CFAP2 Payments Announced: Summary of Applicability

Reading Time: 3 minutesIt has been the talk of the Ag sector throughout the last few weeks: expectations for another round of Coronavirus Food Assistance Program (CFAP) for producers affected by the COVID-19 pandemic. President Trump gave official confirmation in a campaign rally speech in Wisconsin on September 17. While the original CFAP1 program fell short of payment estimates and frustrated many producers with less help than expected, CFAP2 was officially released by the USDA (on September 18) – just one week after the CFAP1 application deadline. This new round of payments will have $14 billion available, and will be provided to producers who have been affected by marketing disruptions and extra marketing costs due to COVID-19. CFAP2: 3 Payment Commodity Categories

1. Price Trigger Commodities – Eligible commodities that fall into this category saw a measurable, 5% price decline over a period of time identified by USDA. Based on 2020 acres.
2. Flat-rate Commodities – Eligible commodities did not have a 5% price decline of the specified period or data was insufficient to calculate. Based on 2020 acres.
3. Sales Commodities – Based on 2019 sales and calculated in five payment gradients.

The payment limit of $250,000 per person/entity and Producer Eligibility remains the same as CFAP1. The major difference is that ‘Trusts and Estates,’ that are producers, will be eligible for increased payment limits (similar to LLCs, Corps, LPs, etc. in CFAP1). In addition, Trusts and Estates will be eligible for increased payments under CFAP1. Signup begins September 21 and runs through December 11. You will be able to apply online. Price Trigger Commodities The crops in this “bucket” will have payments made based on planted acres in the 2020 crop year. This will not include prevented plant or “experimental acres.” Payments will equal planted acres multiplied by the greater of:

• $15/acre
• Nationwide crop marketing percentage, multiplied by a crop-specific payment rate, multiplied by the producers weighted 2020 Actual Production History (APH) yield

APH will be obtained from Federal Crop Insurance and be weighted for all applicable years for all acres nationwide. If the APH is not available for the calculation, 85% of the 2019 benchmark yield from ARC-Co will be used. Eligible crops under the payment method will be: Any APH above the yield in this chart will result in a payment over $15 Broiler and egg eligible producers will be paid based on 75% of their 2019 production Broilers will have the 75% multiplied by $1.01 per bird. Shell eggs will be paid $0.05/dozen, Liquid Eggs- $0.04/lb, Dried Eggs- $0.14/lb, and Frozen Eggs- $0.05/lb; all multiplied by 75% of 2019 Production. Cow Milk dairy producers will be paid $1.20 per hundredweight based on:

• Actual production from April 1 to August 31, 2020 and
• Average daily production from April 1 to August 31, 2020, multiplied by 122

Beef cattle, hogs, pigs, lamb, and sheep producers will have the opportunity to pick the day with the highest inventory between April 16 and August 31, 2020 and multiply that inventory by:

• $55/head for beef cattle (excluding breeding stock)
• $23/head for hogs and pigs (excluding breeding stock)
• $27/head for lambs and sheep (excluding breeding stock)

Flat-rate Crops Similar to Price Trigger Commodities, Flat-rate Crops will be based on the same eligible acres, but will be calculated under a flat $15/acre payment. Commodities include: alfalfa, amaranth grain, buckwheat, canola, Extra Long Staple (ELS) cotton, crambe (colewort), einkorn, emmer, flax, guar, hemp, indigo, industrial rice, kenaf, khorasan, millet, mustard, oats, peanuts, quinoa, rapeseed, rice, sweet rice, wild rice, rye, safflower, sesame, speltz, sugar beets, sugarcane, teff, and triticale. Sales Commodities Many commodities will be paid on a “declining block format.” Producers’ payments will be based on 2019 sales and will be calculated at different rates for each range they fall into. Sales must be raw and not include the value added after harvest. These commodities include:

• Wool
• Goat Milk
• Tobacco
• Mohair
• Eligible Fruits
• Vegetables
• Horticulture
• Tree nuts
• Honey
• Maple Syrup
• Nursery
• Cut Flowers and Greenery
• Cactus and Christmas Trees
• Aquaculture
• Specialty Livestock: alpacas, bison, buffalo, beefalo, deer, ducks, elk, emus, geese, goats, guinea pigs, llamas, mink (including pelts), mohair, ostrich, pheasants, quail, rabbits, reindeer, and turkey

Producers will receive a payment of:

• 10.6% of sells between $0-$49,999
• 9.9% of sells between $50,000-$99,999
• 9.7% of sells between $100,000- $499,999
• 9.0% of sells between $500,000- $999,999
• 8.8% of sells over $1 million

The example the USDA provides: a producer with $75,000 in 2019 sales will equal ($49,000 X 10.6%)+($25,001 X 9.9%) = payment of $7,775. If the producers began in 2020 and there are no 2019 sales, 2020 sales will be used for calculation up to the application date.  For this reason, it’s recommended to wait until the last day. Should you have any questions regarding applicability or calculations, feel free to reach out to K·Coe’s Farm Program Services team.  More information, including application and eligibility forms, can be found on https://www.farmers.gov/cfap.