To be eligible for quality loss payments, farmers must have suffered at least a 20 percent quality reduction in a crop they harvested during the 2000 season. Any quality loss payments received under the 2000 Crop Disaster Program (CDP) will be subtracted from 2000 Quality Loss Program payments.
When Congress passed the 2000 Omnibus Budget Reconciliation Act last fall, it included provisions for both a Crop Disaster Program and a Quality Loss Program (QLP), for the first time in several years, to cover losses resulting from last summer’s drought.
Signup for the Crop Disaster Program began last winter, but FSA only recently completed the regulations for the Quality Loss Program. The latter offers an additional payment for crops where the CDP quality payments were inadequate or nonexistent.
Participants in the Quality Loss Program must provide FSA written documentation of the quality of their 2000 harvested crop. Examples of acceptable documentation include:
Grading receipts from a warehouse or licensed grader;
Sales receipts providing the grade of the crop;
University recognized test results;
Sales receipts showing disposition to a secondary market due to poor quality, such as below grade rice.
Quality loss payments will be calculated by multiplying 65 percent of the affected production times 65 percent of the loss in value due to quality.
Example: A farmer sells 1,000 bushels of a crop whose value was reduced by $1 per bushel due to poor quality. The payment to this farmer is calculated as follows.
1,000 bushels X 65 percent = 650
$1 X 65 percent = 65 cents
650 X .65 = $422.50 (payment to farmer)
Most crops are eligible for quality loss payments except certain specialty crops, such as ornamental nursery, Christmas trees, aquaculture, honey, turf grass sod, maple sap and ginseng. Quality losses for apples and potatoes will be covered under a separate program.
FSA officials said that “persons” whose gross revenue exceeded $2.5 million for the 1999 tax year are ineligible for the payments. Losses on more than one 2000 crop on the same acreage are not eligible, unless there is an established practice on the farm of planting and harvesting two or more crops in the same year on the same acreage.
Combined total payments issued for the Quality Loss Program and the Crop Disaster Program are limited to $80,000 per “person,” as defined by FSA regulations.
Farmers should begin receiving quality loss payments soon after signup, USDA officials said.
For more information, farmers should contact their county Farm Service Agency office or visit the FSA Web-site at www.fsa.usda.gov.