USDA’s Coronavirus Assistance Program for Agricultural Producers

USDA’s Restoration for American Agriculture

On April 17, the United States Department of Agriculture announced the Coronavirus Food Assistance Program (CFAP), a $19 billion immediate relief program with a focus on supporting farmers and ranchers, maintaining the integrity of the food supply chain, and ensuring Americans continue to have access to the food they need. This program uses funding and authorities provided in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Families First Coronavirus Response Act (FFCRA), and other existing USDA authorities.

The CFAP Explained

The program breaks down into two major components. $16 billion will be used for direct support to farmers and ranchers based on agricultural producers’ actual losses. To qualify, commodities must have experienced a 5% price decrease between January and April. Producers will receive a single payment determined using two calculations. The first part will be compensation for 85% of price loss that occurred between January 1, 2020 and April 15, 2020. The second will be compensation for 30% of expected price loss from April 15, 2020 through the next two quarters. This payment will be limited to $125,000 per commodity with an overall limit of $250,000 per individual or entity. It has been reported but not confirmed by USDA that direct payments will include $9.6 billion for the livestock industry, $3.9 billion for row crops producers, $2.1 billion for specialty crops producers, and $500 million for other crops. Hunter Buffington, executive director of Hemp Feed Coalition in Colorado, expects hemp farmers to be eligible for this program if they meet the loss requirements because of hemp’s recognition as a legal commodity in the 2018 Farm Bill, although she was also aware of hemp businesses being denied small-business loans under the CARES Act.

The other part of the program will partner USDA with regional and local distributors, whose workforce has been significantly impacted by the closure of restaurants and other food service entities, to purchase $3 billion in fresh produce, dairy, and meat. The Agricultural Marketing Service’s Commodity Procurement Program will begin with purchases of an estimated $100 million of each of these categories per month. The distributors and wholesalers will then provide a pre-approved box of fresh produce, dairy, and meat products to food banks, community and faith-based organizations, and other nonprofits serving Americans in need. Application for the food purchases can be done through the USDA website solicitations page.

More Plans to Move Forward

In addition to CFAP, USDA will utilize other available funding sources to purchase and distribute food to those in need. It has up to an additional $873.3 million available in Section 32 funding to purchase a variety of agricultural products for distribution to food banks. The use of these funds will be determined by industry requests, USDA market analysis, and food bank needs. The FFCRA and CARES Act provide at least $850 million for food bank administrative costs and USDA food purchases. These funds will be distributed based on food bank need and product availability.

More details regarding eligibility, rates, and other implementation are forthcoming. USDA is expediting the rule-making process for direct payments and expects to begin sign-up for the program in early May with payments to producers being delivered by the end of May or early June.

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By |2020-07-27T13:43:47-06:00April 30th, 2020|Banking and Finance|
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