New ERP Disaster Funds for Producers: Who Qualifies?

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Under the USDA’s Farm Service Agency new disaster program, Emergency Relief Program (ERP), producers who lost crops, trees, bushes, and vines due to qualifying disaster events in 2020 and 2021 should expect to be contacted soon via a letter from FSA. 

What does this mean?

Producers who qualify have an opportunity to receive a significant ERP payment, and below is a summary of the program’s guidelines as published by FSA.

Qualifying events include:

  • Wildfires
  • Hurricanes
  • Floods
  • Derechos
  • Excessive Heat
  • Winter Storms
  • Freeze
  • Smoke Exposure
  • Excessive Moisture
  • Qualifying drought (D2 for 8 or more weeks consecutive, D3, and D4)
  • Related conditions

There are two phases to this program.

Phase 1:  Based on losses associated with a crop insurance or NAP policy loss in 2020 or 2021.

To apply:  To streamline the process, FSA has received data from RMA for losses in 2020 and 2021 and intends to send out applications for ERP directly to producers who had crop insurance losses. This application is an FSA-520 and will be pre-filled with producer information and data transferred from crop insurance. (Letters are expected to begin mailing in May.)

Note: The type of crop insurance policy might affect the timing for when the application will be sent each producerContact your crop insurance agent if you have questions on whether your policy and loss would qualify for ERP. Producers with NAP policies can expect to receive pre-filled applications later this summer.

Phase 2:  Details will be announced later, but the intention is to fill in the gap for producers that suffered qualifying losses but did not have crop insurance or NAP policies.

To apply:  Producers will have to provide loss data and applications will not be sent out pre-filled.

Contact a KCoe advisor with questions or to seek advisory on this ERP program as it applies to your situation. 

Special Notables:

  • Eligibility: Receiving a pre-filled application in the mail will not guarantee eligibility. It is the producer’s responsibility to assure the losses that cause the crop insurance or NAP indemnity payment is a qualifying event for ERP.
    • For example, a producer will need to confirm a crop insurance indemnity because of drought meets the definition of a qualifying drought under ERP. Any payment reductions because of eligibility or payment limits will not be applied to the pre-filled applications. Producers should contact their crop insurance agent if they believe the information on the FSA-520 is incorrect.
  • Payment: There are separate $125,000 payment limits per person/entity for each 2020 and 2021 crop year. This limit can be increased with a CPA certification of AGI (discussed below with the FSA-510).
  • Identify SBI: Ownership or members with Significant Business Interest (SBI) will need to be confirmed or updated on the application.
  • Application Deadline: FSA has not yet set a deadline for submitting the applications. Producers must have the following forms submitted to FSA within 60 days following the application deadline (to be announced soon):
    • AD-2047
    • CCC-902
    • CCC-901
    • AD-1026
    • If producers have recently participated in Farm Service Agency programs, they will most likely have these on file.
  • Forms of Note:
    • CCC-860– Socially Disadvantaged, Limited Resource, Beginning and Veteran Farmer or Rancher Certification. Form with definitions in link below. If an entity’s ownership is at least 50% of one or more of these categories, the entity can file this form. This designation makes the individual or operation eligible for a 15% increase in payment. Husband and wife 50/50 ownership would qualify.
    • CCC-510– These is no AGI means test of $900,000 for ERP. But if at least 75% of a producer’s three-year average AGI for the applicable year is from ‘Farming and/or Ranching’, they will qualify for an increase in the payment limit. Specialty Crops will receive an increase to $900,000, other crops will increase to $250,000. A CCC-510 must be submitted with a certification letter from a CPA.
    • It is recommended that (if applicable) the CCC-860 and CCC-510 should be submitted with the application.

Next Steps:

AGI calculations can be complicated when determining farm vs. non-farm income or determining how income should be split between spouses, and it is recommended that you speak with an accountant if there is an AGI payment limit increase needed.

For more information, view the FSA’s Fact Sheet for ERP payment calculations here:  

KCoe’s advisors have been fielding questions regarding the eligibility and application guidelines for this program. Producers with questions about loss qualifications or payment limit increases should discuss their situation with an advisor.

 

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