On Tuesday, May 19th, President Trump and Secretary Perdue announced the details of the Coronavirus Food Assistance Program (CFAP). The $16 billion food aid program is aimed at supporting a broad range of farms and agriculture enterprises disrupted and injured by the ongoing COVID-19 pandemic.
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 2015, 2016, and 2017. However, if 75 percent of their adjusted gross income comes from farming, ranching, or forestry, the AGI limit of $900,000 does not apply.
Persons and legal entities also must:
- comply with the provisions of the “Highly Erodible Land and Wetland Conservation” regulations, often called the conservation compliance provisions;
- if a foreign person, provides land, capital, and a substantial amount of active personal labor to the farming operation; and
- not have a controlled substance violation.
CFAP Payment Limitations and Structure
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.
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.
For a corporate entity:
- With one such shareholder the payment limit for the entity is $250,000;
- With two such shareholders, the payment limit for the entity is $500,000 if at least two members contribute substantial labor or management with respect to the operation of the corporate entity; and
- With three such shareholders, the limit is $750,000 if at least three members contribute substantial labor or management with respect to the operation of the corporate entity.
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.
CFAP Payments for Non-Specialty Crops
Producers will be paid based on inventory subject to price risk held as of January 15, 2020. A single payment will be made based on 50 percent of a producer’s 2019 total production or the 2019 inventory as of January 15, 2020, whichever is smaller, multiplied by the commodity’s applicable payment rates.
Producers must provide the following information for CFAP:
- Total 2019 production for the commodity that suffered a five percent-or-greater price decline, and
- Total 2019 production that was not sold as of January 15, 2020.
The following table lists eligible non-specialty commodities and payment rates for CFAP.
Commodity | Unit of Measure | CARES Act Payment Rate | CCC Payment Rate
Barley (malting barley only) | bushel | $0.34 | $0.37
Canola | pound | $0.01 | $0.01
Corn bushel | $0.32 | $0.35
Upland Cotton | pound | $0.09 | $0.10
Millet | bushel | $0.31 | $0.34
Oats | bushel | $0.15 | $0.17
Sorghum | bushel | $0.30 | $0.32
Soybeans | bushel| $0.45 | $0.50
Sunflowers | pound | $0.02 | $0.02
Wheat, Durum | bushel | $0.19 | $0.20
Wheat, Hard Red Spring | bushel | $0.18 | $0.20