Lots Of Questions On SDRP Stage 2 Payments

USDA initiated sign-up for “Stage 2” of the Supplemental Disaster Relief Program (SDRP) at local Farm Service Agency (FSA) offices on November 24, with sign-up to continue until April 30, 2026; however, there are still a lot of questions about SDRP Stage 2. The sign-up process for Stage 2 of the SDRP program is a bit more complicated than the fairly straight forward sign-up process in Stage 1. Similar to Stage 1, SDRP Stage 2 will cover losses from eligible crops for both the 2023 and 2024 crop years. The crop losses will be calculated separately for each year, so eligible producers could receive a payment for each year. Also similar to Stage 1 of the SDRP program, to qualify for Stage 2 farmers must have incurred a loss from a qualifying disaster event in 2023 or 2024. Qualifying disasters include floods, wildfires, hurricanes, freezes, excessive moisture, heat, or a qualifying drought.
The application process for potential Stage 2 SDRP payments will require farmers to apply in person at local FSA offices. The SDRP Stage 2 application process for those with “shallow losses” will be relatively easy, using pre-filled RMA crop insurance or NAP data on the application form at their FSA office. They will then just need to designate the type of disaster that caused the crop loss, verify the data, and sign the form to initiate SDRP payments. SDRP applications must be signed by all parties that share in the crop value. The sign-up process for “uncovered crop losses” and “quality losses” under “Stage 2” of SDRP may be a bit more complicated, as it will require the utilization of alternate criteria other than RMA and NAP yield data.
Following are some common questions that have been received regarding the Stage 2 SDRP payments:
 
What Is The Primary Focus Of Potential SDRP Stage 2 Payments?
Stage 2 of the SDRP program includes assistance for losses from uncovered crop losses, shallow crop losses, and crop quality losses. Here are more specific details on the types of losses that are covered by Stage 2 SDRP:
• Shallow crop losses - This would be for 2023 and 2024 crop losses that did not meet the threshold requirements for Stage 1 SDRP payments. The type of eligible losses and the payment formulas and calculations are different from calculations for Stage 1 payments. The calculations will be based off 2023 and 2024 Risk Management Agency (RMA) crop insurance data or NAP data. This is the category that most eligible Midwest corn, soybean, and wheat producers will fall under.
• Uncovered crop losses - This category will provide Stage 2 SDRP assistance for eligible crops that are not covered by federal crop insurance or the NAP program. Crop losses in this category will be factored to 70 percent of the intended revenue for a crop, compared to 75-95 percent for insured crops. This could include certain fruit and vegetable crops, tree farms, etc.
• Quality Losses - This would cover losses that resulted in quality discounts in a crop that were not covered by crop insurance, such as may have occurred from severe storms and flooding. Forage crops that had reduced nutritional value may also be eligible under Stage 2 of SDRP.
 
What Are Some Indicators That A Farmer Is Likely To Qualify For A “Shallow Loss” Stage 2 SDRP Payment?
To qualify for a “shallow loss”, farmers with 80% or 85% crop insurance policy for 2023 or 2024 would need to have at least a 5 percent yield reduction below their APH yield, but likely above the threshold yield where crop insurance would have been initiated for a given crop in either year. For example, a producer that had an 80% insurance policy on corn in 2023, with a final yield above 80 percent of the APH yield, but below 95 percent of the APH yield, might be eligible for a Stage 2 SDRP payment. If that producer had 70% insurance coverage in 2023, then the Stage 2 payment eligibility would occur above 70 percent of the APH yield, but below 90 percent of the APH yield, so producers would need a 10 percent yield reduction below the APH yield. Producers that already received a Stage 1 SDRP payment on a particular crop on a farm unit in a given year are not eligible to receive a Stage 2 SDRP payment on the same crop and same farm. The payment formulas for Stage 1 and Stage 2 SDRP payments are different, which make these calculations harder to analyze
 
What Are Some Situations Where Farmers That Were Not Eligible For A Stage 1 SDRP Payment Might Be Eligible For A Stage 2 Payment?
• A farmer that received a Stage 1 payment for corn in 2024, but also had a shallow loss on corn in 2023. That farmer could now be eligible to apply for a Stage 2 SDRP payment for corn in 2023.
• A farmer that received a 2024 Stage 1 payment for corn, but also had a shallow loss on soybeans in 2024. That farmer could now be eligible to apply for a Stage 2 SDRP payment for soybeans.
• A farmer has three different farm units and received Stage 1 SDRP payments on two farms, but had a shallow loss on the third farm. That farmer could now be eligible to apply for Stage 2 on the third farm.
 
Will the Stage 2 SDRP Payments Be Factored By 35 Percent?
Similar to Stage 1, the initial Stage 2 payments will be paid at a rate of 35 percent (.35) of the total calculated SDRP payment amount. For example, if the calculated Stage 2 SDRP payment is $100 per acre, the initial SDRP payment amount would be $35 per acre.
 
What Are The Payment Limits For The SDRP Payments?
The payment limit for total SDRP payments is $125,000 per eligible individual or entity. This increases to $250,000 if at least 75 percent of the reported adjusted gross income is derived from eligible farm-related operations, based on a 3-year average on Federal tax returns. There are also potential higher payment limits for certain specialty crops. Any SDRP payments received from both Stage 1 and Stage 2 of the program for the same year will be added together for payment limit purposes. There will be a separate payment limit for the 2023 and 2024 crop years.
 
If I Am Eligible For A Stage 2 SDRP Payment, Do I Need To Receive That Payment In 2025?
The Stage 2 SDRP payments will be processed after the application has been received and reviewed by the FSA office. The easiest way to receive the SDRP payment in 2026 is the wait until January 2 or later to apply for the program. Remember, the deadline for Stage 2 SDRP application is April 30, 2026.
 
Could There Be An Additional SDRP Payments Beyond The Initial 35 Percent Payment Rate?
Once all the payments for SDRP Stage 1 and Stage 2 have been calculated, there could possibly be an additional “top-up” payment. The additional round of SDRP payments would occur if the total Stage 1 and Stage 2 SDRP payment amount in the U.S. is lower than the $16 billion originally allocated for the program. Most analysts feel that it is highly likely that we could see an additional “top-up” SDRP payment after April 30, 2026; however, that payment will likely be at a lower percentage than the initial Stage 1 and Stage 2 SDRP payment percentage of 35%.
 
Where Can Farmers Get More Assistance With The Stage 2 SDRP Payments And Application Process?
• USDA has an excellent SDRP website on potential SDRP payments and the application procedures at: https://www.fsa.usda.gov/resources/programs/supplemental-disaster-relief-program-sdrp.
• Kent Thiesse has prepared a SDRP Stage 2 information sheet, which includes SDRP Stage 2 payment examples for corn and soybeans for 2023 and 2024. To receive a free copy of the information sheet, send a request email to: [email protected]
• Farmers with additional questions on the Stage 2 SDRP payments should contact their local FSA office.
For additional information contact Kent Thiesse, Farm Management Analyst, Green Solutions Group Phone - (507) 381-7960; E-mail - [email protected]