Tag Archives: Coronavirus Food Assistance Program

USDA announced $14 bil in CFAP 2 payments, Dairy estimate is $1.20/cwt for Apr-Dec milk

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Second checks under CFAP 1 delayed by enrollment extensions

By Sherry Bunting, Farmshine, Sept. 25, 2020

WASHINGTON, D.C. — President Donald Trump and U.S. Secretary of Agriculture Sonny Perdue announced an expansion of the Coronavirus Food Assistance Program (CFAP) on Sept. 17, which means a second round of $14 billion in additional CFAP payments will be made to a new list of eligible commodities, including dairy cow’s milk as a price-trigger calculation and even goat’s milk as a sales-triggered calculation.

Sign up for this second round of assistance – CFAP 2 — runs from Sept. 21 through Dec. 11, 2020.

CFAP 2 payments for dairy calculate to a little over $2.00 per hundredweight on the equivalent of April through August milk marketings. However, the calculation boils down to $1.20/cwt on actual April through August milk marketings, plus another $1.20/cwt on the estimated September through December milk marketings – a 4-month period – using the average daily milk production from the prior 5-month’s actual marketings.

Specifically, the announcement describes the CFAP 2 dairy payments as follows:

Payments for cow milk under CFAP 2 will be equal to the sum of the following:

1) The producer’s total actual milk production from April 1, 2020, to August 31, 2020, multiplied by the payment of $1.20 per hundredweight, and

2)  The producer’s estimated milk production from September 1, 2020, to December 31, 2020, based on the daily average production from April 1, 2020, through August 31, 2020, multiplied by 122, multiplied by a payment rate of $1.20 per hundredweight.

This round of farm assistance, known as CFAP 2, follows in addition to CFAP 1.

The CFAP 1 payments were to be made in two stages, with enrolled producers having received most of their eligible payment in their first check. However, the second portion or balance of payments under CFAP 1 won’t be received until after all enrolled producers receive their first checks.

Producers have not yet received their second checks from CFAP 1 because the enrollment period for CFAP 1 was extended through Sept. 11. 

Further complicating payment of second checks under CFAP 1 is USDA’s extension of signups for certain counties in Louisiana, Oregon and Texas that were impacted by natural disasters (fires and hurricanes). Producers in those areas have until Oct. 9, 2020 to enroll in CFAP 1.

Once all enrollments in CFAP 1 are completed by Oct. 9, and once all enrolled farms receive their first checks for all eligible commodities under CFAP 1, then the remaining funds from CFAP 1 will be disbursed in the second checks to enrolled producers for eligible commodities, including milk.

CFAP 2, on the other hand, represents a totally separate second source of funding and assistance — and a second enrollment period — to cover market disruptions and additional marketing costs for the nine months period of April through December, whereas CFAP 1 covered mainly the disruptions for the first part of the year. There is some overlap in the time period, but these are two separate enrollments and calculations under CFAP.

To-date, according to USDA, nearly $1.75 billion has been paid to dairy farmers for milk under CFAP 1. The total paid or approved for payment to-date for all commodities under CFAP 1 is $10.2 billion.

Funds for CFAP 1 and 2 are from a combination of the CARES Act and the CCC. USDA used public feedback to make improvements under CFAP 2, according to Secretary Perdue.

CFAP 2 divides commodities into three categories for compensation as 1) Price Trigger Commodities, 2) Flat-rate Crops, and 3) Sales Commodities. Each category has a different method for calculating a payment.

Eligible livestock, including beef cattle and dairy cattle destined for beef, will be based on maximum owned inventory on a date selected by the producer between April 16 and August 31, 2020. USDA FSA personnel report that it’s okay if the date selected by a producer is within the same window as the date selected for CFAP 1 livestock payments as long as the animals in inventory on that date were destined for market as meat animals, not for dairy purposes.

USDA FSA personnel indicate that cull dairy cows are not eligible livestock under CFAP 2, but bull calves and any heifers identified as market animals for beef or veal can be claimed as inventory for market impact payments under CFAP 2.

Corn silage and other forages grown as feed for dairy cattle are also eligible under the corresponding flat rate acreage crops portion of CFAP 2

A complete list of farm commodities covered under CFAP 2 is available at farmers.gov/cfap

As with CFAP 1, there is a payment limitation of $250,000 per person or entity for all commodities combined. Applicants that are corporations, LLCs and partnerships may qualify for additional payment limits when members actively provide personal labor or management to the operation. 

