program (PARP) will be available to help those with ag commodities that saw revenue declines in calendar 2020 compared with 2018 or 2019 due to the COVID-19 pandemic.

The agency said PARP is aimed at addressing “gaps in previous pandemic assistance which was targeted at price loss or lack of market access, rather than overall revenue.”

Under PARP, USDA says producers will use revenue information available from “most tax records,” and urged producers to have those documents available for the past few years along with supporting materials.

According to USDA, the documentation is similar to what producers had to provide for the Coronavirus Food Assistance Program 2 (CFAP 2) effort which allowed for 2018 or 2019 to be used as the benchmark year.

More on ag business:

Can You Defer 2022 ERP?
Paul Neiffer: When Can Inflation Help You?

$670 Million Awarded by USDA to Farm, Meatpacking and Grocery Workers for their 'Essential Role' in U.S. Food Systems During Pandemic

Wed, 05 Oct 2022 19:37:10 GMT

USDA announced 15 groups will get $670 million in funds to farm and meatpacking workers that were negatively impacted during the pandemic, incurring expenses via the outbreak as they were deemed essential workers.

The funds would amount to $600 per person and start in the fall, USDA said. $20 million was also earmarked for a pilot program that would recognize the efforts of grocery workers.

The aim is to defray some of the costs incurred by workers relative to personal protective equipment, child care, and expenses for testing and quarantining.

Farm/meatpacking and grocery worker pilot program grant recipients:

“Please note that payments are not yet available and each organization may have application periods that begin at different times,” said USDA’s Agricultural Marketing Service.

However, according to the announcement, these workers should be given the money from their organizations this fall.

Continuing Resolution Bill in the Works as New Stopgap Spending Bill

Mon, 19 Sep 2022 22:15:44 GMT

Lawmakers had all year to work out a budget/funding level for fiscal year (FY) 2023, which starts Oct. 1. Of course, they didn’t make it and now, again, there’s a need for a stopgap spending bill, the so-called Continuing Resolution (CR). But also as usual, there are disagreements regarding what policy moves may go along for the ride.

Where Politicians Stand

Sen. Edward Markey (D-Mass.) says he opposes attaching environmental streamlining provisions for energy infrastructure projects to a CR. He said in a statement there is an “ongoing conversation” on the topic and legislation that could adversely affect the environment shouldn’t be included in a “must-pass” bill.

Sen. Joe Manchin (D-W.Va.) said Thursday he needs as many as 20 Senate Republicans to vote for his plan to streamline the federal approval for energy projects to counter Democratic defections — casting doubt on the effort to tie his bill to a must-pass spending bill this month.

“If it doesn’t get on the continuing resolution, it’s dead,” Manchin said.

Other Possible Continuing Resolution Provisions

Lawmakers are also eyeing the CR package as a vehicle for Food and Drug Administration user fees and school meals, among other provisions like Ag disaster aid for eligible 2022 crop and livestock producers.

The disaster aid legislation is widely expected to be part of a post-election, lame-duck session of Congress that will be part of an omnibus spending measure for the remainder of fiscal year (FY) 2023. That makes some sense because it will give more time to see how the 2022 ag sector season unfolds (potential hurricanes, blizzards, etc.).

The level of potential disaster aid is murky because USDA reportedly has told lawmakers there are still around $3 billion in ag disaster aid funding remaining for 2020 and 2021 disasters. So, at this time it is difficult to say what dollar amount Congress will settle on by year’s end.

Also, USDA still has not announced phase two for either the Emergency Program (ERP) or Emergency Livestock Relief Program (ELRP). Recall that the White House/USDA requested $1.5 billion for disaster assistance in the Continuing Resolution, but some sources wonder how serious that request really was, thinking it was more messaging than anything else.

Besides temporarily funding the government, which Majority Leader Steny Hoyer (D-Md.) called “the one thing we must do between now and September 30th,” other issues such as policing and public safety, restricting members from trading stocks, and data privacy are stuck in negotiations — and in some cases stymied by disagreements among Democrats.

The Senate is scheduled to come back for two weeks in mid-October, but there’s talk the work period weeks might be canceled to give lawmakers more time on the campaign trail.

