USDA Secretary Sonny Perdue announced the Coronavirus Food Assistance program (CFAP) on April 17, 2020. CFAP will use funding and authorities provided in the Coronavirus Aid, Relief, and Economic Security Act, the Families First Coronavirus Response Act (CARES Act), and other USDA existing authorities (including the Commodity Credit Corporation Charter Act or CCC). This $19 billion immediate relief program includes direct support to agricultural producers as well as the Farmers to Families Food Box Program. We posted information about that program previously, you can read more HERE.
Eligible farmers and ranchers will receive one CFAP payment, drawn from two possible funding sources. The first source of funding is $9.5 billion in appropriated funding provided in the CARES Act and compensates farmers for losses due to price declines that occurred between mid-January 2020, and mid-April 2020 and for specialty crops for product that was shipped and spoiled or unpaid product. The second funding source uses the Commodity Credit Corporation Charter Act (CCC Act) to compensate producers for $6.5 billion in losses due to on-going market disruptions.
Beginning May 26, USDA’s Farm Service Agency will be accepting applications from agricultural producers who have suffered losses. The application form and a payment calculator for producers will be available online once signup begins. A video preview of the payment calculator is currently available.
Participation in the Paycheck Protection Program (PPP) and / or the Economic Injury Disaster Loan Program (EIDL) does not impact eligibility to apply for direct relief through CFAP.
Who is Eligible?
Eligible producers (person or legal entity) of specified agricultural commodities outlined above who have suffered a five percent-or-greater price decline as a result of the COVID-19 pandemic, and who face substantial marketing costs for inventories, are eligible for CFAP payments.
To be eligible for payments, a person or legal entity must have an average adjusted gross income of less than $900,000 for tax years 2016, 2017, and 2018. However, if 75 percent of their adjusted gross income comes from farming, ranching, or forestry, the AGI limit of $900,000 does not apply.
Additional marketing costs from COVID-19 are due to surplus production or to disruptions to shipping patterns and the orderly marketing of commodities.
How Much Am I Eligible For?
CFAP payments are subject to a per person and legal entity payment limitation of $250,000. This limitation applies to the total amount of CFAP payments made with respect to all eligible commodities. These payments are not a loan and do not need to be repaid.
Unlike other FSA programs, special payment limitation rules will be applied to participants that are corporations, limited liability companies, and limited partnerships (corporate entities). These corporate entities may receive up to $750,000 based upon the number of shareholders (not to exceed three shareholders) who contribute at least 400 hours of active person management or personal active labor.
To ensure the availability of funding throughout the application period, 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 as funds remain available.
Commodities that did not suffer a five percent-or-greater price decline from mid-January 2020 to mid-April 2020 are not eligible for 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 (ELS) cotton, alfalfa, forage crops, hemp, and tobacco.
However, for all commodities except for hemp and tobacco, USDA may reconsider the excluded commodities if credible evidence is provided that supports a five percent price decline.
How to Apply
The application opens May 26th and closes August 28th through the Farm Service Agency (FSA). The USDA has offered guidance on preparing in advance by gathering information and documentation on the following:
- Name and address
- Personal information, including your Tax Identification Number
- Farm operating structure
- Adjusted Gross Income compliance certification to ensure eligibility
- Direct deposit to enable payment processing
The application will be available for download May 26, 2020. Applications may be submitted via mail, fax, hand delivery, or via electronic means. Contact your local service center for more information.
Payment calculations are determined by the agricultural commodity and vary significantly based on the specific commodity. Additional information on those calculations and rates can be found in the recently posted RULE and the FAQ which can be found below.
Lenders across America will likely produce a collective sigh of relief that they have not been tasked with implementing the program as they slowly return to normalcy as PPP applications wind down.
When Can I Expect the Money?
Payments are expected “shortly after the application is approved by the FSA,” according to the FAQ.
Like other COVID-19 Programs, the USDA has posted a FAQ resource to address commonly asked questions about the program. You can find that resource HERE.
Like other Relief programs, we expect Terms & Conditions and self certifications that are meant to expedite the process but will likely create confusion and concern for applicants. We will monitor the release of information and will be happy to discuss those issues with you as you apply.
If you have questions or concerns about the Farmers to Families Food Box Program, e-mail us at firstname.lastname@example.org.
Source: Farmers.gov (a resource provided by the United States Agricultural Department)