In addition, USDA reports that this special payment limitation provision has been expanded to include trusts and estates for both CFAP 1 and 2.

Producers will also have to certify they meet the adjusted gross income limitation of $900,000 unless at least 75% or more of their income is derived from farming, ranching or forestry-related activities. Producers must also be in compliance with Highly Erodible Land and Wetland Conservation provisions to receive payments.

USDA reports that Farm Service Agency staff at local USDA Service Centers will work with producers to file CFAP 2 applications. Producers interested in one-on-one support with the CFAP 2 application can also call 877-508-8364 to speak directly with a USDA employee ready to offer assistance at the call center.

Farmers can also visit farmers.gov/cfap for additional information.

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New CFAP details emerge: Dairies eligible for payments on milk, cull cows, some youngstock, some crops

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CFAP_GUIDE_FSA (1)
USDA Farm Service Agency has created this guide for farms applying for CFAP payments.

By Sherry Bunting, Farmshine, May 29, 2020

HARRISBURG, Pa. — When Coronavirus Food Assistance Program (CFAP)payment details were first released last week, the understanding was that payments for livestock price losses would not include dairy production cattle. Also noted at that time was that crops on dairy farms could only be claimed if they were cash crops.

This week, however, as USDA Farm Service Agency (FSA) began the enrollment process on May 26, new details about implementation have emerged, meaning dairy farms have multiple areas of assistance to apply for.

Dairy cull cows and youngstock sold for other than dairy purposes can be claimed under certain classes of livestock under CFAP.

“This was a confusing point, and some portions are still not clear yet,” said Cynthia Walters, FSA dairy programs specialist for Pennsylvania in a Center for Dairy Excellence industry call Tuesday.

“Dairy cows sold for beef from January 15 through April 15, 2020 are eligible for payment under the ‘slaughter cattle, mature cattle’ category. We are still waiting to find out if dairy cull cows can be listed in inventory for that second portion of the payment for second quarter,” she said.

Walters also explained that cattle kept on a dairy farm as beef inventory will qualify for the inventory calculation. This would pertain to animals fed for beef or youngstock intended for sale to a veal grower or beef feedlot, or fed for the beef market as part of the dairy farm operation.

As for feed crops, Walters explained that some calculations are still being worked out to convert dairy feeds grown on farms to grain rates under the “non specialty crop payments” portion of the spreadsheet.

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The Center for Dairy Excellence created this table to show examples of CFAP payments for various farm sizes based on first quarter milk production.

Milk payments

As reported in Farmshine last week, only the first quarter milk production on a dairy farm is used by FSA to calculate the farm’s total Q1and Q2 milk payments.

Walters explained that producers will “self-certify” and keep their documentation on hand in case they are pulled for spot checks. Farms will not provide this documentation to FSA but use their milk statements and other records (such as dumped milk recorded) to fill out the forms.

She confirmed that the only production information the producer puts on the form / spreadsheet are the pounds of milk produced from January 1, 2020 to March 31, 2020. This will be paid at a rate of $4.71 per hundredweight. The second quarter production will be calculated using the January through March production figure, multiplied by a factor of 1.014, and then paid at $1.47 per hundredweight.

The total payment — using these two formulas together — will then roughy equate to $6.20 per hundredweight for the equivalent of first quarter milk pounds.

Walters reminded dairy producers that all first quarter milk production is eligible, even those pounds that were enrolled in risk management programs.

CFAP_Livestock_Payment_Rate_Figure_2 (1)

Farm Bureau created this graph to show payments for eligible classes of livestock.

Cattle payments

There are two parts to the assistance for cattle: A payment per head for cattle sold between January 15, 2020 to April 15, 2020 and a different payment per head for cattle inventory subject to price risk on a date of the producer’s choosing between April 16 to May 14, 2020.

For example, cull dairy cows sold for beef between Jan. 15 and April 15 would be listed under ‘slaughter cattle, mature cattle” and qualify for $93 per head. The inventory method for after April 15 does not apply to dairy cows that are considered dairy inventory, only beef cattle inventory are eligible for the second type of cattle payment.

For calves and heifers sold for other than dairy purposes, the Jan 15 to April 15 marketings would be listed under Feeder Cattle. In the less than 600-pound category, the payment is $102 per head. In the over 600-pound category it is $139 per head.

As for choosing an inventory date between Apr. 15 and May 14 for youngstock that are intended for sale as beef, veal or feedlot animals, they can be listed for an additional $33 per head payment.

