A PDF version of this document can be found here.
On April 17th, the U.S. Department of Agriculture (USDA) announced the $19 billion Coronavirus Food
Assistance Program (CFAP) to support farmers and ranchers during the COVID-19 pandemic. USDA must
draft a rule and submit it to the Office of Management and Budget before we will know the specific
program details.
The $19 billion in funding comes from the $9.5 billion in appropriated funds from the CARES Act, $6.5
billion in existing Credit Commodity Corporation (CCC) funding, and $3 billion from the “such sums”
authority under Section 1101 of the Families First law. The CARES Act also provided $14 billion in
additional CCC funding that will become available in late June.
The CFAP includes:
- $16 billion in direct payments for crop and livestock farmers and ranchers
- $3 billion in purchases of meat, dairy, and specialty crops.
*****The information provided below is based on Committee and agricultural legislative staff briefings. The details
are our understanding of USDA’s current plans. We will not know the final details of the program
until USDA signs and posts a rule to carry out the CFAP.*****
CFAP Direct Assistance for Farmers and Ranchers
USDA will provide $16 billion in direct payments to crop and livestock farmers and ranchers. We have
not officially seen details for how these payments will be calculated but currently expect that producers
will receive a single payment determined using two national calculations:
- Price losses that occurred January 1-April 15, 2020. Producers may be compensated for 85%
of price loss during that period.
- Second part of the payment may be expected losses from April 15 through the next two
quarters and may cover 30% of expected losses.
The estimated losses are being calculated by the USDA Chief Economist’s Office. We will not have per
animal, acre, or hundredweight estimated payment rates until the final rule is issued.
In trying to calculate the potential funding needed for covered losses for all producers in a sector, USDA
used the figures below. USDA has not officially published or committed to these numbers. They were
simply used in their policy discussions to determine how much funding might be necessary to cover the
loss thresholds they were considering.
- $9.6 billion for the livestock industry
- $5.1 billion for cattle
- $2.9 billion for dairy
- $1.6 billion for hogs
- $3.9 billion for row crop producers (we do not know which crops will be eligible at this time)
- $2.1 billion for specialty crops producers (we do not know which crops will be eligible at this
time, but we do expect it to cover some destroyed produce)
- $500 million for other producers (we do not know which other products will be eligible at this
time)
While USDA is indicating that all producers are eligible, they also indicated that they will apply payment
eligibility tests and limits. We expect USDA to operate payments limits very similarly to how they
applied them for the Market Facilitation Program, but this has not been confirmed. If so, the payment
limit is $125,000 per commodity with an overall limit of $250,000 per individual or entity. For any
applicant who does not generate at least 75% of their income through agriculture, they will not be
eligible for payments if their Adjusted Gross Income is above $900,000.
In general, for entities structured as a general partnership, each individual partner is separately and
individually eligible for these payments up to the limit. This applies to joint ventures structured as
general partnerships. For entities structured as an LLC, LLP, S-Corp, or C-Corp, members (owners) are
generally treated as a single person, collectively eligible for a single payment limit. In certain situations,
a husband and a wife may each qualify for his and her own payment limit so that the household receives
two sets of payments up to the limit.
USDA expects to begin sign-up for the new program by the end of May and payments to go out to
producers in late May or early June. The Agricultural Marketing Service will work with fruit and
vegetable producers to determine their losses and forward that information to the Farm Service Agency,
which will make the payments. Livestock and row crop producers will sign-up through the Farm Service
Agency.
CFAP Purchase Program
The other portion of CFAP will include at least $100 million per month in purchases of meat, dairy, and
specialty crops, up to $3 billion.
USDA will work with local food and regional distributors to deliver food to food banks, as well as
community and faith-based organizations to provide food to those in need. We have been told that the
term ‘meat’ is not meant to exclude poultry or other animal proteins.
USDA is hoping to have the distribution companies certified in the next two weeks and be able to start
purchases and food deliveries in the next 3-4 weeks.
Additional Purchases
USDA has up to an additional $873.3 million available in Section 32 funding to purchase a variety of
agricultural products for distribution to food banks. The use of these funds will be determined by
industry requests, USDA agricultural market analysis, and food bank needs.
The FFCRA and CARES Act provided an at least $850 million for food bank administrative costs and USDA
food purchases, of which a minimum of $600 million will be designated for food purchases. The use of
these funds will be determined by food bank need and product availability.
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