Farmers hit by disaster in 2022 are expecting significantly smaller Emergency Relief Program (ERP) payments, setting up a dispute between Congress and USDA over the methodology used to calculate payments.
Sen. Michael Bennet, D-Colo., and Sen. Jerry Moran, R-Kan., led a bipartisan letter from senators and House members to Agriculture Secretary Tom Vilsack challenging USDA’s methodology for issuing payments under the Emergency Relief Program (ERP), which skews payments to provide a higher percentage of aid for smaller losses. Lawmakers asked USDA to “explain the economic justification” for how payments are being calculated.
Congress authorized $3.74 billion for disaster assistance to deal with more than $10 billion in projected losses not covered by crop insurance. FSA Administrator Zach Ducheneaux said that USDA’s payment methodology provided larger payments to about 82% of the 210,000 producers who filed claims for 2022 ERP money.
In November, more than 140 farm groups — including state and national affiliations — wrote Vilsack about the factors used to prorate payments to producers and the way crop insurance premiums are factored into the payments. Neither of those formula changes were part of the ERP payments for 2020 or 2021.
The farm groups and lawmakers each criticize the “progressive payment factor,” which operates like a payment limit. Farm groups stated the factor, “delivers the least amount of benefit to those who have lost the most outside of the payments limits provided in the statute.”
With more than 80% of all payments coming in at $30,000 or less, nearly 170,000 farmers received higher payments than they otherwise would have collected. About 40,500 farmers — likely with higher losses — are receiving lower payments than expected.
USDA and farm groups had warned lawmakers earlier this year that the $3.74 billion Congress provided was going to come up short of meeting the need. The American Farm Bureau Federation last March estimated nearly $10.5 billion in losses last year that were not covered by crop insurance.

Robert Bonnie, USDA’s undersecretary for Farm Production and Conservation, had warned members of the Senate Agriculture Committee the funding wasn’t going to cover the losses.
“The funding provided won’t allow us to provide a comparable level of relief for producers reporting losses compared to those impacted in 2020 and 2021,” Bonnie told senators in a February hearing.
“When we have less resources than the need, that’s when we have to try to figure out some policy decisions and determinations, and that’s how we landed where we’re at now,” Ducheneaux said.
PROGRESSIVE VS. PRORATED PAYMENTS
Under the ERP payouts, the first $2,000 of a disaster loss is covered 100%. It then phases down to 80% up to $4,000 and 60% for $6,000. Above $10,000 in losses, producers receive 10% of their payment losses. The payments are then prorated an additional 75%.
Essentially, a farmer with $2,000 in disaster losses could receive an initial $1,500 payment. A producer with $100,000 in losses would see 85% of their losses not covered. Those producers with the largest losses might only see an initial payment of $11,250.
Under a uniform factor, each producer receives a payment for the same percentage of their losses, which the Senate Ag GOP staff pegged at 27%.
At 25%, for instance, a farmer with a $2,000 loss receives a $540 payment, or $960 less. A farmer with a $100,000 loss receives a $27,000 payment, a $15,750 gain.
The GOP blog cited that farmers with losses under $30,000 receive higher ERP payments under USDA’s progressive factor. Farmers with larger losses than $30,000 see their payments go down compared to having an equitable prorated payment.

PARP PAYMENTS
Another program where payments are going to be squeezed is the Pandemic Assistance Revenue Program (PARP). Funded with $250 million in 2021, the program was meant to help those farmers who did not get support from the multiple Coronavirus Food Assistance Program (CFAP) payments.
The applications for PARP were 10 times the volume expected. Requests topped $2.7 billion.
“It’s a similar story. We were anticipating with a few hundred million dollars we could meet substantial demand for the PARP program, and that one rolled in about a factor of 10 times higher than we thought it would be,” Ducheneaux said.
PARP, unfortunately, is going to be “very highly factored,” and producers could see roughly 10% of their expected losses because there is just no way to divvy up the dollars in a way that would make a larger impact, Ducheneaux said.
USDA has a Dec. 31 deadline to pay out the PARP claims. That means PARP payments will start going out immediately.
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DTN