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The Coronavirus Food Assistance Program Offers Aid to Agricultural Producers Impacted by COVID-19

The Coronavirus Food Assistance Program Offers Aid to Agricultural Producers Impacted by COVID-19

Author: Chris Kalkowski, Vice President, Agribusiness Banking

The coronavirus pandemic has hit the agriculture industry particularly hard. When you couple good demand for protein with delays in getting that product processed and on store shelves, many agriculture producers are facing challenges that will have an impact months down the road.

However, the recently announced Coronavirus Food Assistance Program (CFAP) will provide some direct relief to producers who faced price declines due to COVID-19.

The USDA’s Farm Service Agency is accepting applications now through August 28, 2020.  In this article, we’ll go over a few key aspects of the program and how you may apply.

About the Coronavirus Food Assistance Program

According to the U.S. Department of Agriculture, CFAP will use funding provided in the Coronavirus Aid, Relief, and Economic Security Act, the Families First Coronavirus Response Act, and other USDA existing authorities. This $16 billion immediate relief program includes direct support to agricultural producers, as well an additional $3 billion towards the Farmers to Families Food Box Distribution Program.

The new program will provide financial aid to producers for ag commodities who have suffered a 5 percent or greater price decline and who have had losses due to market supply chain disruptions due to COVID-19. Commodities eligible for the program include:

  • Non-specialty crops (malting barley, canola, corn, upland cotton, millet, oats, soybeans, sorghum, sunflowers, durum wheat, and hard red spring wheat)
  • Wool
  • Livestock (cattle, hogs, sheep)
  • Dairy
  • Specialty crops (fruits, vegetables, nuts, beans and mushrooms)

To be eligible for payments, a person or legal entity must have an average adjusted gross income of less than $900,000 for tax years 2015, 2016, and 2017. However, if 75 percent of their adjusted gross income comes from farming, ranching, or forestry, the AGI limit of $900,000 does not apply. You can learn more about eligibility and payment limitations and structure from the USDA.

According to the USDA, eligible producers will receive one payment, drawn from two possible funding sources. The first source of funding is $9.5 billion provided in the CARES Act, which compensates farmers for losses due to price declines that occurred between mid-January 2020 and mid-April 2020 and for specialty crops for product that was shipped and spoiled or product that did not get paid for. The second funding source uses the Commodity Credit Corporation Charter Act to compensate producers for $6.5 billion in losses due to on-going market disruptions.

To help ensure the availability of funding throughout the application period, producers will receive 80 percent of their max total payment upon approval of the application. The remaining portion of the payment will be paid at a later date as funds remain available.

How to Apply

The USDA’s Farm Service Agency is accepting applications now through August 28, 2020.  Producers can apply through their local Farm Service Agency Service Center by phone appointment only. Additionally, the application form and a payment calculator are now available online through the USDA. To learn what materials will be needed during the application process or for more information, visit the USDA’s CFAP overview and application webpage.

Helpful Resources

About the Author

Chris Kalkowski has been at FNBO since 1998 and a member of our agribusiness banking team since 2003. As Vice President of Agribusiness Banking, he works closely with agribusiness leaders throughout the Midwest. In his spare time, Chris enjoys hunting, ranching and giving back to his local community.