Focus on Ag: CFAP payments being made, but questions remain
Sign-up for the Caronavirus Food Assistance Program (CFAP) payments began on May 26 at local Farm Service Agency (FSA) offices and will continue through Aug. 28. The amount of CFAP payments being processed has varied from state-to-state, as well as from county-to-county within states. This is primarily due to staffing availability and other FSA program demands at local FSA offices. Farmers and ranchers are asked 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 fairly 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 the required FSA forms are completed, producers can complete the CFAP application on-line and then fax or 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 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 that were 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 considerable misunderstanding of the CFAP calculations for field crops, with many producers feeling that the official CFAP payment calculator is under-estimating the CFAP payments. However, the official FSA CFAP calculator is correct. The most common mistake being made by producers is to fully factor downward the maximum bushels on which the CFAP payments are being 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 step that is usually missed is taking the eligible bushels times 50 percent (.50) before calculating the CARES and CCC portions of the CFAP payments. The initial CFAP payment is currently being 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:
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)
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 these CFAP calculation steps are followed, the resulting CFAP initial payment should be the same as the CFAP payment that is calculated on the official FSA CFAP calculator. While there is no guarantee at this point, it is highly likely that the final 20 percent of the CFAP payments will be made, once USDA has more funding available. I have prepared an information sheet titled “2020 CFAP Payment Summary,” which is available by sending an e-mail to: email@example.com.