USDA to Provide Guidance for Coronavirus Food Assistance Program

The USDA will host a webinar on May 14 at 1:00 p.m. ET for agricultural producers who are interested in applying for direct payments through the Coronavirus Food Assistance Program (“CFAP”).  After announcing this relief program on April 17, the USDA has provided few details to the public regarding requirements for producer eligibility and the calculation of payments, so the webinar is welcome news for many producers in need of relief. 

The CFAP consists of a two-pronged plan to provide $19 billion of critical assistance to farmers, ranchers, and consumers in response to the COVID-19 pandemic.

• The first prong of the plan includes $16 billion of direct financial assistance to agricultural producers based on actual losses where prices and market supply chains have been impacted and will assist producers with additional adjustment and marketing costs resulting from lost demand and short-term oversupply.
• The second prong of the plan will create a new partnership between the USDA, regional and local food distributors, and foodbanks, community organizations, and other non-profits that serve Americans in need.  The USDA will purchase a total of $3 billion of fresh produce, dairy, and meat ($100 million of each category per month) from farmers and ranchers to distribute through the existing food distributor supply chain to non-profit organizations and, ultimately, to consumers in need.

While an interim final rule setting out details regarding producer eligibility, payment calculations, and other implementation has not yet been released, Senator John Hoeven (R-ND), chairman of the Senate Agricultural Appropriations Committee, provided the guidance summarized below in a separate release, which we have updated based on subsequent statements from USDA officials:

• Timing:  USDA is expediting the rulemaking process and expects to open the program for signups in the month of May and start getting payments out to producers by the end of May / early June
• Signups:  Signups for the programs likely will be through the USDA’s Farm Service Agency (“FSA”) for producers who already work with FSA and through the Agricultural Marketing Service for producers who do not, including produce farmers who do not usually participate in FSA’s farm programs
• Allocation of Funds: Of the $16 billion in direct payments to farmers and ranchers:
  • $9.6 billion will be allocated to the livestock industry, including $5.1 billion for cattle, $2.9 billion for dairy, and $1.6 billion for hogs
  • $3.9 billion will be allocated to row crop producers
  • $2.1 billion will be allocated to specialty crops producers
  • $500 million will be allocated to other crops
• Payment Calculation:  Producers will receive a single payment to be determined using two calculations:
  • 0.85 * the producer’s price losses that occurred between January 1 and April 15
  • 0.30 * the producer’s expected price losses between April 15 and September 30
• Cap on Payments:  USDA initially planned to limit payments to $125,000 per commodity with an overall cap of $250,000 per producer, but after receiving input from farm-state lawmakers and industry groups, USDA Secretary Sonny Perdue said last week that USDA will increase the aid limits before the program is finalized this month.  It is expected that qualified commodities must have experienced a 5% price decrease between January and April.
• Additional Aid:  Note that the CFAP funding does not include the $14 billion that was appropriated under the CARES Act to replenish the CCC.  Those funds are expected to be available in July, and Secretary Perdue stated that there almost certainly will be more aid to agricultural producers announced in the coming months.