Signup begins for Coronavirus Food Assistance Program, producers confused by calculation

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. The amount of CFAP payments processed has varied by state and county. This is primarily due to staffing availability and other FSA program demands at local FSA offices. Farmers and ranchers will need to be patient with the processing of CFAP applications at local FSA offices. There appears to be adequate funding to cover the initial CFAP payment for all eligible CFAP requests 

The CFAP application process is relatively easy for producers to complete. For producers that are new to utilizing FSA programs and services, they will need to supply the FSA office with some additional FSA forms detailing business and personal information, adjusted gross income verification, and conservation compliance. Farmers that have participated in other USDA farm programs likely have already completed necessary FSA program eligibility forms. Once they fill out the requisite FSA forms, producers can complete the CFAP application online. They can also print and fax, or scan and e-mail it to the local FSA office. The CFAP application form (AD-3114), the CFAP calculator, other FSA forms, and other details on CFAP are available at www.farmers.gov/CFAP.

As of June 15, USDA had paid out nearly $2.9 billion in CFAP payments to producers of various agricultural commodities. The CFAP payments are intended to offer direct financial assistance to offset losses from commodity and product sales associated with the COVID-19 pandemic. There are $16 billion available for the CFAP payments, including $9.5 billion from CARES Act funds and $6.5 billion from USDA Commodity Credit Corporation (CCC) funds. There should be adequate funds to cover the initial round of CFAP payments. Following is the early breakdown of CFAP payment amounts (as of 6-15-20), including the average CFAP payment per eligible producer: 

  • Non-Specialty (Field) Crops — Nearly $758.5 million (26%); average payment = $6,747 
  • Specialty Crops (Fruits, Vegetables & Nuts) — Approx. $53.2 million; average payment = $35,234 
  • Livestock (Cattle, Hogs & Sheep) — Just over $1.4 billion; average payment = $9,527
  • Dairy — Nearly $667 million; average payment = $55,194

There are still numerous questions regarding which commodities are eligible for CFAP payments. Following is a summary of the non-specialty (field) crops, livestock, and specialty crops that are eligible for CFA payments:

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

Livestock – Cattle, hogs, sheep (including wool), and dairy. (Beef cows and calves, bred heifers, sows and gilts, etc., are counted as CCC inventory.) 

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

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

There also continues to be a considerable misunderstanding of the CFAP calculations for field crops, with many producers feeling that the official CFAP payment calculator is underestimating the CFAP payments. 

However, the official FSA CFAP calculator is correct. The most common mistake made by producers is to fully factor downward the maximum bushels on which the CFAP payments will be made. Initially, the eligible bushels for CFAP is the lesser of 50 percent (.50) of the total 2019 production for a crop or the bushels of unpriced inventory on 1-1-20. The CFAP payment calculation is the step that producers usually miss – they need to ensure they take the eligible bushels times 50 percent (.50) before calculating the CARES and CCC portions of the CFAP payments. The initial CFAP payment made is then 80 percent (.80) of the total calculated CFAP payment. 

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, based on the CFAP payment formula. Following is a bit more detailed explanation of CFAP payment calculations for field crops:

Step 1 –The eligible bushels or pounds for CFAP payments with both the CARES and CCC payment formulas will be the lesser of 50 percent of the verified 2019 production for a crop, or the unpriced bushels in inventory on January 15, 2020.

Step 2 – The CARES and CCC payments are paid on 50 percent (.50) of the eligible bushels or pounds (from Step #1).

Step 3 – Multiply the bushels or pounds (from Step #2) times the CARES payment rate times 80 percent (.80) to get the initial CARES payment amount. (CARES payment rates are $.32/bu. for corn; $.45/bu. for soybeans; $.18/bu. for spring wheat.)

Step 4 – Multiply the bushels or pounds (from Step #2) times the CCC payment rate times 80 percent (.80) to get the initial CCC payment amount. (CCC payment rates are $.35/bu. for corn; $.50/bu. for soybeans; $.20/bu. for spring wheat.)

Step 5 – Add the initial CARES payment amount (from Step #3) and the CCC initial payment amount (Step #4) to get the total initial CFAP payment amount for a crop. 

CFAP payment example: 

A crop producer 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.

Eligible bushels 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 payment bushels would be 50,000 bushels (100,000 Bu. x .50)

Soybeans – 20,000 Bu. eligible. Inventory on 1-15-20 is less that (60,000 Bu. x .50) CFAP payment bushels would be 10,000 bushels (20,000 Bu. x .50)

Payment formulas are as follows:

Corn – CARES = 50,000 Bu. x $.32/Bu. = $16,000 x .80 = $12,800  CCC = 50,000 Bu. x $.35/Bu. = $17,500 x .80 = $14,000

Total Initial Payment = $26,800 (remaining payment =$6,700)

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

CARES = 10,000 Bu. x $.50/Bu. = $5,000 x .80 = $4,000                                                                                Total Initial Payment = $7,600 (remaining payment= $1,900)

If producers follow these steps for CFAP calculation, the resulting CFAP initial payment should be the same as the CFAP payment produced by the official FSA CFAP calculator. While there is no guarantee at this point, it is highly likely that the final 20 percent of CFAP payments will be sent once USDA has more funding. Kent Thiesse has prepared an information sheet titled “2020 CFAP Payment Summary”, send me an email to receive a copy. 

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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