Focus on Ag: Additional pandemic assistance for livestock producers

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

USDA recently announced a new program to assist selected livestock producers with losses incurred during the COVID-19 pandemic in 2020.

The assistance program is called the “Pandemic Livestock Indemnity Program” (PLIP), and is being administered through local Farm Service Agency (FSA) offices. The PLIP program targets swine and poultry producers that were forced to depopulate livestock in 2020 due to disruptions in the meat processing industry that were the result of the COVID-19 pandemic.

Funding for the PLIP program was authorized by Consolidated Appropriations Act of 2021 that was passed by Congress earlier this year.

Following are key details for the PLIP program:

  • The application period for the PLIP program runs until Sept. 17, 2021 at local FSA offices
  • Eligible livestock and poultry for the PLIP program include swine, chickens and turkeys. USDA may add other categories of livestock in the future, if they determine that livestock was depopulated due to the pandemic
  • PLIP benefits are intended for swine and poultry producers that were forced to euthanize animals or depopulate their herds or flocks in 2020 due to the pandemic. Producers that were not forced into these actions are most likely not eligible for PLIP payments. There is no PLIP compensation for the sharp drop in hog market prices to producers that occurred in the spring of 2020 due to the disruptions in the processing industry
  • To be eligible for PLIP benefits, individuals or legal entities must have had ownership of the hogs or poultry on the date of depopulation. Contract growers, meat packers, processors and livestock dealers are not eligible for PLIP payments.
  • In order to be eligible for PLIP payments, an individual or legal entity must have had an adjusted gross income (AGI) of $900,000 or less on their federal tax returns for the years of 2016, 2017 and 2018. In the case of partnerships and joint ventures, the AGI limit will be applied to all partners of a legal entity. If one or more members exceed the AGI limit, the payment amount will be reduced proportionally
  • There is no payment limit for PLIP payments for eligible individuals or entities.
  • The PLIP payments for hogs and poultry are calculated at 80% of the value of the lost animal, plus the estimated cost of depopulation and animal disposal. For ease of calculation, USDA has determined flat payment rates for various categories of hogs and poultry.
  • For swine, the PLIP payment range on market hogs ranges from just over $55 per hog for nursery pigs to just over $122 per pig for fully grown market hogs. For sows, bred gilts, boars, etc., payments range approximately $158 to $258 per head, depending on the weight of the hogs. The payment for market turkeys is slightly over $15 per head, with various payments for chickens depending on weight
  • PLIP payment amounts will be reduced by the amount of any payments that a producer previously received for the euthanizing of animals and disposal of livestock during the pandemic through the USDA Environmental Quality Incentives Program (EQIP) or any state programs. PLIP payment amounts will also be reduced by the amount of any CFAP 1 or CFAP 2 payments that a producer has already received on the livestock inventory that was euthanized or depopulated.

The PLIP payment formula is as follows:

PLIP payment = (PLIP payment rate x number of head depopulated)  –  previous EQIP and CFAP payments

  • Producers should note that the PLIP payments will likely be taxable income for 2021, as FSA will issue a  CCC-1099-G form to the Internal Revenue Service (IRS) for the PLIP payments
  • To apply for the PLIP program, eligible individuals or entities must complete the required application form (Form FSA-620) and supply other required information at their local FSA office. FSA may also request documentation to verify ownership and eligibility of the hogs and poultry that were depopulated
  • For more information and application details for the PLIP program, producers should contact their local FSA office or refer to the following website: https://www.farmers.gov/pandemic-assistance/plip

There was no mention of any additional pandemic assistance program (PAP) payments, or “top-up” CFAP 1 program payments to hog producers in the latest announcement by USDA.

Earlier this year, cattle producers received the “top-up” PAP payments, based on their original CFAP 1 program payments; however, hog producers did not receive any additional PAP payments. In the latest announcement, USDA did indicate that an additional $50 million in pandemic assistance funds has been set aside to assist small hog producers that use “spot market prices” for selling their hogs and were impacted by the COVID-related hog market disruptions in 2020. More details of this targeted program are expected in the coming months.

Drought

In recent weeks, drought conditions have intensified in most of the western third of the U.S., including the Northern Plains states, while modifying a bit in the Central Plains and some Midwest states. All of North Dakota and South Dakota and large portions of western Minnesota and Iowa, as well as significant areas in Nebraska continue to be in moderate to severe drought conditions.

This is seriously affecting crop and livestock producers in those areas with reduced crop production in 2021 and depleted feed resources for livestock. Many beef cattle producers are being forced to reduce their herd sizes due to limited pasture and hay resources.

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.