On May 19, 2020, U.S. Secretary of Agriculture Sonny Perdue announced the Coronavirus Food Assistance Program (CFAP). The CFAP will provide up to $16 billion worth of direct relief payments to American farmers and ranchers who have suffered a 5% or greater price decline as a result of the coronavirus outbreak.
The program is providing vital financial aid to agricultural producers who, in addition to a price decline, face additional significant setbacks as a result of decreased demand, surplus production, shipping disruptions and added costs for marketing of commodities.
The CFAP receives funding from two separate sources. The first is $9.5 billion provided in the Coronavirus Aid, Relief, and Economic Stability (CARES) Act. This funding is eligible to farmers who suffered losses due to price declines and/or specialty crop spoilage between mid-January 2020 and mid-April 2020. The second source of funding uses $6.5 billion from the Commodity Credit Corporation Charter Act to compensate agricultural producers for losses due to ongoing market disruptions.
More specific information and eligibility can be found here pertaining to agricultural producers related to:
- Non-specialty crops and wool
- Specialty crops
There is a payment limitation of $250,000 per person or entity, which applies to all entities combined. Corporations, limited liability companies and limited partnerships may qualify for additional funding if members are actively providing personal labor or management for the farming operation.
Producers will be asked to certify that they meet the Adjusted Gross Income limitation of $900,000, unless farming, ranching or forestry-related operations comprise at least 75% of their income. Additionally, producers must be in compliance with Highly Erodible Land Conservation (HELC) and Wetland Conservation (WC) provisions.
The USDA is currently accepting applications (as of May 26, 2020) from agriculture-related producers who have suffered losses. Applications are processed through the Farm Service Agency (FSA). Additional information and application forms can be found here: https://www.farmers.gov/cfap
Agricultural producers of all eligible commodities are instructed to apply through their local FSA office, which may request documentation to support their application and eligibility. An acreage report is not currently needed at the time of application and a USDA farm number may not be immediately required.
Applications will be accepted through August 28, 2020.
In order to ensure the availability of funding across the country, producers will receive 80% of their maximum total payment upfront upon approval of their application. The remaining 20% will be paid at a later date as funds remain available.
Farmers to Families Food Box Program
In addition to the support provided by the CFAP, the United States Department of Agriculture (USDA)’s Farmers to Families Food Box program is purchasing $3 billion worth of produce, dairy and meat from farmers and ranchers to deliver to American families in need. The program is partnering with food distributors across the country who have seen significant setbacks as a result of the closure of many restaurants and other food service entities due to COVID-19.
Disclaimer: This communication is intended to provide general information on legislative COVID-19 relief measures as of the date of this communication and may reference information from reputable sources. Although our Firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. As legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that may modify some of the provisions in this communication. Some of those modifications may be significant. As such, be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.