Deadline for ERP Phase 2 and PARP Applications is July 14

Producers have until July 14, 2023, to apply for disaster relief under Phase 2 of the Emergency Relief Program (ERP Phase 2) or the Pandemic Assistance Revenue Program (PARP). The USDA recently extended the application deadline from June 2, 2023, to July 14, 2023. These are revenue loss assistance programs specifically targeting farmers who were impacted by natural disasters in 2020 or 2021 or COVID-related losses in 2020.

Background

President Biden signed the Extending Government Funding and Delivering Emergency Assistance Act (P.L. 117-43) into law on September 30, 2021. It authorized $10 billion to assist agricultural producers impacted by wildfires, droughts, hurricanes, winter storms, and other eligible disasters experienced during calendar years 2020 and 2021. At least $750 million was earmarked for livestock producers. The USDA determined that the money would fund two new programs, the Emergency Livestock Relief Program (ELRP) and the Emergency Relief Program (ERP). These programs made initial payments to eligible producers in 2022.

In January 2023, USDA issued a new rule announcing Phase 2 of the Emergency Relief Program (ERP). It also announced the Pandemic Assistance Revenue Program (PARP), a new program providing support for agricultural producers impacted by the COVID-19 pandemic.  PARP is funded by the Consolidated Appropriations Act of 2021. The applications for these forms differ from prior programs where the FSA generally pre-filled applications with data derived from crop insurance programs. Here, producers must follow new instructions to provide revenue-based numbers largely derived from tax returns. ERP Phase 2 excludes livestock revenue, but PARP includes it.

ERP Phase 2

To be eligible for ERP Phase 2, producers of crops, trees, bushes, and vines must have suffered a decrease in allowable gross revenue in 2020 or 2021 due to necessary expenses related to losses of eligible crops from one of the qualifying natural disaster events. 

All crops for which federal crop insurance or NAP coverage was available are eligible 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. ERP drought assistance is available in any area of a county rated by the U.S drought monitor as having a D2 severe drought for eight consecutive weeks or a D3 extreme drought or higher during 2020 or 2021:

ERP Phase 2 assistance is primarily intended for producers of crops that were not covered by Federal Crop Insurance or NAP, since crops covered by Federal Crop Insurance and NAP were included in the assistance under ERP Phase 1. Even so, many producers who received ERP Phase 1 payments may be eligible for Phase 2 payments, even if they do not receive an initial payment. Payments are calculated based upon the difference between revenue in a benchmark year (producer picks 2018 or 2019) and revenue from the disaster year (2020 and 2021). For the 2020 ERP Phase 2, revenue from the disaster year is determined based upon data from representative tax years 2020 or 2021. For the 2021 ERP Phase 2, revenue from the disaster year is determined based upon data from representative tax years 2021 or 2022. Producers may use the same benchmark year for the 2020 and 2021 programs, but they cannot use the same representative tax year for more than one disaster year. Disaster year revenue must consist of consecutive years.

Revenue Determinations

Projected payments are calculated based upon “allowable gross revenue,” a new calculation for ERP Phase 2 and PARP. The data is generally derived from certain lines on the IRS Form 1040, Schedule F. USDA-FSA has issued resources for determining allowable gross revenue here: https://www.farmers.gov/sites/default/files/2022-02/fsa-parp-erp2-factsheet-23.pdf

Projected payments are based upon a formula, detailed below, but final payments are subject to USDA funding after all applications are received.

2020 Program Year Payments

The gross payment calculation for the 2020 program year is as follows for (1) specialty and high value crops and (2) other crops.  The same calculation is completed separately for the two crop categories:

Benchmark Revenue (2018, 2019, or adjusted), multiplied by

• ERP Factor (currently 70%, but subject to change depending upon available funds), minus
• Disaster Year Revenue (2020 or 2021 tax year), minus
• 2020 ERP Phase 1 Gross Payment (Specialty and Non-Specialty), minus
• CFAP 1 Net Payment, minus
• CFAP 2 Net Payment (excluding contract producers), minus
• 2020 WHIP+ Net Payments, minus
• 2020 QLA Net Payments, multiplied by
• % of Expected Revenue from Specialty / High Value or Other Crops (because these are calculated separately) equals
• Gross Calculated Payment.

