USDA Announces Phase 2 of ERP Along With New Aid Opportunities
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?