Vilsack Announces $2B in Funding to Transform U.S. Food System

Thu, 02 Jun 2022 00:38:43 GMT

Transforming the U.S. food system by improving supply chains and addressing issues exposed by the Covid-19 pandemic will be detailed today by USDA Secretary Tom Vilsack during a speech at Georgetown University.

The over $2 billion package includes previously announced funding to expand meat and poultry processing and to finance new infrastructure such as cold storage facilities, but there $600 million in new aid to support food supply chain infrastructure outside meat processing. The plan also includes $400 million for regional food business centers, up to $300 million for a new organic transition initiative and $75 million to support urban agriculture.

The initiatives are funded through the American Rescue Plan that was enacted in March 2021 and other relief legislation. On Thursday, Vilsack will be in Ohio with Democratic Rep. Marcy Kaptur to visit a full-service grocery store in central Toledo called Market on the Green.

The package includes $650 million in funding and loan assistance for meat and poultry processing projects, including $275 million to help entrepreneurs who have had trouble getting credit. Another $100 million would go toward training workers in meat processing. Another $600 million is earmarked for improving food supply chain infrastructure, including cold storage and refrigerated trucks, outside of meat and processing.

Other funding in the plan includes:

$200 million to help fruit and vegetable growers comply with food safety regulations.
$400 million to create regional food business centers that will provide coordination and technical assistance and other support to small and mid-size businesses involved in processing, distribution and aggregation.
$155 million to expand USDA’s Healthy Food Financing Initiative, which is aimed at reducing food deserts.
$90 million to prevent and reduce food loss and waste.
$60 million farm-to-school programs that increase markets for smaller-scale farmers through child nutrition programs.

The announcement comes as supermarkets and distributors are pushing back on higher prices from food makers, as escalating inflation drives more consumers to rethink their spending. The Wall Street Journal reports ( link ) that Kroger Co. and other grocery chains said they are asking brands to prove why higher prices are necessary before accepting them, and warning manufacturers that they will stop carrying products if food companies won’t negotiate prices. Some companies said they are switching to new meat suppliers with cheaper products and are delaying price changes for items like canned goods.

Retailers generally have been passing price increases along to consumers, and executives have said that for months shopper demand has remained strong. Industry executives said that is starting to change, as consumers increasingly look for ways to stretch their dollars.

Time is Ticking on the 2021 Policy Clock

Tue, 28 Dec 2021 14:30:24 GMT

The House and Senate are on recess this week, but work is ramping back up to finalize 2021 legislation before the New Year begins.

Build Back Better

Last week, Sen. Joe Manchin (D-W.Va.) said he cannot support the House-passed version of the $1.75 trillion social spending package that would have extended child tax credits and provided new subsidies for childcare, preschool, and elder care.

“My Democratic colleagues in Washington are determined to dramatically reshape our society in a way that leaves our country even more vulnerable to the threats we face,” Manchin issued in a statement. “I cannot take that risk with a staggering debt of more than $29 trillion and inflation taxes that are real and harmful to every hard-working American at the gasoline pumps, grocery stores and utility bills with no end in sight.”

Pro Farmer policy analyst Jim Wiesemeyer doesn’t know “how and when the bill will pass,” but believes the BBB will go through once it has been scaled-back to remove items like childcare credits that he thinks will be included in separate bills.

WHIP+

AgriTalk hosted USDA Secretary Tom Vilsack in late November to discuss the House passage of the BBB. In the episode, Vilsack said the$10 billion Wildfire and Hurricane Indemnity Program Plus (WHIP+) payments could be sent by the end of 2021.

Wiesemeyer says WHIP+ is the “worst implemented program” he’s seen come from the Farm Service Agency (FSA) due to the delayed payout. He does, however, see these payments hitting bank accounts by early 2022.

As it stands, the $10 billion in disaster assistance will include:

• $9.25 billion in disaster assistance to aid producers who suffered losses due to droughts, hurricanes, wildfires, floods and other qualifying disasters. The funding will extend WHIP+ to cover losses in calendar years 2020 and 2021.
• $750 million for livestock producers for losses incurred during 2021 due to drought or wildfire. This disaster assistance, the first specifically for livestock producers since 2008, will build on top of existing farm bill programs for livestock producers.

