The Southwest Council of Agribusiness met with a number of staff from USDA’s Farm Service Agency and Risk Management Agency on Wednesday to address the many Emergency Relief Program-related questions agents are receiving.
Below are the key takeaways from the call.
1. Phase 1 only includes producers who received an indemnity on their MPCI policy. Shallow losses and losses on endorsement policies (SCO, ECO, STAX, HIP, etc.) were not included in the prefilled applications sent under Phase 1. Such cases will be addressed in Phase 2.
2. The cause of loss listed on an insurance claim was not considered when applications were pre-filled for Phase 1. Therefore, the D2 drought for eight weeks requrement and the maps we previously reported are no longer relevant. There is no need for insurance agents to change the cause of loss on a previous claim to align with a covered loss under ERP. Producers need to simply certify that the production loss in question falls under a cause of loss listed for ERP (like excessive heat). Producers would be wise to note this covered cause of loss on their FSA-520. Please note this could also apply, for example, to hail losses that might also be attributed to “excessive moisture” and “related conditions”.
3. The share portion (column 13) of the ERP application should be filled out according to the crop insurance policy. This was included on the application to reconcile differences between RMA and FSA share reporting. This is not a place to re-certify FSA shares.
4. ERP is not designed to cover grazing losses under Pasture, Rangeland, and Forage (PRF) and Annual Forage (AF). RMA was able to delineate PRF policies, and only include qualifying policies intended for haying and exclude grazing. RMA was unable to delineate the difference on AF policies. AF policies intended for forage or hay should be submitted to FSA. AF policies intended solely for grazing were covered under ELRP and should have received a LFP top-up payment and should not be reported under ERP. (Please note we are seeking further clarification on this).
5. Socially disadvantaged, beginning, and veteran farmers and ranchers qualify for a 15% increase in their ERP payment — but their initial payment will still be subject to the 25% adjustment. For an entity to qualify for socially disadvantaged, beginning, or veteran status at least 50% of the interest must qualify under the intended category. Meaning a 50%/50% husband and wife joint venture can qualify as socially disadvantaged if they so certify.
6. Phase 1 will be paid at 75% of the calculated amount on the pre-filled application. The reduction is not incorporated into the calculation (column 11) on the pre-filled applications received by producers.
7. Phase 1 currently only includes insurance claims that have a loss date from 1/1/2020 to 12/ 31/2021. If the loss date falls at the end of 2019 or the beginning of 2022 no pre-filled application will be received. FSA is currently looking into this issue regarding producers who had a cause of loss that started in late 2019 and continued into 2020 causing a prevent plant claim on a 2020 crop.
8. Phase 2 is designed to be a catch all for any producer who is not covered in Phase 1. FSA does not currently have a date for the roll out of Phase 2. Phase 2 would cover scenarios including: shallow losses, losses on endorsements, no crop insurance purchased, and other producers not included in Phase 1.
9. Entities can certify by Form 510 that 75% or more of their income comes from farming and receive a higher payment limit.
10. Producers with an indemnity on a 2021 policy that had STAX, SCO, ECO, MP, or ARPI will not receive a pre-filled application until a later date when data is available. This will not be Phase 2 but a separate mailing under Phase 1 expected late summer.
Formula Explanation
We have been including the formula from the FSA/RMA fact sheets, but we agree it is confusing. Here is another way of stating it that we believe is clearer.
Estimated ERP Payment (Box 11) = Target Revenue minus (-) calculated revenue
Target revenue is the “Expected Value of the Crop” (APH x Price Guarantee) multiplied by the relevant “ERP factor”.
Calculated revenue is the sum of “Actual Value” (realized production x price) plus any “Crop Insurance Proceeds” (MPCI, SCO, ECO, STAX, etc.) less or minus “Producer Premiums and Administration Fees”.
The “Estimated ERP Payment” in Box 11 of the FSA Form 520 is the difference between this target revenue and calculated revenue.
USDA officials will continue to update ERP’s frequently asked questions website which can be found here.
The CS&A cheat sheet is also updated to take out the maps and deemphasize the importance of county designations. It can be accessed here.
Additionally, the previously shared packet from RMA can be accessed here.
-Information Provided by the Southwest Council of Agribusiness.