[Archived] Spot Market Hog Pandemic Program FAQ

About SMHPP

What is the Spot Market Hog Pandemic Program (SMHPP)?

USDA’s Spot Market Hog Pandemic Program (SMHPP) provides assistance to producers who sold hogs through a spot market sale from April 16, 2020, through September 1, 2020, the period in which these producers faced the greatest reduction in market prices due to the COVID-19 pandemic. This new program is part of USDA’s Pandemic Assistance for Producers initiative.

What USDA agency is administering SMHPP?

SMHPP is administered by USDA’s Farm Service Agency.

When does the signup period for SMHPP open and close?

USDA’s Farm Service Agency accepted SMHPP applications from December 15, 2021, through April 29, 2022. USDA extended the deadline which was previously set for April 15, 2022.

Are SMHPP funds a loan that must be repaid? Is there a fee to apply?

No. SMHPP is not a loan program and there is no fee to apply.

I haven’t previously participated in any USDA programs. Can I apply for SMHPP?

Yes. Participation in other USDA programs is not a prerequisite to apply for SMHPP.

Is there an Adjusted Gross Income (AGI) limit to receive SMHPP assistance?

Yes. To be eligible for SMHPP, an individual or legal entity must have an average adjusted gross income (AGI) of less than $900,000 for tax years 2016, 2017, and 2018. A person or legal entity whose average AGI for 2016, 2017, and 2018 exceeds $900,000, but whose 2020 AGI is $900,000 or less, 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. With respect to joint ventures and general partnerships, this AGI provision will be applied to members of the joint venture and general partnership. 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, then 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. Form FSA-1123 is available for download at farmers.gov/smhpp.

What is the funding source for SMHPP?

Funding for SMHPP will be provided through the Coronavirus Aid, Relief and Economic Security (CARES) Act. 

Eligibility

What hog producers are eligible for SMHPP?

• An eligible hog producer is a person or legal entity who has ownership in the hogs and whose production and facilities are located in the United States, including U.S. territories. Eligible hog producers must have sold the hogs through a spot market sale during the timeframe of April 16, 2020, through September 1, 2020.
• Additional eligibility requirements include legal ownership, average adjusted gross income, and conservation compliance provisions, among others. Visit farmers.gov/smhpp for a full list of program eligibility requirements.

What is considered a spot market sale?

A spot market sale means hogs are marketed for slaughter to an individual or through a negotiated sale or through an intermediary who interacts with the buyer on behalf of the seller, which may include, but is not limited to, sale barns, brokers, or other intermediaries as determined by the Farm Service Agency.

What is considered a negotiated sale?

A negotiated sale is a sale by a producer of hogs to a packer under which the base price for the hogs is determined by seller-buyer interaction and agreement on a delivery day. The hogs are scheduled for delivery to the packer not more than 14 days after the date on which the hogs are committed to the packer. A negotiated formula sale is also considered a negotiated sale.

Are contract producers eligible for SMHPP? What about packers?

No. Contract producers, packers, and producers for hog purchases through all other purchase types including other market formula, swine or pork market formula,  and packer-owned swine, are not eligible for SMHPP. Additionally, federal, state, and local governments, including public schools, are ineligible for SMHPP.

Are breeding stock considered eligible for SMHPP? What about feeder pigs?

No. Sales of either pigs or hogs that are marketed for purposes other than slaughter, such as for breeding stock or to grow out are not eligible for this program.

Producer Payments

How will SMHPP payments be calculated for eligible hog producers?

• SMHPP provides financial assistance to producers that sold hogs through a spot market sale from April 16, 2020, through September 1, 2020, the period in which these producers faced the greatest reduction in market prices due to the COVID-19 pandemic.  
• 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. You may use the following equation for this calculation:
  • Expected SMHPP Payment = # Eligible Hogs Sold from April 16, 2020 through September 1, 2020 x $54 
• There is no per person or legal entity payment limitation on SMHPP payments. FSA will issue payments not to exceed 10,000 head per producer to eligible hog producers after the application period ends. If calculated payments exceed the amount of available funding, payments will be factored.

How did USDA determine the payment rate per head?

• USDA calculated the average daily difference in the negotiated sales price during the applicable time frame, compared to the daily five-year average for negotiated sales prices during April 16 through September 1 for years 2015 through 2019. The average daily difference was equal to $77 per hog based on the average carcass weight that was submitted to USDA's Agricultural Marketing Service (AMS) through livestock mandatory reporting.
• The SMHPP payment rate of $54 per head is equal to the $77 per head minus the Coronavirus Food Assistance 2 (CFAP 2) rate of $23 per head. CFAP 2 paid for the highest hog inventory from April 16, 2020, through August 31, 2020. CFAP 2 was available to all swine producers who qualified under the terms and conditions of such program. The application period for CFAP 2 was extended, ending October 12, 2021, to allow additional time for all eligible producers to apply. SMHPP is therefore not intended to cover pandemic impacts that were or could have been compensated under CFAP 2, and the CFAP 2 hog payment rate of $23 per head has been deducted from the calculated payment rate for SMHPP.