Details on the USDA’s plan and timeline for distribution have not yet been released.

DC Signal to Noise: How Congress May Close Out 2021

Mon, 29 Nov 2021 22:18:18 GMT

Chip Flory of AgriTalk and Pro Farmer policy analyst Jim Wiesemeyer summarize the most recent happenings on The Hill. Click on the video above or the podcast below for insight on these topics and more:

> Dairy Pandemic Market Volatility Assistance Program status
> COVID-19 Omicron variant
> U.S. International Trade Commission tariffs

Are CFAP Funds Running Out? Biofuels, Pork Producers Questioning If and When They'll Get Paid

Wed, 01 Sep 2021 17:51:59 GMT

The future of the Coronavirus Food Assistance Program (CFAP) is unclear as biofuels groups and pork producers are questioning when and if they’ll get paid. As USDA continues to divvy out the COVID-19 relief funds for agriculture, reports show that funding may be nearly gone.

Pro Farmer Washington Correspondent Jim Wiesemeyer says USDA’s COVID aid bucket is near empty, with sectors like biofuels and top-up payments for hog farmers still in question.

“Following a revamped COVID relief program announcement in March, USDA has committed $8.75 billion in assistance to farmers and ranchers, including $750 million for the dairy sector and up to $1 billion for contract growers of pigs and poultry,” reports Wiesemeyer “USDA Secretary Tom Vilsack announced on July 13 an estimated $50 million to livestock and poultry producers forced to cull their animals when COVID-19 outbreaks temporarily slowed or shuttered slaughterhouses.”

Unfinished Business

Wiesemeyer says only a few items remain as unfinished business when it comes to COVID-19 relief for agriculture, including the $700 million for biofuels.

“In mid-June, the USDA earmarked $700 million for biofuel producers and said it would act in the next 60 days on ‘support to timber harvesters, biofuels, dairy farmers and processors, livestock farmers and contract growers of poultry, assistance for organic cost share and grants for PPE (personal protective equipment).’”

It’s not just biofuels. Wiesemeyer points out the recent top-up payments to hog farmers, which are calculated at $17 per head, are also left unpaid.

“That has been the subject of an intense quarrel among some in the U.S. hog sector, with a Canadian hog producer chastising the National Pork Producers Council (NPPC) for not doing enough to get the payments announced,” says Wiesemeyer. “Vilsack recently said, ‘We’ll target future assistance, rather than top-up or across-the-board actions that don’t account for actual losses or payments that have already been received.’ Initially, USDA included a halt to the payouts via a regulatory freeze during the change in administrations. Farm-state lawmakers periodically urged USDA to make the payments Two House Republicans said this week, ‘Unfortunately, USDA has given no indication on if or when these payments will be made.’”

Wiesemeyer says calculations show $24.4 billion has been paid through the CFAP since May 2020, which is when payments began.

USDA Rolls Out Updates to CFAP2, Changes for Contract Livestock and Specialty Crop Producers

Wed, 25 Aug 2021 16:40:28 GMT

USDA announced updates and additions to the Coronavirus Food Assistance Program 2 (CFAP 2), with the biggest revisions occurring for contract producers of pork, poultry and other eligible livestock, as well as specialty crop producers who grow on a contract basis. Grass seed growers were also added as eligible for the CFAP2 program.

The agency set a deadline of October 12 for producers to sign up or make modifications to existing applications.

Below are highlights from Pro Farmer Washington Correspondent Jim Wiesemeyer.

Contract grower aid: CFAP 2 payments for eligible contract producers of broilers, pullets, layers, chicken eggs, turkeys, and hogs and pigs, with ducks, geese, pheasants and quail produced under contract also eligible commodities, along with breeding stock of eligible livestock and eggs of all eligible poultry types raised by contract producers.

Contract grower payments were originally to be based on a comparison of eligible revenue for the periods of Jan. 1-Dec. 27, 2019, and Jan. 1-Dec. 27, 2020. With the changes, contract producers can now use eligible revenue from the period of Jan. 1-Dec. 27, 2018, instead of the 2019 date range “if it is more representative,” USDA said.

