OMAHA (DTN) -- More than 220,000 crop producers hit by natural disasters in 2020 and 2021 will soon start seeing disaster payments to offset yield and value losses, as USDA on Monday announced $6 billion will be released under the Farm Service Agency's Emergency Relief Program (ERP).

"For over two years, farmers and ranchers across the country have been hard hit by an ongoing pandemic coupled with more frequent and catastrophic natural disasters," said Agriculture Secretary Tom Vilsack. "As the agriculture industry deals with new challenges and stressors, we at USDA look for opportunities to inject financial support back into the rural economy through direct payments to producers who bear the brunt of circumstances beyond their control. These emergency relief payments will help offset the significant crop losses due to major weather events in 2020 and 2021 and help ensure farming operations are viable this crop year, into the next growing season and beyond."

The funding comes from $10 billion provided by Congress last fall to address production losses from disasters such as droughts, hurricanes, wildfires, winter storms and other disasters that struck producers in 2020 and 2021. Under the Trump administration, USDA dispersed disaster aid under the Wildfire and Hurricane Indemnity Program-Plus (WHIP-Plus), but USDA under the Biden administration has renamed the Emergency Relief Program (ERP).

While crop and livestock disasters may stack up for 2022, as well, it generally takes an act of Congress to approve another ad-hoc disaster program that would address 2022 natural disasters.

Farmers of both commodity crops and specialty crops will receive the first tranche of aid payments. To determine losses, USDA will use its existing crop insurance or Noninsured Crop Disaster Assistance Program (NAP) data as the basis for calculating initial payments. USDA estimates more than 220,000 producers who received crop insurance indemnities or NAP payments will receive ERP payments.

ERP covers losses to crops, trees, bushes and vines due to a qualifying natural disaster event in calendar years 2020 and 2021. Eligible crops include all crops for which crop insurance or NAP coverage was available, 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.

For drought, ERP assistance is available if any area within the county in which the loss occurred was rated by the U.S. Drought Monitor as having a D2 (severe drought) for eight consecutive weeks or D3 (extreme drought) or higher level of drought intensity. Lists of 2020 and 2021 drought counties eligible for ERP are available on the emergency relief website. (See below.)

As Vilsack highlighted last week in a congressional hearing, USDA has sought to reduce the 250 or so questions producers often face in disaster applications. FSA will use the crop insurance or NAP data on file to send producers pre-filled application forms. The form includes eligibility requirements, outlines the application process and provides ERP payment calculations. Producers will receive a separate application form for each program year in which an eligible loss occurred. Receipt of a pre-filled application is not confirmation that a producer is eligible to receive an ERP phase-one payment.

Other forms needed by FSA for producers within 60 days of the ERP phase-one deadline will be announced later by FSA's deputy administrator for farm programs. Most producers, especially those who have previously participated in FSA programs, will likely have other required forms on file. However, those who are uncertain or want to confirm the status of their forms can contact their local FSA county office.

Required forms include: Form AD-2047, Customer Data Worksheet; Form CCC-902, Farm Operating Plan for an individual or legal entity; Form CCC-901, Member Information for Legal Entities (if applicable); Form FSA-510, Request for an Exception to the $125,000 Payment Limitation for Certain Programs (if applicable); Form CCC-860, Socially Disadvantaged, Limited Resource, Beginning and Veteran Farmer or Rancher Certification, if applicable, for the 2021 program year. Producers also need a certification for highly erodible land conservation (sometimes referred to as HELC) and wetland conservation (Form AD-1026 Highly Erodible Land Conservation (HELC) and Wetland Conservation (WC) Certification) for the ERP producer and applicable affiliates.

Under phase one of ERP payments, the ERP payment calculation for a crop and unit will depend on the type and level of coverage obtained by the producer. Each calculation will use an ERP factor based on the producer's level of crop insurance or NAP coverage. For crop insurance, the ERP factor is 75% to 95%, depending on the level of coverage, ranging from catastrophic to at least 80% coverage. For NAP, the ERP factor is 75% to 95%, depending on the level of coverage, ranging from catastrophic to 65% coverage.

Full ERP payment calculation factor tables are available on the emergency relief website and in the program fact sheet: https://www.fsa.usda.gov/….

The factors being used in the ERP calculations ensure that payments to producers do not exceed available funding and that cumulative payments do not exceed 90% of losses for all producers as required by the act. Also, there will be certain payment calculation considerations for area plans under crop insurance policies.

Because the amount of loss due to a qualifying disaster event in calendar years 2020 and 2021 cannot be separated from the amount of loss caused by other eligible causes of loss as defined by the applicable crop insurance or NAP policy, the ERP phase-one payment will be calculated based on the producer's loss due to all eligible causes of loss.

Producers who qualify as beginning, limited resource, socially disadvantaged and veteran farmers and ranchers will see a 15% higher calculated payment for crops having insurance coverage or NAP. 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 2021 program year.

All producers who receive ERP phase-one payments, including those receiving a payment based on crop, tree, bush or vine insurance policies, also are statutorily required to purchase crop insurance or NAP coverage where crop insurance is not available, for the next two available crop years, as determined by the secretary.

Coverage requirements will be determined from the date a producer receives an ERP payment and may vary depending on the timing and availability of crop insurance or NAP for a producer's particular crops. The final crop year to purchase crop insurance or NAP coverage to meet the second year of coverage for this requirement is the 2026 crop year.

FSA in April also began making payments to livestock producers hit by drought and wildfire through the first phase of the Emergency Livestock Relief Program (ELRP).

PHASE TWO

Monday's announcement is only phase one of relief for commodity and specialty crop producers, USDA stated. Making the initial payments using existing safety net and risk management data will both speed implementation and further encourage participation in these permanent programs, such as federal crop insurance, as Congress intended.

The second phase of both ERP and ELRP programs will fill gaps and cover producers who did not participate in or receive payments through the existing programs that are being leveraged for phase-one implementation.

When the phase-one payment processing is complete, the remaining funds will be used to cover gaps identified under phase two.

2020 drought-eligible counties for ERP: https://www.fsa.usda.gov/…

2021 drought-eligible counties for ERP: https://www.fsa.usda.gov/…

Chris Clayton can be reached at Chris.Clayton@dtn.com

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