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USDA recently announced an additional $14 billion in support for agricultural producers facing market impacts from COVID-19. This new version of the Coronavirus Food Assistance Program, CFAP 2, will utilize funds from Commodity Credit Corporation (CCC) for all crops, while tobacco will use the Coronavirus Aid, Relief, and Economic Stability Act (CARES Act) funding. This new version of CFAP will split eligible commodities into three categories: 1). price trigger commodities; 20 flat-rate crops, and 3) sales commodities. Farm Service Agency (FSA) will accept applications from September 21, 2020, through December 11, 2020. See FSA’s spreadsheet here to signup (https://www.farmers.gov/cfap).
Price Trigger Commodities Price trigger commodities suffered a 5-percent or greater price decline by comparing the average sales prices from the weeks of January 13-17, 2020, to July 27-31, 2020. Commodities meeting these criteria include:
Wheat (all classes)
Hogs and Pigs
Lambs and Sheep
Payments for these price trigger commodities will operate depending on the commodity. For barley, corn, sorghum, sunflowers, upland cotton, and wheat (all classes), payments will be based on the 2020 eligible acres reported on the FSA-578, Report of Acreage form, and excludes the prevented planted acres and any experimental acres. For these crops, the payment will be based on the greater of:
Eligible acres multiplied by a $15/acre payment rate; or
The eligible acres multiplied by a nationwide crop marketing percentage (table 1), multiplied by a crop-specific payment rate (table 1), and then by the producer’s weighted 2020 Actual Production History (APH) approved yield. If the APH is not available, 85 percent of the 2019 Agriculture Risk Coverage-County Option (ARC-CO) benchmark yield for that crop will be used.
Turning to the other price trigger commodities, broilers will be equal to 75 percent of the producer’s 2019 production history multiplied by the payment rate of $1.01 per broiler. Please note that a contract grower who does not share in price risk would be ineligible for this payment.
Egg payments will equal 75 percent of the 2019 production multiplied by the CCC payment rate (table 2).
For dairy, milk payments will be equal to the sum of:
The producer’s total actual milk production from April 1 to August 31, 2020, multiplied by the payment rate of $1.20 per hundredweight; and
The producer’s estimated milk production from September 1 to December 31, 2020, multiplied by a payment rate of $1.20 per hundredweight. FSA will estimate this production based on the producer’s average daily output from April 1 to August 31, 2020, multiplied by the number of days the dairy operation commercially markets milk from September 1 through December 31, 2020.
For livestock, the payment is based on a fixed number of head times the payment rate for the type of livestock (table 3). A fixed number of head is the lower of:
The highest maximum owned inventory of eligible livestock, excluding the breeding stock, on a date selected by the eligible producer from April 16 through August 31, 2020, or
The maximum number of livestock per type established by the USDA.
Flat-Rate Crops Flat-rate crops are those crops that either did not meet the 5 -percent price decline trigger, or there was not enough data available to calculate a price change. Flat-rate crops include:
Extra Long Staple Cotton
For all flat rate crops, the payment will be based on the producer’s share of reported or determined 2020 planted acres of the crop, minus any prevented planted and experimental acres, multiplied by $15 per acre.
FSA has defined sales commodities to include:
Fruits and vegetables
Aquaculture grown in a controlled environment;
Nursery crops and floriculture;
Other livestock (excluding breeding stock) not included under the price trigger category that was grown for food, fiber, fur, or feathers;
Mink (including pelts);
Other commodities, listed at https://www.farmers.gov/cfap.
For sales commodities, a producer’s payment will be calculated using a sales-based approach based on the payment gradations in table 4. A producer would use 2019 sales of the eligible sales commodities. For example, if a producer had $85,000 in sales from eligible commodities, the payment would be calculated as the first $49,999 multiplied by 10.6% plus $35,001 multiplied by 9.9%. This producer’s total payment would be $8,765. If the same producer had $250,000 in 2019 of eligible sales commodities, the payment would be $49,999.99 multiplied by 10.6% plus $50,000 multiplied by 9.9% plus $150,000.01 multiplied by 9.7%. In this example, the producer’s payment would be $24,800. See appendix 1 for how this was calculated.
CFAP 2 will have a few crops that are not eligible for a payment. Hay and crops intended for grazing are not eligible for a CFAP 2 payment. Crops intended to be a cover crop, green manure, or left standing are not eligible as well. Possible ineligible crops include:
1. Birdsfoot and Trefoil 2. Clover 3. Cover Crop 4. Fallow 5. Forage Sorghum 6. Forage Soybeans 7. Gardens (commercial and home) 8. Grass 9. Kochia (prostrata) 10. Lespedeza 11. Milkweed 12. Mixed Forage 13. Pelt (excluding mink) 14. Perennial Peanuts 15. Pollinators 16. Sunn Hemp 17. Seed of ineligible crops 18. Vetch
To be eligible, a person or legal entity needs to:
commercially produce the eligible commodities;
be in the business of farming at the time of application;
comply with the provisions of the “Highly Erodible Land and Wetland Conservation” regulations, often called the conservation compliance provisions;
if a foreign person, provide land, capital, and a substantial amount of active personal labor to the farming operation; and
not have a controlled substance violation.
The person or legal entity would also need to meet one of the following:
have an average adjusted gross income of less than $900,000 for tax years 2016, 2017, and 2018; or
derive at least 75 percent of their adjusted gross income from farming, ranching, or forestry-related activities.
As mentioned earlier, contract growers, such as contract poultry growers, would not be eligible for a CFAP 2 payment unless such a grower shares in the price risk of production.
The total CFAP 2 payment a person or legal entity may receive, directly or indirectly through attribution of payments, is $250,000. This CFAP 2 payment limit is separate from the CFAP 1 payment limit. Similar to CFAP 1, this special payment limitation rule will allow participants which are corporations, limited liability companies, limited partnerships, trusts, and estates. Legal entities can potentially receive up to $750,000 based upon the number (up to three) of shareholders, partners, or members up to three shareholders,, or members contributing at least 400 hours of active personal labor or active personal management.
For these business entities:
With one such shareholder, limited partner, or member, the payment limit for the business entity is $250,000;
With two such shareholders, limited partners, or members, the payment limit for the entity is $500,000 if at least two members contribute substantial labor or management with respect to the operation of the business entity; and
With three such shareholders, limited partners, or members, the limit is $750,000 if at least three members contribute substantial labor or management with respect to the operation of the business entity.
Signup runs September 21 to December 11, 2020. Signup can take place online or by making an appointment with your local FSA Office. You can get more details on the program at www.farmers.gov/cfap.