CFAP Payment Breakdown

USDA Spells Out Payment Details and Formula for Coronavirus Aid

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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The American Farm Bureau Federation highlighted the CFAP payment rate under funds provided by the CARES Act and funds from the Commodity Credit Corp. for each commodity. (Chart courtesy of AFBF)

GLENWOOD, Iowa (DTN) -- USDA officials on Tuesday provided more extensive details on the payment plan for producers under the Coronavirus Food and Aid Program (CFAP).

The payment details are complicated, depending on whether livestock or crops are involved and whether producers had sold their commodities within a timespan from Jan. 15 to April 15 of this year.

Farmers and livestock producers will initially receive 80% of their calculated payment under CFAP. USDA right now has $9.5 billion from the Coronavirus Aid, Relief and Economic Security (CARES) Act and $6.5 billion in funds from the Commodity Credit Corp. USDA officials on Tuesday acknowledged the aid available right now will not meet all of producers' expected losses.

"To get the program out quickly, we're using all of those resources that we can," USDA Chief Economist Robert Johansson said on a call with reporters Tuesday. "But it certainly will not rise to the level of the damages we're expecting to see for agriculture and producers as a result of the coronavirus."

USDA is expected in July to have at least another $14 billion to tap from the Commodity Credit Corp., barring any further additional legislation passed by Congress.

Local Farm Service Agency offices can start accepting applications on Tuesday, May 26. Farmers and livestock producers will have to set up phone-call appointments with FSA staff because they are not accepting in-person visits due to coronavirus restrictions. Producers can also communicate with staff through email or go online to fill out applications.

LIVESTOCK

Cattle producers will be the largest recipients of aid at roughly $5 billion. The payments break down several different ways depending on the type of cattle, if they were sold from Jan. 15 to April 15:

-- Fed cattle for slaughter: $214 per head.

-- Slaughter cows and bulls: $92 a head.

-- Feeder cattle under 600 pounds: $102 a head

-- Feeders over 600 pounds: $139 a head

-- All other cattle: $102 a head

For payments, USDA will require producers to document the number of head a producer sold from that Jan. 15-to-April 15 time frame.

Unpriced cattle in inventory from April 16 to May 14 receive a flat rate from the Commodity Credit Corp. of $33 a head. Producers can basically pick a date of their choosing in that time frame and report their inventory to USDA.

Pigs sold from Jan. 15 to April 15 have a payment rate of $28 a head while hogs sold during that time have a payment rate of $18 a head. Unsold hogs and pigs in inventory from April 16 to May 14 have a payment rate of $17 a head. USDA also right now does not have any payment indemnity in the CFAP for euthanized hogs. USDA officials repeatedly noted the only aid for those livestock would be support for disposal from USDA's Natural Resources Conservation Service.

Lambs and yearlings also have a CARES payment of $33 a head and a CCC payment of $7 a head.

Dairy farmers will be paid on a certification of their first-quarter production with $4.71 per cwt coming from the CARES Act. A second payment based on second-quarter production will also be multiplied by 1.014, then a payment will be made for $1.47 per cwt from the Commodity Credit Corp.

Left out of the program were contract poultry growers. USDA officials said farmers would have to show ownership of the commodity to receive a payment.

COMMODITY CROPS

For commodity crop producers, payments are eligible for unpriced crops, or "inventory held subject to price risk" that a farmer held on Jan. 15, 2020.

"If you already sold it ahead, you set a price on it, then that's not being impacted by the reduction of prices," said Bill Northey, USDA's undersecretary for farm production and conservation.

The inventory will be self-certified, Northey said, though there will be some compliance audits conducted, he said.

"We want it to be correct, but we want to avoid large amounts of paperwork at the county office," he said. Northey added, "We just need a final inventory."

A producer will be paid on that commodity in storage, but the inventory cannot be higher than 50% of total 2019 production that the producer reported to the Farm Service Agency. Effectively, a farmer who grew 100,000 bushels or more in 2019 and has 50,000 bushels of 2019 corn in storage, unsold, on Jan. 15 would be paid on the 50,000 bushels

Yet, it is more complicated the way the rule is spelled out.

Half of that 50,000 bushels would be paid 32 cents from the CARES Act, and the other 25,000 bushels would be paid 35 cents from the Commodity Credit Corp. Essentially, USDA officials explained, when it is boiled down, the 50,000 bushels would be multiplied by 33.5 cents. That breaks down to 50,000 x 0.335, or $16,750.

For soybeans, the payment rates are 45 cents a bushel from the CARES Act and 50 cents a bushel from CCC. A farmer with 50,000 bushels unsold in storage from the 2019 harvest on Jan. 15 would be paid on 25,000 bushels at 45 cents a bushel. The other 25,000 bushels would be paid at 50 cents a bushel. That equates to $23,750 (50,000 x 0.475).

For hard red spring wheat, the payments are set at 18 cents a bushel from CARES and 20 cents from CCC. Durum wheat is 19 cents from CARES and 20 cents from CCC. Barley is 34 cents from CARES and 37 cents from CCC. Upland cotton is 9 cents a pound from CARES and 10 cents a pound from CCC.

PAYMENT LIMIT CHANGES

Payment limits have been adjusted under the CFAP as well. Payment limits are raised to $250,000 per individual, raising the limit for a married couple to $500,000.

Another change affects corporations, which typically receive one payment limit. Under CFAP, corporations, limited liability corporations and partnerships with members and shareholders can receive up to three payments if they have members or shareholders who contribute at least 400 hours of active personal labor or management. So those corporate entities could receive a maximum of $750,000 in payments if three members can meet those actively engaged standards, Northey said.

Once USDA determines a producer's payment, the department will make a payment of up to 80% of the total within a week.

"We believe those payments can go out within a week of when we open up here," Northey said.

Another 20% payment will be held back for later in the year, depending on when funds become available.

Payment adjusted gross income is capped at $900,000 for producers, unless they can show at least 75% of their income is derived from farming, ranching or forestry.

Greg Ibach, undersecretary for marketing and regulatory programs at USDA, said specialty crop producers -- fruit and vegetable growers -- would be paid based on multiple factors. Producers would receive a payment for crops sold from Jan. 15 to April 15. A different payment is established for specialty crop producers who harvested and shipped crops, but they spoiled because of lost markets over that time.

Ibach also said USDA is looking for details from farmers on the impacts they received raising nursery products or aquaculture products, if those producers can show a 5% market decline for their products.

More information on the Coronavirus Food and Aid Program, including ways to sign up, can be found at www.farmers.gov/cfap.

Chris Clayton can be reached at Chris.Clayton@dtn.com

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Chris Clayton