Ag Policy Blog

Pork producers who sold hogs through a negotiated sale over a four month stretch in 2020 are eligible for a potential $54 per head payment under a USDA program rolled out on Monday.

The Spot Market Hog Pandemic Program (SMHPP) will pay producers $54 a head for up to 10,000 head sold through a negotiated sale from April 16, 2020, through Sept. 1, 2020. USDA characterized a negotiated sale or negotiated formula sale as "a sale of hogs by a producer to a packer under which the base price for the hogs is determined by a seller-buyer interaction and agreement on a delivery day." Contract growers are not eligible for SMHPP.

USDA is offering the SMHPP because packer production was reduced due to COVID-19 because of employee illnesses and supply-chain challenges, leading to fewer negotiated hogs being bought and also lower market prices.

"Previous pandemic assistance used flat rates across the hog industry, and this didn't take into account the various levels of harm felt by different producers," said FSA Administrator Zach Ducheneaux. "We worked closely with industry partners and USDA's Agricultural Marketing Service to target assistance to hog producers who were hit the hardest during the pandemic. This is one more example of our efforts to provide new, broader, and more equitable opportunities for farmers,?ranchers?and producers."

USDA set aside $50 million in funds for the SMHPP, which will start enrollment on Dec. 15, 2021, through Feb. 25, 2022. Based on USDA's formula, the department anticipates funding producers who accounted for roughly 926,000 head of hogs marketed in that stretch from mid-April to September in 2020.

Producers will have to show they should the hogs between April 16 and Sept. 1 of last year. The producer will have to show ownership as well as keep their production facilities in the U.S. as well. Producers also must have adjusted gross income below $900,000 for tax years 2016-2018 as well. If that's the case, producers must provide a form and certification from an accountant that their 2020 adjusted gross income was below $900,000.

More details can be found at https://www.farmers.gov/…

Chris Clayton can be reached at Chris.Clayton@dtn.com

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