Focus on Ag: USDA announces additional pandemic assistance payments

Kent Thiesse
Farm Management Analyst and Vice President, MinnStar Bank
Kent Thiesse

On June 15, the USDA announced additional aid to farmers and other agricultural entities as part of the Pandemic Assistance to Producers (PAP) program.

In March, the USDA authorized up to $12 billion for the PAP program as part of the overall $900 billion Consolidated Appropriations Act that was passed by Congress late in 2020. USDA utilized the latest round of PAP program funding to especially target farmers and ranchers that did not previously qualify for aid through other coronavirus assistance programs, as well as to assist beginning, socially disadvantaged and small-to-medium sized farm operations.

Following is a brief summary of the information from USDA regarding the latest round of PAP program payments:

Support for dairy farmers and dairy processors

  • $400 million toward the new “Dairy Donation Program”, designed to address food insecurity and mitigate food waste and loss
  • Additional pandemic payment to dairy producers that have demonstrated losses that were not covered by previous pandemic assistance programs
  • Approximately $580 million for “Supplemental Margin Coverage” to small and medium sized dairy operations. No details were released on how this will be administered by USDA.

Assistance to poultry and livestock producers left out of previous rounds of pandemic payments

  • Financial assistance to contract growers of poultry that were impacted by the coronavirus pandemic
    • Note: In the USDA announcement, there was no mention of additional assistance to contract hog producers or contract producers of any other livestock entities.
  • Assistance to poultry and livestock producers that were forced to euthanize animals during the pandemic from March 1, 2020, through December 26, 2020

Other PAP program provisions

  • $700 million to biofuel producers to offset the market loss during the pandemic in 2020
  • $700 million for “Pandemic Response Safety Grants” that are targeted toward specialty crop growers, meat packers and processors, seafood industry workers and others for PPE equipment, supplies and other measures
  • $200 million for small, family-owned timber harvesting and hauling businesses
  • Up to $20 million for additional organic cost-share assistance, including for producers that are transitioning to organic production

Earlier this year, eligible crop producers received an additional $20 per acre PAP program payment (so-called “CFAP 3 payments”) as part of the pandemic assistance aid that was authorized by Congress in 2020.

Payments for eligible crops was based on the same criteria that was used for the 2020 CFAP 2 payments. Some cattle producers also received an additional PAP payment earlier this year, based on the cattle inventory numbers that were submitted for CFAP 1 eligibility in 2020. This top-up CFAP payment was basically a doubling of the original 2020 CFAP 1 payments, with payment rates depending on the size and type of cattle.

Noticeably missing in the latest PAP program assistance announced by USDA was the additional top-up payment of $17 per head to hog producers that had previously applied for and received a CFAP 1 payment in 2020.

Hog producers initially received a CFAP 1 payment of $17 per head, so the additional payment would raise the total payment to $34 per head. The additional top-up CFAP payments to hog producers apparently is still under review by USDA, and there was no update on the status of these payments.

For the latest details on many of these programs, farmers should contact their local Farm Service Agency (FSA) office or refer to www.farmers.gov.

Update on 2019 WHIP+ and QLA program payments

USDA also recently announced the authorization of more than $1 billion in additional 2019 payments through the Wildfire and Hurricane Indemnity Program (WHIP+) and for payments to producers that qualified under the Quality Loss Adjustment (QLA) program.

Many farmers in southern Minnesota and other areas of the Upper Midwest were eligible to receive the additional WHIP+ payments due to significant crop losses that resulted from late planting and excessive rainfall in 2019. Most eligible producers that applied had already received their 2018 WHIP+ payments and the first half of eligible 2019 WHIP+ payments.

The funding for the second half of the 2019 WHIP+ payments was authorized in the COVID relief bill passed by Congress in late 2020.

Following are the details on the latest WHIP+ and QLA payments:

2019 WHIP+ payments

  • Producers that were eligible for the WHIP+ program for the 2019 crop year and have already received 50% of the eligible payment are now receiving a second WHIP+ payment on 2019 crop losses. No additional WHIP+ application was necessary, and no new applications were accepted
  • The second payment is 40% of the total eligible 2019 WHIP+ payment, bringing the total 2019 WHIP+ payment to 90% of the eligible amount
    • Example: $10,000 total 2019 WHIP+ payment eligibility; $5,000 paid earlier; $4,000 paid now, and $1,000 remaining to be paid
  • The second 2019 WHIP+ payment was reduced by USDA to assure that adequate funding exists to make the payments. If sufficient funds are available, a third and final WHIP+ payment may occur
  • Producers with eligible 2018 crop losses already received the entire 2018 WHIP+ program payment
  • WHIP+ payments for 2020 crop losses, including the devastating derecho storm in Iowa and surrounding states, was not included in the latest announcement by USDA

Quality Loss Adjustment (QLA) payments

  • The QLA payments are for crop and forage producers that suffered quality losses due to the natural disasters in 2018 and 2019. The application period for the QLA program was from January 6 through April 9 of this year.
  • Producers that qualified for QLA assistance will receive 100% of the eligible payment amount.
  • The maximum payment limit that a person or legal entity may receive through the QLA program in a given year is $125,000. Persons or entities with an adjusted gross income (AGI) exceeding $900,000 are not eligible for QLA benefits unless 75% or more of the AGI is derived from farming and ranching.
  • All producers receiving WHIP+ or QLA benefits are required to purchase Federal Crop Insurance or Noninsured Crop Disaster Assistance Program (NAP) cover for the next two available crop years at the 60% or higher coverage level. For most crops, this requirement can be met by purchasing USDA Risk Management Agency (RMA) Revenue Protection (RP) insurance policies that are offered through local crop insurance agents.

For more information refer to the USDA WHIP+ website at: www.farmers.gov/recover/whip-plus.

PPP loan program ended

In late May, the U.S. Small Business Administration (SBA) announced that loan applications for the Paycheck Protection Program (PPP) were being discontinued.

SBA had previously announced a PPP application deadline May 31, 2020; however, all allocated PPP loan fund had been exhausted prior to the deadline. If eligibility requirements are met, PPP loans may be forgiven by SBA.

Many first round PPP loans and some second round PPP loans have already been forgiven. The application for forgiveness of PPP loans for farmers and other small businesses is administered through the local banks and ag lenders that originally submitted the PPP loan to SBA. More details on PPP loan applications are available from lenders or on www.sba.gov.

For additional information contact Kent Thiesse, farm management analyst and senior vice president, MinnStar Bank, Lake Crystal, Minn., at (507) 381-7960 or kent.thiesse@minnstarbank.com, or visit www.minnstarbank.com.