Answers to common questions on CFAP Payments

By Kent Thiesse

The sign-up period for the Coronavirus Food Assistance Program (CFAP) payments began on May 26 at local Farm Service Agency (FSA) offices and will continue through August 28, 2020. Currently, FSA offices are open for business by phone appointment only; however, the application process is fairly easy for producers to complete.

Producers of commodities that new to FSA programs will have some additional required FSA forms to complete to be eligible for CFAP payments. Farmers that already have completed necessary FSA farm program eligibility forms will be able to complete the application on-line. The CFAP application form (AD-3114), calculator and other details are available at www.farmers.gov/CFAP.

Since the announcement of the CFAP program sign-up and the initiation of the CFAP payments, several questions have arisen regarding CFAP payment eligibility and calculations. Following is a summary of some of the frequent questions regarding CFAP payments:

  • What additional FSA forms do I need to complete to be eligible for CFAP payments if I am a new producer to FSA programs?  

For producers that normally enroll in farm programs or utilize other FSA services, the FSA offices likely already have most of the background information needed to apply for CFAP payments. For producers that are new to utilizing FSA programs and services, they may need to complete all or some of the following FSA forms:

CCC-901 — Identifies all members of a farm or ranch that is a legal entity, including name, address, 

                      and tax identification number.

CCC-902 — Farm operating plan for payment eligibility.

CCC-941 — Reports the adjusted gross income (AGI) to determine payment eligibility.

CCC-942 — Reports the amount of the AGI that is derived from farming.

AD-1026 — Ensures compliance with highly erodible land and wetland conservation practices.

SF-3881 — Collects customer banking information to allow FSA to direct deposit CFAP payments.

All of the listed FSA forms, as well as the CFAP calculator and application form are available at www.farmers.gov/CFAP.

  • What commodities are eligible for CFAP payments ?

The following field crop, livestock, and specialty crops are eligible for CFA payments:

Field Crops — Corn, soybeans, spring wheat, drum wheat, sorghum, oats, malting barley, canola, upland cotton, millet, and sunflowers.

Livestock — Cattle, hogs, sheep, wool, and dairy.

Specialty Crops — Numerous fruits, vegetables, nuts, and other specialty crops are eligible.

For a complete list, go to www.farmers.gov/CFAP.

 

  • Are breeding animals eligible for CFAP livestock payments?

Following is a breakdown of the eligibility of various livestock species, which were in inventory from April 16 to May 14, regarding breeding animal eligibility for CFAP payments ……

  • Cattle — Beef cows and bred heifers are eligible to be counted as inventory for CCC payments.   Hogs — Sows and bred gilts are eligible to be counted as inventory for CCC payments.
  • Sheep — Breeding ewes less than two years old are eligible to be counted for CCC payments.

Any breeding stock that was sold for market between January 15 and April 15 would be eligible for the CARES funding portion of CFAP payments. Dairy cows or heifers are not eligible to be counted as breeding stock. Dairy CFAP payments are based on milk production during the first quarter of 2020.    

                                         

  • Is there a detailed explanation available for the CFAP payment formula for field crops?

There has been a lot of misunderstanding of the CFAP calculations for field crops. Following is a bit more detailed explanation:

The CFAP payments are calculated from two different funding sources, CARES Act funds and CCC funds, with different payment rates, which are then combined into a single CFAP payment.

The eligible bushels for CFAP payments with both the CARES and CCC payment formulas are based on the lesser of 50 percent of the verified 2019 production for a crop, or the unpriced bushels in inventory on January 15, 2020.

The CARES and CCC payments are then paid on 50 percent (.50) of the eligible bushels.

The initial CFAP payment will be 80 percent (.80) of total eligible CFAP payment. The remaining 20 percent (.20) may be made later, as additional funds become available.

Following are the CFAP payment rates for corn, soybeans and wheat: 

Corn — CARES rate = $.32 per bushel; CCC rate = $.35 per bushel

Soybeans — CARES rate = $.45 per bushel; CCC rate = $.50 per bushel

Spring Wheat — CARES rate = $.18 per bushel; CCC rate = $.20 per bushel

CFAP payment examples for corn and soybeans:

A crop producer that produced 200,000 bushels of corn and 60,000 bushels of soybeans in 2019 and had 150,000 bushels of corn and 20,000 bushels of soybeans as unpriced inventory on 1-15-20.

Payment formulas are as follows:

 Corn — 100,000 Bu. eligible. (200,000 Bu. x .50) is less than 150,000 Bu. (inventory on 1-15-20).

CFAP = 100,000 Bu. x .50 = 50,000 Bu. x $.32/Bu. = $16,000 x .80 = $12,800 

CCC = 100,000 Bu. x .50 = 50,000 Bu. x $.35/Bu. = $17,500 x .80 = $14,000

Total Initial Payment = $26,800

Soybeans — 20,000 Bu. eligible. Inventory on 1-15-20 is less that (60,000 Bu. x .50)

CFAP = 20,000 Bu. x .50 = 10,000 Bu. x $.45/Bu. = $4,500 x .80 = $3,600

CCC = 20,000 Bu. x .50 = 10,000 Bu. x $.50/Bu. = $5,000 x .80 = $4,000         

Total Initial Payment = $7,600

  • For CFAP payment eligibility, what is the definition of “unpriced” grain?

USDA has released the following clarification regarding grain contracts or risk management strategies (entered into on or before 1-15-20) that are either “eligible” or “not eligible” for CFAP payments…

Eligible for CFAP Payments                      

Inventory with no price established

Delayed Price Contract

Deferred Price Contract 

Basis Contract  

Basis-Fixed Contract    

Not Eligible for CFAP Payments

Cash Contract Hedge-to-Arrive Contract       

Futures Contract Forward Price Contract

Futures Fixed Contract Fixed Price Contract 

Options Contract Minimum Price Contract 

Windows Contract Cash Forward Contract

  • Where can producers get more details regarding CFAP enrollment and payments?

CFAP applications will be made through local FSA offices. The CFAP payment calculator, application form, and other information are available on the FSA CFAP website at www.farmers.gov/CFAP

I have created an information sheet on 2020 CFAP Payments, email me if you’d like to see it. 

For additional information email Kent Thiesse, Farm Management Analyst and Senior Vice President, MinnStar Bank, Lake Crystal at kent.thiesse@minnstarbank.com.  

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