The Coronavirus Food Assistance Program (CFAP): What you need to know
What is the Coronavirus Food Assistance Program (CFAP)?
On May 19, 2020, the U.S. Department of Agriculture (USDA) announced details of direct assistance to farmers through the Coronavirus Food Assistance Program (CFAP). CFAP includes $16 billion, funded in part by the Coronavirus Aid, Relief and Economic Security (CARES) Act, for direct payments to farmers impacted by the toll this public health emergency has taken on the food supply chain.
Farmers and ranchers can receive direct support from two funding sources. The first source is $9.5 billion in appropriated CARES Act funding to compensate farmers for losses due to price declines that occurred between mid-January and mid-April 2020 and provides support for specialty crops for products that had been shipped from the farm in the same time frame but subsequently spoiled due to the loss of marketing channels. The second funding source uses the Commodity Credit Corporation (CCC) Charter Act to compensate producers for $6.5 billion in losses due to ongoing market disruptions.
Who is eligible?
- Specifically, CFAPaims to provide financial assistance for agricultural operators who have suffered a five percent or greater price decline or experienced losses due to market supply chain disruptions due to COVID-19 and face additional significant market costs. Eligible commodities include non-specialty crops, wool, livestock, dairy, fruits, vegetables, and nuts.
- Farmers (or "legal entity") must have an average AGI (adjusted gross income) or less than $900,000 for 2016, 2017, and 2018 tax years. The exception? The $900,000 limit doesn't apply if 75% of the AGI is from farming, forestry, or ranching. Producers also must follow the Highly Erodible Land Conservation and Wetland Conservation provisions.
- This payment is a per person and legal entity payment limitation of $250,000. There is a payment limitation of $250,000 per person or entity for all commodities combined.
- Applicants that are corporations, limited liability companies or limited partnerships may qualify for increased payment limits where members actively provide personal labor or personal management of 400 hours annually for farming operations up to $250,000 per shareholder or partner (not to exceed three) for a maximum benefit of $750,000.
- Participation in the U.S. Small Business Administration’s Paycheck Protection Program (PPP) or Economic Injury Disaster Loan program does not affect producer eligibility for the CFAP or any USDA farm program. The PPP duplicate benefit provision does not have an effect on FSA farm programs or farm loan programs.
How do I apply for the CFAP?
Farmers should apply through their local Farm Service Agency Service Center, and applicants can visit farmers.gov/cfap or call 877-508-8364 to speak directly with a USDA employee. Applications will be accepted beginning Tuesday, May 26, 2020, through local Farm Service Agency (FSA) offices. Applications will be accepted through August 28, 2020.
Producers can begin preparing the application now by gathering the necessary documentation based on the appropriate producer category and preparing the applicable forms below:
- CCC-901 identifies a member of a farm or ranch that is a legal entity
- CCC-941 reports your average AGI for programs where income restrictions apply
- CCC-942, if applicable, reports income from farming, ranching and forestry for those exceeding the AGI limitation
- AD-1026 is for Highly Erodible Land Conservation and Wetland Conservation certification
- AD-2047 provides basic customer contact information
- SF-3881 provides your banking information for USDA direct deposit payments
To allow availability of funding throughout the application period, producers will receive 80 percent of their maximum total payment upon approval of their application, with the remaining 20 percent at a later date, as funds are available.
What commodities are eligible?
- Cattle, sheep (lambs and yearlings only) and hogs.
- Total payments will be calculated using the sum of the producer’s number of livestock sold between January 15 and April 15, 2020, multiplied by the payment rate per head, plus the highest inventory number of livestock between April 16 and May 14, 2020, multiplied by the USDA’s payment rate per head.
Nonspecialty Crops & Wool
- Malting barley, canola, corn, upland cotton, millet, oats, soybeans, sorghum, sunflowers, durum wheat and hard red spring wheat. Wool also is eligible.
- Producers will be paid based on inventory subject to price risk held as of January 15, 2020. A payment will be made based on 50 percent of a producer’s 2019 total production or the 2019 inventory on hand as of January 15, 2020, whichever is smaller, multiplied by the commodity’s applicable payment rates. Crops intended for grazing are not eligible.
The USDA has confirmed that producers will receive 80 percent 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 if funds remain available.
Therefore, it is very important that dairy producers submit their applications as soon as possible, as time is of the essence when it comes to the amount of money that remains available for CFAP.
- CFAP payments are eligible to all dairy operations with milk production in January, February, and/or March 2020. Any dumped milk production during the months of January, February, and March 2020 is eligible for assistance.
- For 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 national price decline during the same quarter). The second part of the payment is based a national adjustment of 1.4% (spring flush in milk production) to each producer’s production in the first quarter, multiplied by $1.47 per hundred weight.
- CFAP payments to dairy producers will not cover long-term supply contracts / monthly forward contracting. (Please note: This has since been clarified with USDA, and long-term/forward contracting has no impact on calculating your dairy payment.)
- Specialty crops include, but are not limited to, almonds, beans, broccoli, sweet corn, lemons, iceberg lettuce, spinach, squash, strawberries and tomatoes.
- A full list of eligible crops may be found on the USDA website. Additional crops may be deemed eligible at a later date.
The total payment will be based on:
- The volume of production sold between January 15 and April 15, 2020
- The volume of production shipped, but unpaid
- The number of acres for which harvested production did not leave the farm or mature product was destroyed or not harvested during that same time period, and which have not and will not be sold.
What commodities are NOT eligible?
- Commodities that did not suffer a 5 percent or greater price decline from mid-January to mid-April 2020 are not eligible for the CFAP.
- Specifically, this includes sheep more than two years old, eggs/layers, soft red winter wheat, hard red winter wheat, white wheat, rice, flax, rye, peanuts, feed barley, extra-long staple cotton, alfalfa, forage crops, hemp and tobacco.
- The USDA may consider the excluded commodities at a later date if credible evidence is provided that supports a 5 percent price decline.
What if I DID suffer a five percent or more loss on an "ineligible" commodity?
- If you have legitimate evidence you can show to back up your claim, USDA could reevaluate the ineligibility of the commodity.
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