When are SMHPP payments expected to begin?

Farm Service Agency county offices will process applications after the application period ends on April 29, 2022. Program approval is handled at the local level and the timeline for this approval process, including required internal controls and data validation, varies from county to county. 

Is there a payment limitation for SMHPP?

No. There is no payment limitation for SMHPP.

Can SMHPP payments be withheld to satisfy a debt?

No. SMHPP payments will not be subject to administrative offset. This means the payments will not be withheld to satisfy any USDA debts nor will they be offset by Treasury.

Are SMHPP payments going to be counted as taxable income?

The Farm Service Agency reports program payments to the Internal Revenue Service (IRS) and program participants on a CCC-1099-G. This report is a service to help program participants report taxable income. Please consult with the IRS or your tax preparer for any additional questions on how this income impacts your business. 

How to Apply

How can I prepare to apply for SMHPP?

• A full list of program eligibility requirements and information on applying is available at farmers.gov/smhpp. We recommend you review this list before initiating your application.
• Your local Farm Service Agency (FSA) staff will work with you to fill out your SMHPP application. Visit farmers.gov/service-locator to find contact information for the FSA office at your local USDA Service Center. FSA staff are available to support you in preparing your application. You may also call 877-508-8364 to speak directly with a USDA employee ready to offer assistance or answer any questions.

How do I apply for SMHPP?

You can apply for SMHPP through the Farm Service Agency office at your local USDA Service Center. Visit farmers.gov/smhpp for a full set of application requirements, including forms that will be needed to finalize your application. USDA staff are available to assist with every step of your application process.

Do I need to work with a third-party entity to complete my SMHPP application?

No. USDA helps applicants complete program applications and other paperwork free of charge. USDA Service Center staff can guide you through the process of preparing and submitting required paperwork to apply for SMHPP on your own, with no need to hire a paid preparer. Language translation services are available in all USDA Service Centers, so one-on-one assistance with a Service Center employee can be translated in real time for applicants requiring translations.

What documents do I need to submit with my SMHPP application?

You must provide supporting documentation to verify the accuracy of information provided on your SMHPP application, including to substantiate the number of hogs reported on the application that were sold through a spot market sale and how the price was determined for the sale.  If you apply after March 18, 2022, you must submit supporting documentation within 15 days from submitting your FSA-940 application to FSA, or the application will be disapproved. Those who applied prior to March 18, 2022, will receive further guidance from your local FSA office.

The forms needed to complete your SMHPP application are available for download at farmers.gov/smhpp. These include the program application form – FSA-940 – along with forms to confirm your personal information, confirm average adjusted gross income, and certify compliance with USDA conservation compliance provisions, among others. 

What types of supporting document will be required?

The supporting documentation must be verifiable or reliable records that substantiate the reported number of hogs sold through a spot market sale and how the price was determined for the sale.

The following table is provided to assist you with determining what types of sales are considered a negotiated sale and identity the types of verifiable or reliable supporting documentation that must be provided to FSA based on the type of sale. 

*Certification must be verifiable or reliable as determined by the FSA County Committee.

My local USDA Service Center is not open for walk-in service. How does this impact how I’ll submit my application?

• We are committed to delivering USDA services while taking safety measures in response to the pandemic. Some USDA offices are open to limited visitors by appointment only. Service Center staff also continue to work with agricultural producers via phone, email, and other digital tools. Please call the Farm Service Agency office at your local USDA Service Center to schedule an appointment if you’d like assistance or have questions about applying for SMHPP.
• A call center is available for applicants who would like additional one-on-one support with the SMHPP application process over the phone. Please call 877-508-8364 to speak directly with a USDA employee ready to offer support. The call center can provide service to non-English speaking customers. Customers will select 1 for English and 2 for Spanish. For other languages, customers select 1 and indicate their language to the call center staff.

I’ve never worked with USDA’s Farm Service Agency (FSA) previously. How do I connect with my local FSA office to get started with my application?

There is a Farm Service Agency (FSA) office located in nearly every county across the United States. Visit farmers.gov/service-locator to find the contact information for your local office. We recommend you call your office to connect directly with FSA staff who can talk with you about the program, eligibility requirements, and how to apply. You may also contact our call center at 877-508-8364 to speak directly with a USDA employee ready to offer support. At USDA, we are here to make your application process as easy as possible and will provide support every step of the way.