February 20, 2023 — The USDA released a new program called the Pandemic Assistance Revenue Program (PARP) to provide additional assistance to farmers that incurred losses from the pandemic. All farmers are potentially eligible to receive payments even if they participated in other programs such as the Payroll Protection Program (PPP) and the Coronavirus Food Assistance Program (CFAP).
Unlike prior USDA pandemic programs that focused payments based on commodities or acres, PARP focuses on revenue decline regardless of the commodity produced. To qualify, farmers need to show at least a 15% decrease in “allowable gross revenues” in 2020 compared to either 2018 or 2019. The USDA is using tax data to help determine allowable gross revenues; however, allowable gross revenues will not be the same as gross income from the schedule F of the tax return.
In general, allowable gross revenues are determined by the gross revenues from a farmer’s schedule F and making the following adjustments:
- Add any raised breeding stock proceeds from Form 4797
- Subtract custom hire income
- Subtract income received from the following USDA pandemic programs:
- CFAP 1 & 2, PLIP, CMHPP, 2020 ERP, and any conservation program payments
- Subtract the following other income items:
- Cash rent
- Hedging gains or losses
- Any non-farming-related income
The above adjustments are not a comprehensive list of items that may be included in computing allowable gross revenues. See the link at the end of this article for more detailed information. Many farmers may show a 15% decline in gross revenues since pandemic assistance programs such as CFAP are not included in the allowable gross income for 2020. However, as demonstrated below, a farmer meeting the 15% decline is not guaranteed payment since the payment is based on the excess of the farmer’s revenue decline versus the pandemic program relief received.
Payments are calculated based on the following formula:
Expected PARP Payment = ((Allowable Gross Revenue from either 2018 or 2019 – Allowable Gross Revenue from 2020) X 80% Payment Factor) – Any CFAP 1 and 2, PLIP, SMHPP, and 2020 ERP Payments
For example: If a farmer had allowable gross revenues of $500,000 in 2018 and $400,000 in 2020 and the farmer received $50,000 of CFAP payments, the farmer would receive a payment of $30,000 under PARP. However, if the farmer had received $100,000 in CFAP payments, the calculation would be less than zero and the farmer would receive no payment under PARP.
- ($500,000 – $400,000) X 80%) – $50,000 = $30,000
- ($500,000 – $400,000) X 80%) – $100,000 = ($20,000)
Payments will be limited to $125,000 per farmer or legal entity.
Additionally, to be eligible the farmer or farm entity must have had an average adjusted gross income (AGI) under $900,000 for tax years 2016, 2017, and 2018 or must have an AGI under $900,000 for the 2020 tax year.
The 80% payment factor will apply to the majority of farmers. Socially disadvantaged (women and minorities), beginning, limited-resourced, or veteran farmers may qualify for an increased 90% factor. A farmer qualifying for the higher percentage will need to file Form CCC-860 with the USDA.
The USDA is currently accepting applications through June 2, 2023. More information can be found on the USDA website using the following link:
Please feel free to reach out to your HBE trusted advisor with any questions regarding the Pandemic Assistance Revenue Program or if you need help determining your eligibility and potential payment amounts.