Wandro & Associates
What Farmers Need to Know About the Coronavirus Food Assistance Program (CFAP)
The Coronavirus Food Assistance Program (CFAP), was announced in mid-April by USDA Secretary Sonny Perdue to assist farmers who have been impacted by the Coronavirus pandemic. This $19 billion Program will provide direct relief to farmers who have experienced price declines due to COVID-19 and will support the Farmers to Families Food Box Program to bring agricultural products to families in need.
Who is Eligible for CFAP?
CFAP will provide financial assistance to farmers who have suffered a 5% or greater loss between mid-January to mid-April 2020 due to market chain disruptions caused by COVID-19, and who face substantial marketing costs for inventory.
Persons who are eligible to participate in CFAP include any individual that shares in the risk of producing a crop or livestock, including farmers who run community supported agriculture (CSA) operations. Participation in other USDA programs is not a prerequisite to participate in CFAP. Participation in the SBA’s Paycheck Protection Program (PPP) or Economic Injury Disaster Loan program also does not impact your eligibility for CFAP benefits.
A person applying for CFAP must not have an Adjusted Gross Income (AGI) that exceeds $900,000 (using the average for 2016, 2017, and 2018 tax years) NOTE: this does not apply if 75% of the person’s income comes from farming or ranching.
The applicant must still comply with the conservation compliance provisions.
The applicant must not have a controlled substance conviction.
Eligible Commodities Include:
Non-specialty crops such as corn, oats, and soybeans
Wool and Dairy
Livestock such as cattle, hogs, and sheep
Specialty crops such as fruit, vegetables, and nuts
A complete list of eligible commodities can be found on USDA’s website.
Commodities such as sheep more than two years old, poultry and eggs, and hemp are not included in CFAP. The ethanol industry is also not included in CFAP relief, but direct payments will still be made to corn producers.
When and How to Apply for CFAP Assistance
USDA’s Farm Service Agency (FSA) will be accepting applications beginning on May 26th, 2020 through August 28th, 2020. Applicants will be able to download the application tool and other forms at farmers.gov/cfap beginning May 26th, 2020.
To apply for CFAP assistance, contact your local FSA office and set up a phone appointment with a representative. Your FSA representative will walk you through the application process. In order to be prepared for your call to your FSA office, consider having the following information available:
Tax Identification Number (TIN)
Farm operating structure
Adjusted Gross Income
Your direct deposit information for payment processing
The following forms are also required to be eligible for CFAP benefits:
CCC-901 (Identifies members of a farm or ranch that is a legal entity)
CCC-941 (reports your average gross income)
CCC-942 (form for AGI over $900,000)
AD-1026 (ensures compliance with conservation provisions)
AD-2047 (Basic customer contact information)
SF-3881 (banking information for direct deposit payments)
NOTE: If you are an existing customer, this information is likely already on file at your local FSA office. To ensure privacy and security, make sure to contact your FSA representative before sending any forms with personal identifying information.
Payments: Limits, Structure, and Calculations
Funding for CFAP comes from the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) with $16 billion designated for direct payments to farmers. Although the breakdown of this funding has not been disclosed by USDA, cattle and row crops such as corn and soybeans are expected to take up over 50% of this funding.
Individuals who apply for CFAP benefits and are approved can to receive up to $250,000 per person or legal entity (this includes the total for all CFAP payments with respect to all eligible commodities). There are different payment limits for corporations, LLCs, and other corporate entities which can be found on the USDA website. Upon approval of the application, applicants will receive 80% of their maximum total payment and will receive the remainder of the payment at a later date as funds remain available. Applicants can expect payments to be made within seven to ten days from when their application is approved by FSA.
USDA will be using two calculations when determining the payments that will be sent out. The first calculation will come from the losses sustained January 1 through approximately April 15. Farmers will be compensated 85% of the price loss during this period. The second calculation comes from the losses sustained from approximately April 15 through the following two quarters. Producers will be compensated 30% for the expected losses.
The Farmers to Families Food Box Program
The United States Department of Agriculture is partnering with national, regional, and local food banks and food distributors to purchase $3 billion worth of fresh meat, dairy, and produce for Americans in need. Distributors will provide a pre-approved box of these agricultural products to food banks and other nonprofits who will in turn provide these boxes to families in need between May 15, 2020 and June 30th, 2020 and may be extended further. Farmers who want to participate in this program can view solicitations by the Agricultural Marketing Service and submit bids for those products in need. More information about solicitations can be found here.
Short clip about the application process and how to use CFAP payment calculator (available on USDA website May 26th, 2020).
FAQ for CFAP application and eligibility.
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This Wandro & Associates Update is intended to inform firm clients and friends about legal developments, including recent decisions of various courts and administrative bodies. Nothing in this Practice Update should be construed as legal advice or a legal opinion, and readers should not act upon the information contained in this Update without seeking the advice of legal counsel.