Under this legislation the Farm Service Agency (FSA) is administering the Emergency Relief Program (ERP). The covered disasters must have occurred during the 2020 and 2021 crop years. Many producers already will have received letters from the Farm Service Agency to apply for the available funds. If you have not, it may be necessary to contact your local FSA office.

In general, the program covers losses to crops, trees, bushes and vines and will be released in two phases. Phase 1, currently in motion, is designed to leverage existing Federal Crop Insurance programs or Noninsured Crop Disaster Assistance Program (NAP) coverage data as the initial resource for payment calculation. Phase 2 will be rolled out later to cover additional holes in coverage for producers who did not participate in Federal Crop Insurance or NAP.

The use of existing loss data from crop insurance indemnity or NAP will facilitate quick program enrollment and fund distribution since the data collection has already occurred. The main question for producers is “Do I qualify?” and “What is the catch?”

Most producers in Oklahoma will qualify for Phase 1 payments if they received a crop insurance indemnity on crop production in 2020 and/or 2021. Generally, our losses fall under the types of disasters covered in this program.

The amount of the payment will be determined based on the underlying crop insurance coverage you had at the time of the loss. At a crop insurance level of 70%, the ERP Payment factor is 90%. Simply, for example, if you carry 70% Revenue Insurance on your wheat and you received an indemnity in 2020 or 2021, that coverage becomes 90% Revenue Insurance. The payment is calculated using the producer’s current loss procedures for the coverage they purchased while substituting in the new 90% coverage level. Then the previously paid net indemnity is subtracted out of that loss calculation to give the ERP payment amount. Net indemnity is the gross crop insurance indemnity minus service fees and premiums. Therefore, producers will essentially be repaid for their service fees and premiums in this program.

This isn’t without some commitments by producers, however. There is an agreement that if a producer accepts payments under this program, they must purchase crop insurance or NAP coverage for the next two available crop years. The coverage level must be at least 60% for crop insurance and catastrophic (CAT) or above for NAP insurance. Also, Phase 1 payments calculated on crop insurance indemnities will be based on a 75% payment factor to ensure that the program retains enough funding through Phase 2. NAP payments will not be subjected to the 75% payment factor.

This follows a trend in ad hoc disaster payments where the federal government is rewarding those producers who seek risk management strategies on their own. If you do not participate in these programs, you may want to contact your local county extension agent to learn more about risk mitigation on your operation.

Milacek is Oklahoma Cooperative Extension Service west area ag economics specialist.

Source - https://www.enidnews.com