COVID-19 Response: Coronavirus Food Assistance Program (CFAP) Application Period and Payment Details

by Megan Roberts, Extension educator

On May 19, 2020 the United States Department of Agriculture (USDA) released full details of the Coronavirus Food Assistance Program (CFAP). The CFAP program will help agricultural producers recoup partial losses due to the economic repercussions of COVID-19. Because USDA offices are not taking in-person appointments, farmers must call their local USDA service center to begin the application process with Farm Service Agency. Details on CFAP, including contact information for your local USDA service center, are available at farmers.gov/cfap. The complete final rule (RIN 0503-AA65) is available in the Federal Register.

Sign up begins May 26

Sign up via phone for CFAP begins Tuesday morning, May 26, 2020. Before then, USDA is encouraging producers that are not already enrolled in other Farm Service Agency programs to contact their local FSA and submit initial contact information, personal information including Tax Identification Number, farm operating structure, adjusted gross income (for eligibility purposes), and direct deposit information to enable payment processing. USDA will also ask producers new to the FSA to fill out several forms, such as the CCC-901, CCC-902, CCC-941, CCC-942, AD-1026, AD-2047, and SF-3881. These are all available at farmers.gov/cfap.

During a May 14 national webinar, Sonia Jimenez, USDA Deputy Administrator for the Specialty Crops Program, reminded specialty crop producers that contacting FSA now to submit contact information is especially important. Many dairy, livestock and row crop producers will already have needed contact information in the FSA system and will not need to provide additional information beyond the CFAP application and documentation.

CFAP Payments

CFAP draws funding from two different sources. The first is the $9.5 billion from the CARES Act and the second is $6.5 billion from the Commodity Credit Corporation (CCC) Charter Act. On the CFAP website, farmers will notice that each commodity classification has slightly different applicable time periods, quantity parameters, and payment amounts. Farmers may also notice the USDA has separated payments into two columns, Part 1 CARES Act funding and Part 2 CCC funding. This is due to the two different funding sources. Payments are calculated for both columns and summed together; there is no either/or decision to select. For non-specialty crops, part 1 and part 2 payment rates are simply summed and multiplied by the quantity. For other commodities, part 1 payments and part 2 payments have different quantity and payment rate calculations. Each column is calculated separately and then summed. Specialty crops have an additional payment column to compensate for spoiled produce due to loss of marketing channels.

After summing Part 1 and part 2 payments, the total payment is then multiplied by 80%. According to Minnesota FSA, this initial 80% payment could be received within 7-10 days of a completed CFAP application. The remaining 20% of the payment will be distributed at a later date, if CFAP funds remain. The total combined payment must not exceed payment limitations (described below).

Let’s work through an example initial payment for a livestock producer with one type of livestock species and class. The livestock producer will multiply their total sales of the eligible owned livestock between January 15 and April 15 times the CARES Act part 1 payment rate. Then producers will multiply the highest inventory of eligible owned livestock at any point between April 16 and May 14 by the CCC part 2 payment rate. Part 1 and Part 2 will be summed, added to any other CFAP payment calculations for other commodities, and multiplied by 80% for the total first payment.

To help prepare for your application process, visit farmers.gov/cfap to understand the production amounts you will need to verify for in your CFAP application. To watch a video of how the application process and CFAP calculator works, visit the USDA’s youtube.

Payment Limitations

Producers will need to verify they are eligible for USDA farm program participation. Producers will also be subject to a payment limitation. According to the USDA, “CFAP payments are subject to a per person and legal entity payment limitation of $250,000.” There are not payment limitations for specific commodities beyond the $250,000 per person/entity. The USDA has created a special CFAP limitation for corporations, LLCs, and limited partnerships that have multiple owners that substantially participate in the farm. In this case, "substantial" participation is defined as “at least 400 hours of active person management or personal active labor” in the farm or agricultural entity.  For one substantially participating shareholder the limit is $250,000, for two substantially participating shareholders the limit is $500,000, and for three substantially participating shareholders the limit is $750,000. No more than three shareholders can submit for the special payment limitation, making the maximum possible corporate cap $750,000.

Some commodities are also limited from participating in CFAP because the commodities did not suffer a greater than five percent price loss from January 15 to April 15, 2020. These commodities, according to the USDA, are “sheep more than two years old, eggs/layers, soft red winter wheat, hard red winter wheat, white wheat, rice, flax, rye, peanuts, feed barley, Extra Long Staple (ELS) cotton, alfalfa, forage crops, hemp, and tobacco.” May 27 update: while forages are excluded, silage and, in specific cases, hay may be converted to grain equivalents to calculate to qualify for a non specialty payment. See our post on silage for more information. 

A final note: According to Bill Beam, USDA Deputy Administrator for Farm Programs, producer participation in the Paycheck Protection Program (PPP) and/or Economic Injury Disaster Loans (EIDL) does not affect eligibility for the CFAP program, Farm Bill programs, or any FSA loans. This is good news for ag producers that have already utilized these helpful federal financial assistance programs.

This is not legal or accounting advice. Information may change due to the evolving situation of the COVID-19 legislative response.