2021 Program Year Payments

The gross payment calculation is as follows for (1) specialty and high value crops and (2) other crops.  The same calculation is completed separately for the two crop categories:

Benchmark Revenue (2018, 2019, or adjusted), multiplied by

• ERP Factor (currently 70%, but subject to change depending upon available funds), minus
• Disaster Year Revenue (2021 or 2022 tax year), minus
• 2021 ERP Phase 1 Gross Payment (Specialty and Non-Specialty), minus
• 2022 ERP Phase 1 Gross Payment (Specialty and Non-Specialty), multiplied by
• % of Expected Revenue from Specialty / High Value or Other Crops (because these are calculated separately) equals
• Gross Calculated Payment.

All ERP Phase Two payments are subject to a maximum initial payment that will be applicable through signup, equal to the lesser of the:

• calculated payment, or the
• maximum initial payment of $2,000 minus gross ERP Phase 1 payments.

In other words, if a producer received an ERP Phase 1 payment of $2,000 or more, no initial payment will be made.

Underserved Producers

Underserved producers, including beginning, limited resource, socially disadvantaged and veteran farmers and ranchers, will receive a higher ERP payment, at a percentage rate that will be determined at a later date. To qualify for the higher payment percentage, eligible producers must have a CCC-860, Socially Disadvantaged, Limited Resource, Beginning and Veteran Farmer or Rancher Certification, form on file with FSA for the applicable program year.

Crop Insurance Requirement

All producers who receive ERP payments are required to purchase crop insurance, or NAP coverage where crop insurance is not available, for the next two available crop years.

Payment Limitation and Adjusted Gross Income

2020 ERP payments (Phase 1 and Phase 2 combined) are limited to $125,000 if adjusted gross farm income is less than 75 percent of average AGI for tax years 2016, 2017, and 2018. 2021 ERP payments (Phase 1 and Phase 2 combined) are limited to $125,000 if adjusted gross farm income is less than 75 percent of average AGI for tax years 2017, 2018, and 2019. For those with 75 percent of average AGI derived in farming, ranching, or forestry (as certified by a CPA or attorney), the payment limit increases to $900,000 for each program year for specialty and high value crops and $250,000 for each program year for all other crops.

To request the increased payment limitation, participants must file form FSA-510 complete with the participant’s certification that their average adjusted gross farm income is at least 75 percent of their average AGI and a certification from a licensed CPA or attorney that the participant meets the requirements.  

FSA has a helpful webpage devoted to resources for the Emergency Relief Programs. This includes the application, allowable gross revenue worksheet, and an ERP Phase 2 Tool. The site additionally includes helpful FAQs and other resources.  https://www.fsa.usda.gov/programs-and-services/emergency-relief/index

Pandemic Assistance Revenue Program

To be eligible for PARP, an agricultural producer, raising crops or livestock, must have been in the business of farming during at least part of the 2020 calendar year and must have had a 15% or greater decrease in allowable gross revenue for the 2020 calendar year, as compared to the 2018 or 2019 baseline year (as chosen by the producer).  PARP is designed to assist producers who did not receive adequate assistance under previous price loss support programs. Even so, farmers who received pandemic assistance may still benefit from PARP if they had a revenue loss after subtracting the pandemic assistance payments.

PARP payments are made on a whole-farm basis rather than by commodities. The formula for expected PARP payments is as follows:

Expected PARP Payment = ((Allowable Gross Revenue from either 2018 or 2019 - Allowable Gross Revenue from 2020) X Either 80% or 90% Payment Factor) - Any CFAP 1 and 2, PLIP, SMHPP, and 2020 ERP Payments

Allowable gross revenue calculations for PARP are detailed here: https://www.farmers.gov/sites/default/files/2022-02/fsa-parp-erp2-factsheet-23.pdf

PARP payments will be issued after the application period ends on July 14, 2023. Payments are subject to a per person and legal entity payment limitation of $125,000. There is no option to increase the payment based upon 75% or more gross income from farming. USDA may reduce the payments if the total calculated payments exceed the available funding.

Additional information on PARP can be found here: https://www.farmers.gov/coronavirus/pandemic-assistance/parp

Webinar Information

A webinar about the ERP Phase 2 Application hosted by the USDA can be found here: https://www.youtube.com/watch?v=d6Hnmaihxf4

A webinar about the PARP application hosted by the USDA can be found here: https://www.youtube.com/watch?v=Ey6uoI9VQgw