Farmers and agricultural producers are no strangers to difficulty. Whether their business is being threatened by trade wars, flooding or drought, these producers work to ensure the nation’s food supply. However, the COVID-19 pandemic has compounded their challenges, and the federal government is stepping in to provide assistance.
In total, the federal government is mobilizing $19 billion in aid to provide relief for farmers and producers impacted by the COVID-19 pandemic. Of that total, $16 billion will come in the form of direct payments from the Coronavirus Food Assistance Program (CFAP).
On Tuesday, May 19, U.S. Secretary of Agriculture Sonny Perdue announced that the Farm Service Agency will begin accepting applications from farmers for the CFAP program on Tuesday, May 26.
“America’s farming community is facing an unprecedented situation as our nation tackles the coronavirus. President Trump has authorized USDA to ensure our patriotic farmers, ranchers, and producers are supported and we are moving quickly to open applications to get payments out the door and into the pockets of farmers,” Perdue said in a statement. “These payments will help keep farmers afloat while market demand returns as our nation reopens and recovers. America’s farmers are resilient and will get through this challenge just like they always do with faith, hard work, and determination.”
Funding for the CFAP program comes from both the Coronavirus Aid, Relief and Economic Stability (CARES) Act and the Commodity Credit Corporation Charter Act. The CARES Act will provide $9.5 billion, which will be used to provide compensation for losses “due to price declines that occurred between mid-January 2020, and mid-April 2020 and provides support for specialty crops for product that had been shipped from the farm between the same time period but subsequently spoiled due to loss of marketing channels,” according to a USDA release. The Commodity Credit Charter Act will provide $6.5 billion for losses caused by “ongoing market disruptions.”
Commodities eligible for CFAP payments include malting barley, canola, corn, upland cotton, millet, oats, soybeans, sorghum, sunflowers, durum wheat, and hard red spring wheat.Livestock, such as cattle, hogs and sheep (lamb and yearlings only) are also eligible for CFAP payments. Dairy is also eligible for payments, as is wool.
Multiple commodities, however, are not currently eligible for payments. These include 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. According to the USDA, these commodities, excluding hemp and tobacco, could be reconsidered.
The CFAP payments are capped at $250,000 per individual or legal entity. Exceptions apply for corporation, limit liability companies and limited partnerships, which can receive up to $750,000 based on the number of shareholders.
In order to be eligible for CFAP, producers have incurred a five-percent decline or greater as a result of the COVID-19 crisis and face “substantial marketing costs for inventories.” They also must have an average adjusted gross income of less than $900,000 for the 2016, 2017 and 2018 tax years. This income limit does not apply if 75 percent of their adjusted gross income comes from farming, ranching or forestry.
If a producer receives CFAP funding, 80 percent of their maximum total funding will be disbursed upon approval of the application with the remaining portion to be “paid at a later date as funds remain available.”
To prepare for the application, the USDA is advising that producers speak with their local FSA office and have the following information ready:
- 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 remaining $3 billion of farm aid will be used to purchase produce, dairy and meat and to deliver these goods to Americans in need. This is part of the USDA’s Farmers to Families Food Box program, which is aiming to stem both food insecurity and support farmers whose regular partners, such as restaurants, have been impacted by the economic downturn.
This program is aiming to purchase $461 million fresh fruits and vegetables, $317 million of dairy products, $258 million in meat and $175 million of a combination of produce, dairy or meat.