USDA launched a new program on Dec. 13 to assist hog producers who sold hogs through a negotiated sale during the period in which these producers faced the greatest reduction in market prices due to the COVID-19 pandemic.
The Spot Market Hog Pandemic Program (SMHPP) is designed to provide help to hog producers who sold animals through a negotiated sale from April 16, 2020, through Sept. 1, 2020. Hogs must have been physically located in the United States to be eligible for SMHPP. USDA has allocated up to $50 million in pandemic assistance funds for SMHPP. Payments are not available to contract growers.
USDA will calculate SMHPP payments by multiplying the number of head of eligible hogs, not to exceed 10,000 head, by the payment rate of $54 per head. The formula to calculate payments is:
| Expected SMHPP Payment = # Eligible Hogs Sold from April 16, 2020 through September 1, 2020 x $54 |
The agency said in a notice of funding availability published in the Federal Register that prior pandemic aid had not “adequately addressed” the impact to those selling hogs on a negotiated basis which it said the industry describes as “a cash or spot market sale.”
Producers can file SMHPP applications Dec. 15 through Feb. 25. Payments will be issued shortly after SMHPP applications are approved — there is no payment limit on the aid.
To be eligible for SMHPP, an applicant must:
• Be a person or legal entity who has ownership in the hogs and whose production facilities are located in the U.S., including U.S. territories. Please note that contract producers; federal, state, and local governments, including public schools; packers; and producers for hog purchases through all other purchase types are not eligible for SMHPP. Ineligible purchasing types may include other market formula, swine or pork market formula, other purchase arrangements, and packer owned.
• Have an average adjusted gross income (AGI) of less than $900,000 for tax years 2016, 2017, and 2018. If a person or legal entity’s average AGI for 2016, 2017, and 2018 exceeds $900,000 but their 2020 AGI is $900,000 or less, they must submit form FSA-1123 and provide a certification from a licensed CPA or attorney affirming the person’s or legal entity’s 2020 AGI is not more than $900,000. AGI provisions are applicable to members of a legal entity, including a general partnership or joint venture who are at or above the fourth tier of ownership in the business structure. If a producer fails to provide FSA-1123, the eligible livestock owner’s payment will be reduced by the portion of a payment attributed to a member who exceeds the $900,000 AGI limitation or is otherwise ineligible for payment.
• Comply with provisions of the “Highly Erodible Land and Wetland Conservation” regulations, often called the conservation compliance provisions. These will be addressed via form AD-1026 during the application process.
• Not have a controlled substance violation.
• Be a citizen of the U.S. or a resident alien.
• Submit a complete SMHPP application form (FSA-940) and provide all required documentation. The below section details documents required to apply for SMHPP.
More information is available here.
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