FOCUS ON AG
February 15, 2021
IMPORTANT GOVERNMENT PROGRAM DEADLINES AND INFORMATION
Farm operators have numerous deadlines for federal government programs, in addition to farm program sign-up, coming up in the next few weeks. Many times, it is difficult to sort through all the details for the various government programs. For further details on many of these programs, farmers should contact their local Farm Service Agency (FSA) office. Here is a brief summary of the information and deadlines for some of the programs:
CFAP 1 “top-up” payments — The additional payments were announced by USDA in January, late in the previous Administration. The proposed payments would include a “top-up” payment of $17 per head to hog producers that previously applied for the Coronavirus Food Assistance Program (CFAP1) program in 2020. Hog producers initially received a CFAP 1 payment of $17 per head, so they will now receive a total of $34 per head. The “top-up” CFAP payments are currently under review by USDA in the new Administration. Once the funding is released, these “top-up” payments are likely to occur through direct payments from FSA offices. No additional application is required to receive these payments, as the same formula that was used originally will be used for these payments as well.
Additional CFAP 2 eligibility — Contract growers of hogs and poultry were initially left out of the CFAP 1 and 2 payments; however, they may now be eligible to apply if they can document a decline in revenue in 2020 compared to 2019. This particularly affects contract growers that were impacted when livestock was euthanized in the Spring and early Summer of 2020. Potentially eligible contract growers should check with their local FSA office for details. The deadline to apply is February 26, 2021.
Updated CFAP 2 data — Crop producers that applied for CFAP 2 payments but did not have 2020 crop insurance APH data available may now go back and re-adjust the CFAP payment calculation. Producers that did not have 2020 APH yields available had their original CFAP payments calculated on 85 percent of the ARC-CO county benchmark yield for 2020. Under the revised guidelines, producers in this situation can have the CFAP 2 payments re-calculated at 100 percent of the county benchmark yield. Eligible producers should contact their local FSA office by February 26, 2021. This does not affect producers that applied for CFAP 2 payments using their farm-level 2020 APH yields.
Potential CFAP 3 payments — The COVID relief bill passed by Congress late in 2020 authorized an additional $20 per acre payment to crop producers, as well as payments to some cattle and dairy producers. No announcement has been made by USDA as to when these payments will occur. Once again for most producers, these payments will likely be automatically administered through local FSA offices. In most instances, no additional application will be required to receive the CFAP 3 payments.
More details on the various CFAP programs are available at: https://www.farmers.gov/cfap.
Quality Loss Adjustment (QLA) Program — Crop and livestock producers that had quality losses on crops related to natural disasters in 2018 or 2019 may potentially be eligible for QLA payments. In the case of crops, the QLA program is intended for quality losses that occurred following harvest while the crop was in storage. Actual production losses were already covered through crop insurance coverage and the WHIP+ program. To qualify for the QLA program, a producer must have sustained at least a 5 percent decline in quality of the grain or forage, which is reflected by quality discounts when the grain is sold or nutrient loss in forage crops. The application deadline for the QLA program is March 5 at FSA offices.
More information on the QLA program is available at: https://www.farmers.gov/quality-loss
WHIP+ payments — Most eligible producers that applied have already received their 2018 and the first half of the 2019 Wildfire and Hurricane Indemnity Program (WHIP+) payments. If not, those payments should be coming very soon. The funding for the second half of the 2019 WHIP+ was authorized in the COVID relief bill passed by Congress in late 2020. It is expected that these payments will be allocated in the coming months. At this point, there have not been any provisions for WHIP+ applications or payments for crop losses incurred from natural disasters during the 2020 growing season.
For more information refer to the USDA WHIP+ website at: https://www.farmers.gov/recover/whip-plus.
CRP sign-up deadline extended — USDA has extended the enrollment period indefinitely for the latest General Conservation Reserve Program (CRP) sign-up, which was originally set to end on February 12. The CRP sign-up is being extended to encourage more acres to be enrolled in the program, which are currently about 4 million acres below the maximum CRP acreage authorized in the last Farm Bill. Landowners that are interested in the current General CRP sign-up should contact their local FSA office.
PPP Loan application update — The COVID relief bill that was passed by Congress in late December was directed to assist small businesses through another round of funding through the Payroll Protection Program (PPP) through the U.S. Small Business Administration (SBA). The PPP loans are for businesses with less than 300 employees, as well as for businesses that incurred at least a 25% loss of revenue in a specific quarter of the year in 2020, compared to the similar quarter in 2019. The PPP provisions allow for forgivable loans up to 2.5 times the average monthly payroll costs for the year, up to a maximum level of $2 million. PPP loans of less than $150,000 will have a simplified application process. The latest legislation allows for farmers and other self-employed individuals to potentially go back to apply for round #1 PPP loans, as well as to later apply for round #2 PPP loans. Farm businesses that previously received a round #1 PPP loan that was later forgiven may now potentially be eligible to apply for a round #2 PPP loan.
Following are some details and clarifications regarding farm-related PPP loan applications:
Round #1 PPP loans — Self-employed farmers (sole proprietorships) that did not qualify for the first round of PPP loan payments due to having a negative net farm profit on Schedule F (Line 34) of their 2019 Federal tax return may now apply for the first round of PPP loan payments. The revised PPP loan application for sole proprietorships is based on the gross farm income on Schedule F (Line 9) of the 2019 tax return, up to a maximum of $100,000. Based on the PPP loan calculation formula, a farm operation could qualify for a maximum round #1 PPP loan payment of $20,833 ($100,000 divided by 12 times 2.5). Farmers that previously received a round #1 PPP loan in 2020 that has already been forgiven are not eligible to re-apply for an additional round #1 PPP loan, even if they received less that $20,833 in the first payment. These farmers could potentially be eligible for Round #2 PPP loans.
Round #2 PPP loans — Self-employed farmers could potentially be eligible for round #2 PPP loans. If they receive a Round #1 PPP loan under the new guidelines (listed earlier), they must wait until that loan is forgiven before applying for a Round #2 PPP loan. The same $100,000 maximum gross income level and maximum PPP loan payment that existed in round #1 of PPP loans for farm operators filing as sole proprietorships will exist for the round #2 PPP loan applications. Farm operations will need to show at least a 25 percent decline in revenue for one quarter in 2020, compared to a similar quarter in 2019 in order to qualify for Round #2 PPP loan.
PPP loans are being administered through local ag lenders and the application deadline is March 31. More details on PPP loan applications are available from lenders or on the SBA website at: www.sba.gov/.
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Note — For additional information contact Kent Thiesse, Farm Management Analyst and Sr. Vice President, MinnStar Bank, Lake Crystal, MN. (Phone — (507) 381-7960). E-mail — kent.thiesse@minnstarbank.com) Web Site — http://www.minnstarbank.com/