USDA Begins Accepting Applications for Coronavirus Food Assistance Program Relief Funding May 26, 2020

May 26, 2020 Print PDF

By Charissa A. Johnston and Michelle D. Mendoza | Related Practice: Agriculture

Like most industries, the agriculture industry is not immune from the economic impact of COVID-19. On April 17, 2020, the U.S. Department of Agriculture (“USDA”) announced the Coronavirus Food Assistance Program (“CFAP”) to provide direct relief to agricultural producers that have suffered price declines and additional marketing costs due to COVID-19. The CFAP allocates a total of $19 billion in funding, with $16 billion available for direct relief to agricultural producers (“Direct Relief Payment”).

Agricultural producers that previously received funding through the Small Business Association’s Paycheck Protection Program or Economic Injury Disaster Loan Program remain eligible for CFAP. As discussed in more detail below, apple and pear producers are eligible for certain CFAP relief; however, cherry producers are not. Dairy and livestock producers are also eligible for CFAP relief.

Who is an eligible “Agricultural Producer” under CFAP?

A person or legal entity that produces specific agricultural commodities is eligible for a Direct Relief Payment if the producer’s average adjusted gross income (“AGI”) is less than $900,000 for tax years 2016, 2017, and 2018 (“Agricultural Producer”). However, if at least 75% of the Agricultural Producer’s AGI comes from farming, ranching, or forestry, there is no AGI limit.

In general, a one-time Direct Relief Payment is available for producers of agricultural commodities that have (a) suffered 5% or greater price declines; or (b) have experienced losses due to market supply chain disruptions due to COVID-19 and face significant additional marketing costs. Specific eligibility requirements and payment information depend on agricultural commodity and are briefly detailed below.

What agricultural commodities are covered?

1. Specialty Crops

Specialty crops eligible for the CFAP relief include the following commodities:

Fruits: apples, avocados, blueberries, cantaloupe, grapefruit, kiwifruit, lemons, oranges, papaya, peaches, pears, raspberries, strawberries, tangerines, tomatoes, watermelons. Please note, cherries are not currently an eligible commodity.
Vegetables: artichokes, asparagus, broccoli, cabbage, carrots, cauliflower, celery, sweet corn, cucumbers, eggplant, garlic, iceberg lettuce, romaine lettuce, dry onions, green onions, potatoes, rhubarb, spinach, squash, sweet potatoes, taro.
Nuts: almonds, pecans, walnuts.
Other: beans, mushrooms.

Producers of all specialty crop commodities are eligible for a Direct Relief Payment if they had commodities shipped before April 15, 2020, but subsequently spoiled due to loss of marketing channel, or had shipments that did not leave the farm or mature crops that went unharvested as of April 15, 2020.

Producers of most specialty crops are also eligible for a Direct Relief Payment if they suffered at least a 5% price decline between mid-January and mid-April as a result of COVID-19; however, producers of the following specialty crop commodities are not eligible to claim losses for price decline: apples, asparagus, avocados, blueberries, cantaloupe, celery, garlic, grapefruit, kiwifruit, mushrooms, green onions, oranges, papaya, potatoes, raspberries, sweet potatoes, tangerines, taro, walnuts, and watermelons.

Please visit https://www.farmers.gov/cfap/specialty for more information on eligibility and payment details.

2. Non-Specialty Crops

Non-specialty crops eligible for CFAP relief include malting barley, canola, corn, upland cotton, millet, oats, soybeans, sorghum, sunflowers, durum wheat, and hard red spring wheat. Producers of these non-specialty crops are eligible for a Direct Relief Payment if they have suffered at least a 5% price decline as a result of COVID-19 and face increased marketing costs for inventories.

3. Dairy

All dairy operations with milk production, including dumped milk production, in January, February, and/or March 2020 are eligible for CFAP relief. Eligible dairy operations will receive a single payment comprised of two components. The first component of Direct Relief Payment will be calculated based on a producer’s certification of milk production for the first quarter of calendar year 2020 multiplied by $4.71 per hundredweight. The second component of Direct Relief Payment will be calculated based on a national adjustment to each eligible dairy’s production in the first quarter of calendar year 2020 multiplied by $1.47 per hundredweight.

4. Livestock

Livestock eligible for CFAP relief include cattle, hogs, lambs, and yearlings. Producers of these livestock are eligible for a Direct Relief Payment if they have an ownership interest in the eligible livestock that have suffered at least a 5% price decline as a result of COVID-19 and face additional significant costs in marketing their inventories due to unexpected surplus and disrupted markets.

5. Wool

Wool producers are eligible for CFAP relief if they suffered at least a 5% price decline as a result of COVID-19 and face increased marketing costs for inventories. Producers will be paid a single Direct Relief Payment based on the smaller of 50% of a producer’s 2019 total production or the 2019 inventory held as of January 15, 2020 multiplied by the commodity’s applicable payment rate.

How much will eligible Agricultural Producers receive?

Eligible Agricultural Producers that are sole proprietors or general partnerships, may receive up to a total of $250,000 in CFAP relief for all agricultural commodities. However, Agricultural Producers that are corporations, limited liability companies, and limited partnerships may receive an additional $250,000 per member/shareholder (up to 3 member/shareholders) if the entity is able to certify that such members/shareholders have contributed at least 400 hours of active personal management or labor to the entity. For example, a corporation may receive up to a maximum of $750,000 if the entity has three shareholders that have each contributed at least 400 hours of active labor or management to the corporation.

To ensure that all eligible Agricultural Producers receive some CFAP relief, Agricultural Producers will receive 80% of their maximum total payment upon approval of their application and the remaining 20% will be paid at a later date if funds remain available.

How do eligible Agricultural Producers apply for CFAP?

Starting May 26, 2020, eligible producers may call their local USDA Farm Service Agency Service Center (“FSA”) to schedule an appointment to apply. Producers of ineligible commodities are encouraged to submit comments and request additional commodities to the USDA for consideration of inclusion in the CFAP. If you are interested in learning more about CFAP relief, please visit https://www.farmers.gov/cfap for more information.

If you have CFAP-related questions, please contact Charissa Johnston or Michelle Mendoza.