WHIP+ name changed to ERP as USDA ad hoc disaster program
On May 16, the USDA announced that some commodity and specialty crop producers impacted by natural disasters in 2020 and 2021 will soon be eligible to receive emergency relief payments totaling about $6 billion to offset crop yield and value losses through the Farm Service Agency’s (FSA) new Emergency Relief Program (ERP), previously known as the Wildfire and Hurricane Indemnity Program + (WHIP+).
On May 19, the American Farm Bureau Federation focused its Market Intel report including the following information on the revamped program.
Farmers and ranchers over the past two years faced billions of dollars in losses associated with wildfire, extreme drought, hurricanes, tornados and other major weather events. Those who had losses in early 2020 have waited more than two years to hear program specifics.
Using data from the USDA’s Risk Management Agency, AFBF estimated that $124 million would be distributed in Georgia.
Established under the Additional Supplemental Appropriations for Disaster Relief Act of 2019 with $3.005 billion in funds alongside On-Farm Storage Loss, Milk Loss, and Tree Assistance programs, WHIP+ had its origins in the 2017 WHIP. On Sept. 30, 2021, President Biden signed a continuing resolution into law with a retroactive extension of disaster assistance programs, including WHIP+ (or a WHIP+-like program, like ERP), the On-Farm Storage Loss Program, Milk Loss Program and Tree Assistance Program, through 2020 and 2021. The law appropriates $10 billion out of the Treasury to the office of the Secretary of Agriculture for these programs and expands ad hoc disaster coverage for additional causes of loss including derechos, winter storms, polar vortexes, freeze, smoke exposure and quality losses for crops. The first phase of ERP will provide $6 billion of these funds to eligible farmers and ranchers.
The ERP announcement breaks the program down into two phases., Phase 1 focuses on streamlining payments to producers whose crop insurance and/or Noninsured Crop Disaster Assistance Program (NAP) data are already on file. Phase 2 focuses on filling payment gaps to cover producers who did not participate or receive payments through existing programs or with other special cases (see payment calculation examples).
Under Phase 1, eligible crops include all crops for which federal crop insurance or NAP coverage was available and a crop insurance indemnity or NAP payment was received, except for crops intended for grazing. Qualifying natural disaster events include “wildfires, hurricanes, floods, derechos, excessive heat, winter storms, freeze (including a polar vortex), smoke exposure, excessive moisture, qualifying drought, and related conditions.” Related conditions under ERP include “weather and adverse natural occurrences that occurred concurrently with and as a direct result of a specified disaster event.” Examples include excessive wind that occurred with a derecho or silt and debris that occurred as a result of flooding. Losses due to drought are also eligible if they occurred in areas rated by the U.S. drought monitor as D2 (severe) for eight consecutive weeks or D3 (extreme drought) or higher at any time during the applicable calendar year. Phase 2 details are expected later this summer.
How to apply
Under ERP Phase 1, the FSA indicated it would provide pre-filled applications to producers with existing crop insurance or NAP information on file. The form will include eligibility requirements, outline the application process and provide ERP payment information. A separate application form will be sent for each program year (2020 and 2021). USDA clarified that receiving a pre-filled application does not necessarily guarantee payment under Phase 1 ERP. Producers will have to return completed and signed ERP Phase 1 applications to their local FSA office.
In addition, USDA is requiring the following forms, which should already be on file for those with prior FSA program participation, for ERP eligibility: Form AD-2047, Customer Data Worksheet, Form CCC-902, Farm Operating Plan for an individual or legal entity; Form CCC-901, Member Information for Legal Entities (if applicable); Form FSA-510, Request for an Exception to the $125,000 Payment Limitation for Certain Programs (if applicable); Form CCC-860, Socially Disadvantaged, Limited Resource, Beginning and Veteran Farmer or Rancher Certification, if applicable, for the 2021 program year; a highly erodible land conservation (sometimes referred to as HELC) and wetland conservation certification (Form AD-1026 Highly Erodible Land Conservation (HELC) and Wetland Conservation (WC) Certification) for the ERP producer and applicable affiliates.
Phase 1 Payment Calculations
USDA has reported that ERP Phase 1 payments for crops covered by crop insurance will be reduced to 75% of the calculated total payment to ensure payments under both phases do not exceed available program funding. Phase 1 payments for NAP-covered crops will not be prorated due to the much smaller portfolio of participating producers. ERP Phase I payment calculations for a crop will depend on the existing coverage obtained by a producer. Calculations will parallel the formula of the existing coverage but use an ERP factor in place of the producer-selected coverage level. Paid indemnities or NAP payments through existing coverage (after also subtracting service fees and premiums) will be subtracted from the final ERP payment. In other words, producers will be indirectly reimbursed for premium and fee costs for 2020 and 2021 program years. ERP factor tables for crop insurance and NAP are provided below.
Payments under ERP Phase 1 will be calculated based on the producer’s loss due to all eligible causes of loss. Producers who are defined as beginning, limited resource, socially disadvantaged and/or are veterans will have payments under ERP raised by 15% from the base ERP payment. Payment limitations for Phase 1 ERP are dependent on farm-related adjusted gross income (AGI). Some payment limitations apply.
Payment limitations are addressed by USDA as follows:
- A person or legal entity, other than a joint venture or general partnership, cannot receive, directly or indirectly, more than $125,000 in payments for specialty crops and $125,000 in payment for all other crops under ERP (for Phase 1 and Phase 2 combined) for a program year if their average AGI farm income is less than 75% of their average AGI the three taxable years preceding the most immediately preceding complete tax year.
- If at least 75% of the person or legal entity’s average AGI is derived from farming, ranching or forestry-related activities and the participant provides the required certification and documentation, as discussed below, the person or legal entity, other than a joint venture or general partnership, is eligible to receive, directly or indirectly, up to:
- $900,000 for each program year for specialty crops; and
- $250,000 for each program year for all other crops
- The relevant tax years for establishing a producer’s AGI and percentage derived from farming, ranching, or forestry related activities are:
- 2016, 2017, and 2018 for program year 2020; and
- 2017, 2018, and 2019 for program year 2021
Similar to WHIP+, ERP retains future insurance coverage requirements for participating producers. All producers who receive payments are required to purchase crop insurance or NAP coverage where crop insurance is not available for the next two available crop years. Insurable crops must be covered at greater than or equal to 60% or at the catastrophic level for NAP crops. USDA has reported Phase 1 payments for qualifying producers with submitted applications should reach bank accounts in June.