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Cotton News

January 27, 2023

By February 3rd, 2023No Comments

Welcome to the January 27, 2023 issue of “Cotton News,” a service provided by Plains Cotton Growers Inc. for the cotton industry in the Texas High Plains and beyond.

What’s the Deal with ERP Phase 2?

Phase 2 of the Emergency Relief Program (ERP) has been talked about for months with the anticipation that the process would model that of Phase 1. However, the rule for Phase 2, published almost two weeks ago, is fundamentally different from Phase 1 in both formula and eligibility determination. 

A Comparison of Methodology

To understand the difference in implementation between the two phases of ERP, we’ll do a side-by-side comparison.

The Challenges with Phase 2

Gross Income
A producer’s actual production history (APH) is an adjusted average of 10 years’ yields, which is a more accurate measurement of expected gross income. Phase 2, however, is operating off a one-year base period using an individual’s taxable information. And, in some cases, this is not a true reflection of an individual’s crop production year. Obviously, expenses are not considered, and with input costs ever rising, it’s unfortunate that gross income is the litmus test here. 

Farm Service Agency
Phase 1 went relatively smoothly for FSA local offices. Producers received a pre-filled application from USDA and merely had to verify, sign and return to their local FSA office. Phase 2 requires local offices to input the data themselves, making it more labor intensive for offices that are already short staffed. Phase 1 was streamlined. Phase 2 is not.  

If a producer were to jump through all the hoops and become eligible, the initial payment is a maximum of $2,000. If total calculated payments exceed the total funding available for Phase 2, the rule states that the ERP Factor may be adjusted and the final payment amounts will be prorated to stay within the amount of available funding. 

To further understand the application of Phase 2, consider the example Paul Neiffer provided to FarmJournal:

The Emergency Relief Program (ERP) Phase 2 Calculator is now available on the ERP website. This tool can help you determine eligibility for Phase 2 and can provide an estimated program payment calculation. 

The enrollment period for ERP Phase 2 closes June 2, 2023. 

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American Cotton Shippers Association International Cotton Institute

The American Cotton Shippers Association will be hosting the International Cotton Institute at the University of Memphis from June 5-June 30, 2023.

The program is a four-week intense education on the cotton business with emphasis on functions of the trade, risk management, global logistics, and forward-facing global industry objectives.  The curriculum also gives a good foundation of US industry associations and contacts, their roles, and differences.  In addition to the content, this program creates a unique networking opportunity with the trade’s leadership and classmates that are growers, spinners, brand representatives, and policy influencers.

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