According to the IRS Recipient Instructions for Form 1099-G, you should refer to IRS Publication 225 Farmer's Tax Guide and the IRS Instructions for Schedule F Profit or Loss from Farming for information on reporting income from Form 1099-G Box 7.
Per IRS Publication 225, page 9:
Agricultural Program Payments
You must include in income most government payments, such as those for approved conservation practices, direct payments, and counter-cyclical payments, whether you receive them in cash, materials, services, or commodity certificates. However, you can exclude from income some payments you receive under certain cost-sharing conservation programs.
Report the agricultural program payment on the appropriate line of Schedule F, Part I. Report the full amount even if you return a government check for cancellation, refund any of the payment you receive, or the government collects all or part of the payment from you by reducing the amount of some other payment or Commodity Credit Corporation Loan. However, you can deduct the amount you refund or return or that reduces some other payment or loan to you. Claim the deduction on Schedule F for the year of repayment or reduction.