USDA Announces CFAP 2: $14 Billion in Direct Payments to Producers

On September 17, 2020, the USDA announced a $14 billion expansion of the Coronavirus Food Assistance Program (“CFAP”), named CFAP 2. The program’s aim is to provide agricultural producers with additional financial assistance to offset some of the costs and market disruptions associated with COVID-19. Eligible producers have until December 11 to sign-up for payments through the Farm Service Agency’s local county office.

Eligibility

Any individual or legal entity that shares in the risk of producing certain commodities may apply for the program. This includes producers in the business of farming; however, it does not include contract growers.

Producers that have an Adjusted Gross Income of greater than $900,000 are ineligible unless at least 75% of their income comes from farming, ranching, or forestry activities. Payments are capped at $250,000 per person or entity for all combined commodities. A legal entity may exceed that cap if:

1. Two members of the entity actively provide personal labor, personal management, or a combination of the two, then such entity may receive up to $500,000.
2. Three members of the entity actively provide personal labor, personal management or a combination of the two, then such entity may receive up to $750,000.

For those entities that qualify for payment limits in amounts greater than $250,000, each individual person that is a member of those entities remains subject to the $250,000 limit. In other words, no individual person can receive more than $250,000 in direct or indirect payments from the entity, regardless of the amount of payment received by said entity.  

Commodities

Eligible commodities are divided into three categories: price trigger commodities, flat-rate crops, and sales commodities. Ineligible commodities include hay (except alfalfa and grazing crops); equine, animals raised for breeding stock, pets, and animals raised for hunting; and birdsfoot, trefoil, clover, cover crop, gardens; and other certain kinds of commodities.

Price Trigger Commodities

Price trigger commodities are major commodities that have a minimum of price decline of at least 5% over the specified period of time. This includes broilers and eggs; row crops like barely, corn, sorghum, soybeans, sunflowers, upland cotton, and wheat; dairy; and livestock like beef cattle, hogs and pigs, and lambs and sheep.

• Broiler payments are equal to 75% of the producer’s 2019 production multiplied by a payment rate of $1.01 per bird. Egg payments are based on 75% of 2019 production with a per-pound or per-dozen multiplied depending on whether the eggs are shell, liquid, dried, or frozen.
• Row crops payments will equal the greater of:

1. $15 per acre of eligible crop; or
2. Eligible acres of crops multiplied by the nationwide crop marketing percentage multiplied by crop-specific payment rate multiplied by the producer’s weighted 2020 actual production history approved yield.

• Dairy payments equal the sum of:

1. Producer’s total milk production from April 1, 2020 to August 31, 2020 multiplied by $1.20 per hundredweight; and
2. Producer’s estimated milk production for September 1 to December 31 multiplied by $1.20 per hundredweight.

The estimated milk production is calculated by multiplying the daily average production from April 1 to August 31 by 122. A good estimate of the total dairy payment amount is $2.16 per hundredweight multiplied by milk production from April through August.

• Livestock payments are equal to the maximum owned inventory (excluding breeding stock) on a date selected by the producer between April 16, 2020 and August 31, 2020 multiplied by the number of payment limitations for the producer multiplied by $55 per head for beef cattle, $23 per head for hogs and pigs, or $27 per head for lambs and sheep.

Flat-Rate Crops

Crops that do not meet the 5% decline trigger or do not have available data are categorized as flat-rate crops. They include, alfalfa, amaranth grain, buckwheat, canola, ELS cotton, crambe, einkorn, emmer, flax, guar, hemp, indigo, industrial rice, kenaf, Khorasan, millet, mustard, oats, peanuts, quinoa, rapeseed, rice, sweet rice, wild rice, rye, safflower, sesame, speltz, sugar beets, sugarcane, teff, and triticale.

The payments are simply $15 per acre.

Sales Commodities

Sales commodities eligible specialty crops, including most fruits, vegetables not already listed, horticulture, tree nuts, honey, maple sap, and indigo. For a full list of specialty crops, please click here.

• Fruits, vegetables, horticulture, tree nuts, honey, and maple sap payments are equal to:

1. The amount of the producer’s sales in 2019 times
2. The payment rate for the range:

2019 Sales Range1	Percent Payment Factor for the Producer's 2019 Sales of Eligible Commodities Falling in the Range
$0 to $49,999	10.6%
$50,000 to $99,000	9.9%
$100,000 to $499,999	9.7%
$500,000 to $999,999	9.0%
Sales over $1 million	8.8%

​​​If you have questions about this article or need help applying for CFAP 2, please contact your Foster Swift attorney or a member of our Agri-Business team.

¹ See https://www.farmers.gov/cfap/specialty