USDA Details CFAP 2 Aid
New Aid Package Broadens Out for More Producers, Crops and Payment Options
OMAHA (DTN) -- USDA on Friday released details about sign-up for a new round of coronavirus aid to producers for as much as $14 billion.
The announcement comes after President Donald Trump talked about the aid package at a campaign rally Thursday evening in Wisconsin. The president said his administration was providing an additional $13 billion to producers.
"I'm proud to announce that I'm doing even more to support Wisconsin farmers," Trump said at the Wisconsin event. "Starting next week, my administration is committing an additional -- you've been asking for this for a long time -- $13 billion in relief to help farmers recover from the China virus, including Wisconsin's incredible dairy, cranberry and ginseng farmers who got hurt badly. Been after that money for a long time."
The USDA announcement Friday was $1 billion higher than the president said at his rally. USDA said signup for the new Coronavirus Food Assistance Program (CFAP 2) would begin Sept. 21. Applications will be accepted through Dec. 11, 2020.
The aid package comes as USDA has highlighted farm income is rising, mainly because of government aid. USDA forecasts overall net farm income at $102.7 billion for 2020, the highest since 2014. But USDA also projects that government aid would account for $37.2 billion in 2020 as well, or roughly 36% of net farm income for producers.
The first CFAP package for coronavirus-related losses before April 15 has paid out $9.9 billion to 621,919 farmers, as of the latest payment update. Cattle, dairy, corn, hogs and soybeans are the main aid recipients. USDA had projected spending $16 billion for the CFAP. Signup for that program ended earlier this month.
Agriculture Secretary Sonny Perdue, in announcing the CFAP 2, said farmers are still facing challenges related to the pandemic. Perdue also credited President Trump for the aid, which was initially funded by Congress in an aid bill last spring.
"President Trump is once again demonstrating his commitment to ensure America's farmers and ranchers remain in business to produce the food, fuel, and fiber America needs to thrive," Perdue said. "We listened to feedback received from farmers, ranchers and agricultural organizations about the impact of the pandemic on our nations' farms and ranches, and we developed a program to better meet the needs of those impacted."
USDA stated funding for CFAP 2 will come from the Commodity Credit Corp. (CCC) and the CARES Act. Changes have been made to CFAP 2 to cover a broader set of agricultural products than the first round of aid, USDA stated.
"This program provides financial assistance that gives producers the ability to absorb increased marketing costs associated with the COVID-19 pandemic. Producers will be compensated for ongoing market disruptions and assisted with the associated marketing costs," USDA stated.
CFAP 2 will have three different categories of payments to farmers based on price triggers, flat-rate crops and overall commodity sales.
Under the price-trigger category are mainly major commodity crops that meet a 5% price decline over a specific period of time. This will include the broad range of commodities such as barley, corn, sorghum, soybeans, sunflowers, upland cotton and all classes of wheat.
The "all classes of wheat" comes after wheat-state senators and the groups representing wheat growers earlier this month had lobbied USDA that the CFAP had largely excluded roughly 70% of wheat production from aid.
Payments will be made based on 2020 planted acres for the crop -- excluding prevented planting and experimental acres. That will cut into payments in North Dakota, which has reported more than 3 million prevented planting acres, and South Dakota, which has about 1.58 million prevented planting acres. Nationally, FSA reports about 10 million prevented planting acres that would not be eligible for CFAP 2 payments.
USDA again has multiple determinations on how payments will be made with some complicated formulas steps thrown in. Payments will be the greater of:
-- Eligible acres multiplied by $15 per acre, or;
-- The eligible acres multiplied by a nationwide crop marketing percentage, multiplied by a crop-specific payment rate, and then by the producer's weighted 2020 Actual Production History approved yield. If APH is not available, then the calculation will use 85% of the 2019 Agricultural Risk Coverage-County Option (ARC-CO) benchmark yield for that crop.
For broilers and eggs, payments will be based on 75% of the producers' 2019 production.
For dairy, payment will be based on actual milk production from April 1, 2020, to Aug. 31, 2020. The milk production from Sept. 1 to Dec. 31 will be estimated by FSA.
Payments for beef cattle, hogs and pigs will be based on maximum owned inventory of eligible livestock, excluding breeding stock, on a date chosen by the producers between April 16, 2020, and Aug. 31, 2020.
For "flat-rate crops," if they cannot show a 5% price decline or do not have data for a price change, they will receive $15 an acre for eligible planted acres in 2020. These crops include alfalfa, extra-long staple (ELS) cotton, oats, peanuts, rice, hemp, millet, mustard, safflower, sesame, triticale, rapeseed, and several others, USDA stated.
"Sales commodities" include specialty crops, aquaculture, nursery crops and floral crops. Other crops include tobacco, goat milk, mink (including pelts), mohair, wool and other livestock (excluding breeding stock) not included under the price trigger category that were grown for food, fiber, fur or feathers.
Payments for those crops will be based on a sales approach, where producers are paid "based on five payment gradations associated with their 2019 sales."
Other commodities not included specifically in CFAP 2 can still petition to be included. USDA stated if a farmer has been affected since April 2020, but their commodities are not included, that they still apply for CFAP 2 aid.
Payments are capped at $250,000 per person or entity for all commodities combined. Corporations, limited liability companies and limited partnerships may qualify for higher payments based on USDA's actively engaged rules.
Producers also must certify that they meet the $900,000 limit on adjusted gross income, or at least 75% of their income is from agriculture -- farming, ranching or forestry.
Farmers can enroll in CFAP 2 through their local Farm Service Agency office.
More information can be found at www.farmers.gov/cfap.
Chris Clayton can be reached at Chris.Clayton@dtn.com
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