Dairies feeding Holstein or Dairy-cross cattle for the beef market or raising / backgrounding such calves for feedlots may apply for all relevant cattle payments.

USDA confirmed in a media call that livestock payments will only go to producers with eligible livestock. Processor-owned livestock are not eligible for these direct farm payments, and a separate program will be designed for livestock producers who were forced to euthanize animals due to COVID-19 supply chain disruptions.

CFAP_Non_Specialty_Payment_Rate_Figure_1 (1)

Farm Bureau has created this graph to show payments for eligible non-specialty crops.

Crop payments

Included under non-specialty crops are payment rates for malting barley, canola, corn, upland cotton, millet, oats, soybeans, sorghum, sunflowers, durum wheat and hard red spring wheat.

These crops, if grown on dairy farms for feed, are also eligible under inventory with conversions to grain prices — as long as these crops were “subject to price risk” or incurred market costs due to COVID-19 disruptions.

In the case of corn silage, for example, Walters said producers would use their Jan 15 inventory, the amount owned by the producer on January 15 that was subject to future price risk.

PaymentCalculator (1)
This payment calculator spreadsheet is part of the application form for CFAP payments. It can be downloaded at farmers.gov/cfap under “CFAP Application” or at this direct link 

FSA application process

“The direct financial assistance through CFAP is for commodities with 5% or greater price decline or market costs from disruptions due to the virus,” said Walters.

She noted that farm enrolled with FSA for other programs have their eligibility already on file (AGI forms, highly erodible lands conservation, banking information for direct deposit, and contact information). This streamlines the process for filling out the application electronically or faxing or mailing it in.

Walters said FSA employees can help dairy producers walk through these categories on the calculator spreadsheet that is now available at farmers.gov/cfap.

Producers can also enroll for CFAP payments online and do not have to set up an appointment with FSA as long as they have been an FSA customer in the past and have all of the FSA forms in place. The USDA has provided a payment calculator for farmers to download at farmer.gov/cfap under “CFAP Application.” It is also available at this direct link.

This gives producers the option to print the application after entering their data, and then sign it and submit it to their County FSA Office by email, fax, or mail.

Farm consultants, such as nutritionists, can assist their clients in downloading and using these forms and in calculating relevant feed crop inventory.

FSA offices are being inundated with calls. Walters noted that a CFAP Call Center is also available for producers who would like additional one-on-one support with the CFAP application process at 877-508-8364.

The main information needed to begin the application process includes:

1) Settlement milk checks for January through March 2020,

2) Receipts of cull cows sold January 15 through April 15, 2020,

3) Inventories of grain not under contract and inventories of corn silage on hand as of January 15 paid on grain conversion,

4) Direct deposit information,

5) Farm ownership structure if needed to be eligible for expanded payment limits for larger, multi-generational farms.

Walters was quick to point out that there is plenty of time to apply for CFAP payments.

“These funds are NOT first-come, first-served. The department is paying 80% of a farm’s total eligibility to be sure there is enough funding for all farms,” said Walters. “Applications will be accepted until August 28, 2020, and the other 20% of a farm’s payment will come later.”

In addition, USDA is purchased $437 million in additional milk and dairy products, including $317 mil. so far for the Farmers to Families Food Boxes as part of the CFAP program.

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Signups begin May 26 for $16 bil. CFAP; dairies payments equate to Q1 milk x $6.20/cwt

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Farmers and ranchers deemed essential to our nation’s future; bulk of payment totals under two calculations to be sent a week to 10 days after signup

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By Sherry Bunting

WASHINGTON, D.C. – President Trump and USDA Secretary Sonny Perdue released the long-awaited details on the $16 billion Coronavirus Food Assistance Program (CFAP) direct payments to farmers this week, indicating that dairy farmers will be eligible for two payment rates across first and second quarter production — and those rates pencil out to be equal to $6.20 per hundredweight multiplied by first quarter production, including milk that was dumped.

Farms using USDA Dairy Margin Coverage (DMC), Dairy Revenue Protection (DRP) or Livestock Gross Margin (LGM) programs, or certain types of forward pricing through cooperatives or brokers based on futures markets, are eligible for CFAP direct payments on all pounds of milk production, even the pounds enrolled in these types of risk management tools. Participation in other forms of government aid through the Small Business Administration does not affect a farm’s eligibility for direct payments through CFAP.

