USDA Announces Details of Coronavirus Food Assistance Program

Thoughtware Alert May 26, 2020
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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). The program will provide up to $16 billion in direct payments to help deliver relief to America’s farmers and ranchers affected by the SARS-CoV-2 virus and incidence of COVID-19. Applications will be accepted beginning on Tuesday, May 26, 2020, through local Farm Service Agency (FSA) offices.

The CFAP will provide vital financial assistance to producers of agricultural commodities who have suffered 5 percent or greater price decline due to COVID-19 and face additional significant marketing costs as a result of lower demand, surplus production, disrupted shipping and transportation patterns and the orderly marketing of their commodities. Farmers and ranchers will have the opportunity to receive direct support from two funding sources. The first source is $9.5 billion in appropriated funding provided by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) 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.

Payment Limitations

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. Producers will have to certify they meet the adjusted gross income (AGI) limitation of $900,000 for tax years 2016 through 2018 unless at least 75 percent or more of their income is derived from farming, ranching or forestry-related activities. Producers also must be in compliance with the Highly Erodible Land Conservation and Wetland Conservation provisions.

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.

Livestock

Eligible livestock for the CFAP include 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 payment rate per head found on the USDA website.

Nonspecialty Crops & Wool

Nonspecialty crops eligible for CFAP payments include 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 found here for crops and here for wool. Crops intended for grazing are not eligible.

Dairy

CFAP payments are eligible to all dairy operations with milk production in January, February and/or March 2020. Any dumped milk production during these months is eligible for assistance.

A single payment for dairy will be made based on a producer’s certification of milk production for the first quarter of calendar-year 2020 multiplied by $6.18 per hundred weight.

Specialty Crops

For eligible specialty crops, 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

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.

Ineligible Commodities

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.

Applying for Assistance

Applications may be found online, and producers will apply through their local FSA office. 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.

BKD will continue to monitor this developing situation. Please note this information is current as of the publication date. Visit BKD's COVID-19 Resource Center to learn more. If you have questions, contact your BKD Trusted Advisor™ or use the Contact Us form below.

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