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Policy Update: USDA Releases CFAP 2.0

Today, USDA released details of the second round of the Coronavirus Food Assistance Program (CFAP 2), coming one week after the application period ended for CFAP 1. The new program will distribute an additional $14 billion of support (from the Commodity Credit Corporation, authorized by the CARES Act) to agricultural producers impacted by the pandemic. The program will accept applications from September 21 through December 11, 2020 and could begin making payments within the week.

Since the passage of the CARES Act, AFT and many other agricultural organizations have advocated for CFAP to be more inclusive of smaller-scale, direct-to-consumer producers. We were concerned that, because payments were based on national averages, producers that typically received premium prices (organic, local, etc.) were not being sufficiently compensated for their actual losses. In its communications with USDA, AFT urged the Agency to better account for these producers, and suggested the use of relief payments based on an operation’s historic revenue.

In today’s press release on CFAP 2, USDA stated that they “listened to feedback received from farmers, ranchers and agricultural organizations about the impact of the pandemic on our nations’ farms and ranches, and… developed a program to better meet the needs of those impacted.” AFT is pleased with many of the changes in the new program, especially the fact that specialty crop producers can now receive relief based on their 2019 revenue.

To summarize: CFAP 2 payments are broken into three categories: price trigger commodities, flat-rate commodities and sales commodities. In order to qualify for a payment under the price trigger commodity category, the commodity must have suffered a 5% or greater national price decline between the weeks of Jan. 13 and July 27, 2020. Producers are eligible for payments based on planted acres of eligible commodities, with a minimum rate of $15/acre. Flat-rate crops either do not meet the 5% or greater national price decline noted above, or do not have data available to calculate a price change, and are eligible for a flat $15/acre payment. For sales commodities including specialty crops, payment calculations will be based on a percentage of a producer’s 2019 sales.

Detailed information below:

• Price Trigger Commodities
  • Major commodities (corn, soy, wheat, beef, dairy etc.) that met a minimum 5% price decline between January and July
  • Payment calculations for these commodities did not change significantly in CFAP
  • Crop payments will be the greater of:
    • Equal to the number of 2020 planted acres of the crop x a payment rate of $15, or
    • Eligible acres x nationwide crop marketing percentage x crop-specific payment rate x the producer’s weighted 2020 Actual Production History (APH) approved yield

• • Broilers and eggs: payments will equal 75% of the producers’ 2019 production x the applicable payment rate
  • Dairy: payments will be based on production from April 1 to August 31, 2020. Payments will equal:
    • The producer’s total actual milk production from April 1 to August 31 x the payment $1.20 per hundredweight; AND
    • The producer’s estimated milk production from September 1 to December 31, based on the daily average production from April 1, through August 31 x 122 x a payment rate of $1.20 per hundredweight.

• • Beef, hogs, lambs and sheep payments will be based on the maximum inventory of livestock on a date selected by a producer between April 16 and August 31.
    • Beef will receive $55/head
    • Hogs will receive $23/head
    • Sheep and lambs will receive $27/head

• Flat-Rate Crops
  • Crops that did not meet the 5% price decline, or a price decline cannot be calculated (alfalfa, oats, peanuts, hemp, etc.)
  • Payment calculations for these commodities also did not change significantly in CFAP 2
  • Payments will be equal to the number of 2020 planted acres of the crop x a payment rate of $15
• Sales Commodities
  • Includes sales of all specialty crops, aquaculture, nursery crops, and other crops not included in other categories. More commodities are now eligible under CFAP 2
  • These payment calculations are entirely new in CFAP 2
  • Payments will be based on five payment gradations associated with their 2019 sales to offer a benefit to smaller producers
  • Producers no longer need to apply for each individual crop – eligible crops are calculated in aggregate
  • Payments are calculated as follows, similarly to income taxes:
    • For the first $49,999 in 2019 sales, they receive 10.6%. For the next $50,000 in sales, they receive 9.9%, etc. (See chart below)
    • For example, a producer who sold $75,000 of eligible commodities would receive: ($49,999 x 10.6%) + ($25,001 x 9.9%) = $7,775

Eligibility:

• Any producer is eligible for CFAP 2, regardless of participation in or payments from CFAP 1
  • CFAP 1 covered a period of time from January to April
  • CFAP 2 covers a period of time from January to July
• There is a $250,000 payment limitation per person, although corporations with multiple actively engaged members might qualify for a higher limit
• AGI limitation of $900,000 unless 75% or more of their income is derived from farming
• Must be in compliance with wetland conservation and highly erodible land provisions

Application:

• Some producers can now apply online
• Producers will self-certify regarding sales, inventory, etc. meaning that they do not need to submit these materials. However, they are subject to spot-checks