Specialty Crops to See Large Reduction Under ERP Track 2

It appears that specialty crop farmers who had more than 75% of their AGI from farming may see a large reduction in their payments compared to 2020/21 ERP Phase 2.

Photo by Philippe Gauthier on Unsplash

Under 2020-2022 ERP, farmers who grow specialty crops such as fruits and vegetables have a payment limit of $125,000, however, if the farmer can prove that more than 75% of their total tax adjusted gross income (AGI) is from farming, then the payment limit is increased to $900,000.

However, FSA is doubling down on their definition of farm AGI by specifically stating that gains from the sale of farm equipment in almost all cases will not qualify as farm income. In order for this income to qualify, your other farm AGI must be greater than 66.66% of total AGI including the equipment gains. Most “true” farmers who trade-in farm equipment will never qualify as a farmer for this purpose.