Signups with USDA Farm Service Agencies began May 26, and USDA intends to send 80% of the total calculated Q1 and Q2 payment to farms within seven to 10 days of their signups. The remaining 20% will be paid later, pending the availability of funds in the $16 bil. package after all eligible commodity applicants receive first payments.

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Screenshot of CFAP payment spreadsheet calculator across all eligible commodities. A preview video on how to use the calculator and fill out forms can be found at this link — Check back at www.farmers.gov/CFAP for the spreadsheet calculator or find it through your FSA portal.

Applications will be received until August 28, 2020. USDA has a video for signup, explaining how to use the online calculator spreadsheet, across commodities at this link.

To calculate payments, USDA is using $4.71/cwt from the CARES Act applied to a dairy farm’s first quarter (Jan-Mar) “actual” milk production and $1.47/cwt from CCC funds for a second quarter (Apr-Jun) “calculated” production that is equivalent to the first quarter pounds multiplied by a factor of 1.014 to reflect seasonal production increase for Q2.

Those two payment rates with the second quarter calculation of production push the total payment to be equivalent to multiplying first quarter production by about $6.20/cwt.

With the 80 / 20 split in how this total payment will be sent, farms shipping 5 million annual pounds of milk with roughly 200 cows could expect a payment around $60,000 by early June if they sign up at the end of May, with the balance of roughly $15,000 in a later payment, pending availability of funds.

Responding to bipartisan support from members of Congress asking for payment limits to be increased so that larger multi-generation family farms can benefit, USDA expanded the payment limits to $250,000 per farm entity even with multiple eligible commodities. The previous limit was $125,000 per commodity and $250,000 per farm.

The payment limits were increased for larger farms with multiple ownership structure. Partnerships with two owner-operators would have a payment limit of $500,000, and the maximum limit for any farm structured as an LLC, LLP or corporation with three or more owner-operators is $750,000.

These payment limits apply to the total amount of money a farm can receive even if applying under more than one commodity, such as dairy and crop or dairy and beef.

graph 052220

Graphic by Center for Dairy Excellence risk management coordinator Zach Myers.

Doing the math on larger herds, it appears that a 1000-cow dairy would stand to receive around $325,000 total payment (split 80%, or $260,000, right away, and the remaining 20% later pending available funds). This puts a 1000-cow dairy over the single-owner limit but under the partnership two-owner limit.

The rough math on a 2000-cow dairy comes out to a total payment of around $650,000, which is getting close to the hard-cap of $750,000. A farm of this size or larger, with three or more owner-operators, would have a payment limit of $750,000.

Dairy economists Mark Stephenson and Andrew Novakovic at the Dairy Markets and Policy website have a more detailed paper on this that can be downloaded downloaded here.

Eligibility is limited to owner-operators who materially participated in the dairy (400 hours minimum). For those deriving 75% or more of their income from farming/ranching, there is no adjusted gross income limit for eligibility. For owners not in that category, the adjusted gross income limit to be eligible for CFAP payments is $900,000.

To be eligible for these payments, farms must also show “conservation compliance” regarding the highly erodible land and wetland conservation regulations.

The original USDA notice stated that milk priced on forward contracts would be ineligible for CFAP direct payments, and under ‘dairy eligibility’ was original language stating: “Any milk production that is not subject to price risk for any time during January, February or March is ineligible.” However, USDA removed this language about forward contracting in the final rule for May 21 Federal Register publication.

USDA has confirmed that milk pounds covered by USDA risk management programs like DMC, DRP and LGM, as well as some types of forward contracts based on futures markets through cooperatives and brokers, are eligible for the CFAP direct payments. 

Forward contracts are a gray area. An example of ineligibility could pertain to milk pounds that are specifically priced under a binding contract where pricing is determined ahead of time, such as cost-plus, and where no changes were made to reduce those contracts or charge marketing fees during COVID-19. These are not common contracts, but some larger farms have such contracts with certain processors outside of the Federal Milk Marketing Orders.

In short, the final rule as prepared for Federal Register publication on May 21 no longer contains language excluding risk-managed milk from being eligible, but a farmer applying for CFAP payments is still signing a statement that the pounds of milk certified had price losses of more than 5% and incurred other marketing and inventory costs or deductions during COVID-19.

Producers are encouraged to call their local FSA offices as soon as possible to set up phone appointments for application and to find out how to provide the information required for their applications and forms, such as tax ID number, ownership structure of the farm, adjusted gross income if applicable and pounds of first quarter milk production via milk check settlement statements Jan. through March, or other documentation for dairies doing on-farm processing.

