What Coronavirus Food Assistance Program Means for Farmers
Mike Schrey, Horizon Farm Credit’s chief credit officer, reviews the Coronavirus Food Assistance Program (CFAP) which provides up to $16 billion in direct payments to farmers who have experienced losses related to COVID-19.
Help our listeners understand the basics of the CFAP. Who is eligible for the assistance and how does the program work?
As part of the CARES Act, the Coronavirus Food Assistance Program (CFAP) was developed. It provides two main components:
- USDA Purchase and Distribution: which provides $3 billion to partner with regional and local distributors to purchase fresh produce, dairy and meat.
- Direct Support for Farmers and Ranchers: which provides $16 billion in direct support to ag producers where prices and market supply chains have been impacted. This direct support for farmers is what we will primarily discuss here today.
USDA announced the details related to CFAP direct support for farmers just last week and I will cover the highlights on each commodity next. However, it’s important to understand that the funding draws from two separate authorities - $9.5 billion from the CARES Act and $6.5 billion from the Commodity Credit Corporation. The dual authority makes it a bit confusing as it does cause separate payment rates for each commodity based on the underlying authority.
Commodities eligible for CFAP include livestock (cattle, hogs and sheep- lambs and yearlings only), wool, dairy, non-specialty crops which includes many row crops such as corn and soybeans, and specialty crops such as fruits, vegetables, nuts and mushrooms. CFAP payments are limited to $250,000 per person or legal entity, and each commodity has its own set of standards for how the direct payment is structured.
Let me share some examples of the calculations for a few commodity areas:
- In dairy, a single payment will be made based on a producer’s certification of milk production for the first quarter of calendar year 2020 multiplied by $4.71 per hundred weight. The second part of the payment is based on multiplying first quarter milk production by the national adjustment factor of 1.014 to adjust for increased spring milk production in the second quarter, then multiplying by $1.47 per hundredweight. Again, the two different payments are a reflection of the dual authorities. In total, this payment amounts to $6.20 per hundredweight for a farm’s production in January through March of this year.
- For livestock, the total payment will be calculated using the sum of the producer’s number of livestock sold between January 15 and April 15, multiplied by the payment rates per head, and the inventory number of livestock between April 16 and May 14, multiplied by the payment rate per head.
- For corn, the rate is $0.32/bushel for the CARES Act Payment Rate and an additional $0.35 for the CCC Payment Rate. This is applied against 50% of unpriced inventory as of January 15, 2020, not to exceed 50% of 2019 total production.
To ensure availability of funding throughout the application period, producers will receive 80% of their maximum total payment upon approval of the application. The remaining portion of the payment, not to exceed the payment limit, will be paid at a later date as funds remain available.
It’s clear that there are a lot of details related to CFAP that farmers need to understand. How can farmers learn more and what steps do they need to take to apply?
CFAP is administered through FSA. I encourage all farmers to review the CFAP website for details on their specific commodities.
All farmers must apply for CFAP through their local FSA office, many of which are operating by appointment only right now. The application period officially opened this week on May 26 and will remain open through August 28.
To expedite the process, be prepared before you have your appointment with FSA. If you’ve worked with FSA before, many of the entity and general information forms should already be on file. If not, check out the farmers.gov website for the forms what will need to be collected. Consider all aspects of your operation and information you will need to submit. For instance, if you are a dairy farmer, in addition to having your settlement checks for January through March, gather your receipts for cull cows as well as inventories of grain not under contract and inventories of corn silage on hand as of January 15 which will be paid on grain conversion.
Are there any other thoughts you would like to share?
Some program details are still unclear and may change. Stay informed about any changes by reviewing the website and reading articles in farm publications. Submit an application with FSA as soon as you can. There is a limited amount of funds and when the funds are expended, there’s no guarantee they will be replenished. Apply early, and hopefully you will get your payment quickly to help cover lost income during COVID-19.