USDA said the shift is aimed at making the program more flexible and equitable for contract growers who had reduced revenue in 2019 versus a normal production year. The revenue difference will be multiplied by 80% to figure a final payment. “Payments to contract producers may be factored if total calculated payments exceed the available funding and will be made after the application period closes,” USDA said. The COVID aid plan approved included $1 billion for payments to contract growers.

USDA also announced additional flexibilities for those that increased the size of their operation in 2020 and did not have a full period of revenue for the Jan. 1-Dec. 27 period in either 2018 or 2019. USDA said that assistance is also now available to new contract producers who began their farming operation in 2020.

Changes for sales-based commodities: USDA is amending the CFAP 2 payment calculation for sales-based commodities — primarily specialty crops — to allow producers to substitute 2018 sales for 2019 sales. Previously, payments for sales-based commodities were based only on 2019 sales, with 2019 used as an approximation of the amount the producer would have expected to market in 2020. Producers can now use 2018 sales for this approximation, including 2018 crop insurance indemnities and 2018 crop year Noninsured Disaster Assistance Program (NAP) and Wildfire and Hurricane Indemnity Program Plus (WHIP+) payments.

USDA Finally Announces QLA, WHIP+ Details

Thu, 24 Jun 2021 18:54:31 GMT

More than $1 billion in payments will be released over the next several weeks starting June 15 for agricultural producers with approved applications for the Quality Loss Adjustment (QLA) Program and for producers who have already received payments through the Wildfire and Hurricane Indemnity Program Plus (WHIP+). These USDA programs provide disaster assistance to producers who suffered losses to 2018 and 2019 natural disasters.

QLA Payments:

QLA provides assistance to crop and forage producers who suffered a quality loss due to qualifying natural disasters occurring in 2018 or 2019.
FSA will begin issuing payments to producers on June 15.
FSA accepted applications from Jan. 6 to April 9, 2021.
Based on these QLA applications, producers will receive 100% of the calculated assistance under QLA.

For each crop year, 2018, 2019 and 2020, the maximum amount that a person or legal entity may receive, directly or indirectly, is $125,000. Payments made to a joint operation (including a general partnership or joint venture) will not exceed $125,000, multiplied by the number of persons and legal entities that comprise the ownership of the joint operation. A person or legal entity is ineligible for QLA payment if the person’s or legal entity’s average Adjusted Gross Income exceeds $900,000, unless at least 75% is derived from farming, ranching or forestry-related activities.

Second WHIP+ Payments

WHIP+ provides payments to producers to offset production losses due to hurricanes, wildfires, and other qualifying natural disasters that occurred in 2018 and 2019. WHIP+ covered losses of crops, trees, bushes and vines that occurred as a result of those disaster events.

Producers who applied for and have received their first WHIP+ payment can expect to receive the second payment beginning in mid-June for eligible crop losses.
Due to budget constraints, producers received an initial WHIP+ payment for 2019 crop losses equal to 50% of the calculated payment.
This second payment will be equal to 40% of the calculated payment for a total 90% WHIP+ program payment.
This second round of WHIP+ payments are expected to exceed $700 million.
A third round of payments may be issued if sufficient funds become available.
Producers with 2018 crop losses have already been compensated at 100%.

Future Insurance Coverage Requirements: All producers receiving QLA Program and WHIP+ payments are required to purchase federal crop insurance or Noninsured Crop Disaster Assistance Program (NAP) coverage for the next two available crop years at the 60% coverage level or higher. If eligible, QLA participants may meet the insurance purchase requirement by purchasing Whole-Farm Revenue Protection coverage offered through USDA’s Risk Management Agency.

USDA: More Pandemic Assistance for Dairy Farmers, Biofuel Producers, Specialty Crop Growers and Livestock Producers

Thu, 24 Jun 2021 18:53:05 GMT

USDA is continuing its rollout of aid to segments of the agriculture industry impacted by the COVID-19 pandemic.

