USDA accepting applications to Quality Loss Adjustment Program

Information taken from Farmers.gov

USDA’s Farm Service Agency is now accepting Quality Loss Adjustment Program applications through April 9. Signup opened Jan. 6.

USDA is implementing the Quality Loss Adjustment Program to provide financial assistance to crop producers who experienced quality losses caused by qualifying disaster events in 2018 and 2019.

USDA announced Jan. 5 that the Quality Loss Adjustment Program will assist producers whose eligible crops suffered quality losses due to qualifying drought, excessive moisture, flooding, hurricanes, snowstorms, tornadoes, typhoons, volcanic activity, or wildfires occurring in calendar years 2018 and/or 2019. QLA joins a suite of USDA programs offering disaster assistance for America’s farmers. 

Eligible crops

Crops that can be covered by federal crop insurance or the Noninsured Crop Disaster Assistance Program — NAP — are generally considered eligible for QLA, excluding the below crops deemed ineligible.

To be eligible for the program, a crop must have:

• suffered a quality loss due to a qualifying disaster event and

• had a five-percent-or-greater quality discount due to the qualifying disaster event.

Eligible crops may have been sold, fed on-farm to livestock, or may be in storage at the time of application.

Ineligible crops

Crops that were destroyed before harvest are not eligible for QLA.

The following crops are also ineligible:

• grazed crops,

• honey,

• maple sap,

• aquaculture,

• floriculture,

• mushrooms, ginseng root,

• ornamental nursery,

• sea grass and sea oats,

• Christmas trees, and

• turfgrass sod.

Eligible producers include individuals or legal entities who are:

• entitled to an ownership share and

• at-risk in the agricultural production and marketing of crops on the farm.

To be eligible for payments, a person or legal entity must either:

• have an average adjusted gross income (AGI) of less than $900,000 for tax years 2018 and 2019 or

• derive at least 75 percent of their AGI from farming, ranching, or forestry-related activities.

Persons and legal entities also must:

• have control of the crop acreage on which the commodity was grown at the time of the disaster;

• comply with the provisions of the “Highly Erodible Land and Wetland Conservation” regulations, often called the conservation compliance provisions;

• not have a controlled substance violation; and

• be a citizen of the United States or a resident alien. All entities consisting of more than one person must solely include United States citizens or resident aliens.

Assistance through QLA is available for eligible crops that suffered quality loss due to one or more of the following disaster events. The disaster event must have occurred in calendar year 2018 or 2019.

• Tornado

• Typhoon

• Volcanic activity

• Snowstorm

• Wildfire

• Hurricane

• Flood

• Excessive moisture

• Qualifying drought

For drought, producers are considered eligible if the loss occurred in an area within a county rated by the U.S. Drought Monitor as having a D3 — extreme drought — or higher intensity level during 2018 or 2019.

Generally, the crop quality loss must have occurred in a county that received a qualifying Presidential Emergency Disaster Declaration or Secretarial Disaster Designation because of one or more of these qualifying disaster events or a condition caused by these events.

Producers in counties that did not receive a qualifying disaster declaration or designation may still apply for QLA with supporting documentation showing that the crop quality loss was directly affected by a qualifying event. For example, supporting documentation might include weather data from a reputable source.

QLA payments will be calculated based on the type of crop – forage or non-forage – and the type of documentation submitted by the producer as shown below.

Forage crops with documentation of nutrient factors for affected production and historical nutrient factors

For forage crops with verifiable documentation of nutrient factors for the affected production for the year of application and the three preceding crop years, the following payment equation will be used.

QLA Payment = Total Affected Production x Verifiable % Loss x Average Market Price x 0.7

The average market price is determined by USDA’s Farm Service Agency, and the producer’s verifiable percentage of loss is determined by comparing the nutrient factor test results for the affected production to the average from the three preceding crop years.

Forage crops with documentation of nutrient factors for affected production without historical nutrient factors

For forage crops with verifiable documentation of nutrient factors for the affected production for the year of application but no historical nutrient factors for the three preceding crop years, the following payment equation will be used.

QLA Payment = Total Affected Production x County Average % Loss x Average Market Price x 0.7 x 0.5

The average market price is determined by USDA’s Farm Service Agency.

Non-forage crops with documentation of grading factors due to quality and dollar value loss due to quality

For non-forage crops with verifiable documentation of grading factors and the total dollar value loss due to quality, the following payment equation will be used.

QLA Payment = Total Dollar Value Loss on Affected Production x 0.7

Non-forage crops without dollar value loss due to quality but with documentation of grading factors due to quality

For non-forage crops without verifiable documentation of the total dollar value loss, but with verifiable documentation of grading factors, the following payment equation will be used:

QLA Payment = Total Affected Production x County Average Loss Per Unit of Measure x 0.7 x 0.5

To determine the county average percentage of loss for forage crops or the county average loss per unit of measure for non-forage crops, FSA will calculate the average loss for a crop based on the losses of producers applying with verifiable documentation of historical nutritional factors for forage crops, or the total dollar value loss for non-forage crops if at least five eligible producers in the county submitted that documentation.

For each crop year, 2018 and/or 2019, the maximum payment that a person or legal entity may receive, directly or indirectly, is $125,000.

Payments made to a joint operation, including a general partnership or joint venture, will not exceed the total of $125,000 multiplied by the number of persons and legal entities included in the ownership of the joint operation.

QLA payments will not begin to be issued to producers until after the application period ends April 9. This will enable FSA to calculate county averages and the total scope of QLA payments requested.

If the total amount of needed QLA payments exceeds the amount of funding available, FSA will prorate payments to all producers by a national factor. For example, if the national factor is 75 percent, all producers participating in the program will receive 75 percent of their calculated payment.

All producers receiving QLA payments are required to purchase federal crop insurance or NAP coverage for the next two available crop years at the 60% coverage level or higher in the county for which the producer was issued a QLA payment.

Wildlife and Hurricane Indemnity Program Plus (WHIP+) participants who already met the WHIP+ requirement to purchase crop insurance or NAP coverage are considered to have thereby met the requirement to purchase crop insurance or NAP coverage for QLA.

QLA participants who exceed the average AGI limitation of $900,000 for NAP may meet the insurance purchase requirement by: purchasing Whole-Farm Revenue Protection coverage offered through USDA’s Risk Management Agency, or paying the NAP service fee and premium even though the participant will not be eligible to receive a NAP payment due to the average AGI limit.

Applying for the Quality Loss Adjustment Program

USDA’s Farm Service Agency will accept QLA applications from January 6 through the extended deadline, April 9.

To apply, producers must submit a completed program application along with supporting documentation. Producers can apply directly through their local USDA Service Center or via the online QLA Application Portal, available at https://www.farmers.gov/quality-loss .