Today, June 15, Agriculture Secretary Tom Vilsack announced additional aid to agricultural producers and businesses as part of the USDA Pandemic Assistance for Producers initiative. Since January, USDA has allocated $11 billion to producers and food and ag business.

This new round of funds will focus on a number of gaps and disparities in previous rounds of aid, according to Vilsack. As part of the Pandemic Assistance initiative announced in March, USDA pledged to continue Coronavirus Food Assistance Program (CFAP) payments and to provide aid to producers and businesses left behind.

“USDA is honoring its commitment to get financial assistance to producers and critical agricultural businesses, especially those left out or underserved by previous COVID aid,” Vilsack said in a news release. “These investments through USDA Pandemic Assistance will help our food, agriculture and forestry sectors get back on track and plan for the future.”

The following programming is planned for implementation within 60 days:

Support for dairy farmers and processors:
- $400 million: The new Dairy Donation Program to address food insecurity and mitigate food waste and loss
- Additional pandemic payments targeted to dairy farmers that have demonstrated losses that have not been covered by previous pandemic assistance
- Approximately $580 million: Supplemental Dairy Margin Coverage for small and medium farms
Assistance for poultry and livestock producers left out of previous rounds of pandemic assistance:
- Contract growers of poultry
- Livestock and poultry producers forced to euthanize animals during the pandemic (March 1, 2020 through December 26, 2020)
$700 million: Pandemic Response and Safety Grants for PPE and other protective measures to help specialty crop growers, meat packers and processors, seafood industry workers, among others
Up to $20 million: Additional organic cost share assistance, including for producers who are transitioning to organic
$700 million: Biofuels producers
$200 million: Small, family-owned timber harvesting and hauling businesses

USDA announced the aid Tuesday amid reports the administration is considering ways to give relief to oil refiners on requirements they mix ethanol and other biofuels with fuel, a step fought by groups representing Midwestern farmers, according to Farm Journal Washington Correspondent Jim Wiesemeyer. Vilsack declined to comment on the reports, citing the Environmental Protection Agency’s jurisdiction over the program.

The aid comes from funding earmarked for agricultural producers in the $1.9 trillion Biden Covid-19 relief package Congress passed in March. The funding associated with USDA Pandemic Assistance is meant to serve as a bridge from disruptions associated with the pandemic to longer-term investments to help build back a better food system, according to USDA. Through USDA’s Build Back Better initiative, USDA has already announced $5 billion in a mix of loans, grants and financing.

Since USDA rolled out the Pandemic Assistance initiative in March, the Department has announced approximately $6.8 billion in assistance to producers and agriculture entities through the following programs:

$6.295 billion: Coronavirus Food Assistance Program (CFAP) payments to farmers, ranchers and producers (March 24th)
$35 million: Value Added Producer Grants (March 5th)
$169.9 million: Specialty Crop Block Grants (April 13th)
$75 million: Gus Schumacher Nutrition Incentive Program (April 13th)
$37.5 million: Beginning Farmer and Rancher Development Program (April 13th)
$80 million: Payments to Domestic Users of Cotton (April 13th)
$92.2 million: Local Agriculture Market Program (May 5th)
Approximately $20 Million: Pandemic Cover Crop Program (June 1st)

Read the USDA news release .

Ag Commissioner Sues Biden Administration Claiming American Rescue Plan Discriminates Against White Farmers

Fri, 30 Apr 2021 21:53:20 GMT

The nearly $2 trillion stimulus known as The American Rescue Plan Act of 2021 is already facing a lawsuit over its provisions targeting farmers of color.

The Texas Tribune reports Texas Ag Commissioner Sid Miller has filed a personal lawsuit against the federal government. He says the COVID relief plan discriminates against some white farmers and ranchers because it offered targeted relief to “socially disadvantaged” farmers and ranchers, which the plan defines as people of color.

The plan designates roughly $5 billion for things such as loan repayments and program awareness. Miller’s complaint against USDA says the definition in the program fails to include “white ethnic groups that have unquestionably suffered” because of ethnicity, such as those of Irish, Italian, German, Jewish and eastern European heritage.

The lawsuit is seeking class action status.