Any milk that was dumped on farms in March due to COVID-19 supply chain disruptions that is not included in the milk check pounds can also be self-certified by a producer’s record of this dumping, according to USDA.

These CFAP payments help producers offset COVID-19-related declines in income by price loss and sales loss for dairy as well as livestock and identified specialty and non-specialty crops.

Secretary Perdue indicated that for livestock and poultry growers forced to euthanize animals due to supply chain disruptions, a different program will handle those losses once USDA has the data on these occurrences to review. These CFAP payments are only for animals sold in the first quarter and animals subject to price risk that are a part of a producer’s inventory on the date chosen in the second quarter.

Dairy producers are eligible for compensation for certain types of livestock and feed.

Included under livestock are payments per head for specified classes of cattle (excluding cattle intended for dairy production), hogs, sheep (lambs and yearlings only) and wool.

CFAP_Livestock_Payment_Rate_Figure_2

It is clear that cattle sales intended for dairy are not eligible for cattle payments. However, dairy producers feeding Holstein or Dairy-cross cattle for the beef market, or raising / backgrounding such calves for feedlots may apply for cattle payments.

Cull cows are also eligible under “Mature Slaughter Cattle” for Q1 actual sales, but the “inventory at risk” method is not appropriate for dairy cull cows since they are dairy production animals while they are in “inventory,” not beef animal inventory waiting for a slot at the packing yards. Youngstock sold for to beef or veal growers, not dairy replacements, can be entered under feeder cattle. Check with your FSA office.

Assistance to cattle producers has two components – cattle sold between January 15, 2020 to April 15, 2020 and cattle inventory subject to price risk on a date of the producers choosing between April 16, 2020, to May 14, 2020. Livestock payments are per-head are shown in the Farm Bureau chart above by the two rates used for Q1 and Q2.

USDA confirmed in a media call that payments will only go to producers with eligible cattle and livestock, including contract growers if their contract allows them to have price risk in the livestock. Processor-owned livestock are not eligible for these direct farm payments.

CFAP_Non_Specialty_Payment_Rate_Figure_1_CorrectedIncluded under non-specialty crops are payment rates for malting barley, canola, corn, upland cotton, millet, oats, soybeans, sorghum, sunflowers, durum wheat and hard red spring wheat. These crops grown on dairy farms are also eligible under inventory with conversions for silage to grain prices — as long as these crops were “subject to price risk” or incurred market costs due to COVID-19 disruptions.

Also, included under specialty crops are payment rates for a variety of fruits and vegetables as well as almonds, pecans and walnuts, beans and mushrooms.

USDA has a special webpage devoted to the CFAP program at https://www.farmers.gov/cfap

CFAP payments are not government “handouts” or “bailouts”, but rather the government’s recognition that our nation’s farmers and ranchers are essential to our nation’s future. Like other businesses receiving federal assistance during this worldwide COVID-19 pandemic and economic shut down, the losses farmers are suffering are monumental and totally outside of their control and outside of the disrupted supply chain’s ability to handle under these unprecedented conditions.

Throughout the past eight weeks of publicized empty shelves, purchase limits and dumping of milk — as well as euthanizing of livestock and plowing under of produce unable to be harvested – consumers are showing renewed appreciation for American farmers and ranchers. These much-needed funds will not make farmers whole but are a life boat in uncharted waters.

According to American Farm Bureau Federation, this program is considered “an important downpayment in helping farmers and ranchers deal with the unprecedented and unexpected economic fallout related to COVID-19.”

According to Jim Mulhern of National Milk Producers Federation, the details on the dairy payments are “more than we anticipated,” but at the same time “more is needed,” he said.

Both AFBF and NMPF – as well as other farm organizations – indicate they are working with lawmakers for additional assistance in the future as the full extent of the pandemic and crisis become known. USDA will be replenishing the CCC by $14 billion in July, and Congress is currently looking at what additional measures are necessary to assist producers of commodities not included in the CFAP package.

Mulhern noted in a PDPW Dairy Signal webinar Tuesday that the dairy industry stands to lose nearly $9 billion this year if the recently released World Agriculture Supply and Demand Estimates of 2020 milk price comes to fruition – or worsens.

He said that even with the expanded limits for CFAP, “This still leaves larger operations (over 2000 cows) without coverage for larger losses. I think there’s a good chance that additional legislation, like the House ‘HEROES’ bill, to have the payment limit issue removed.”

Mulhern also noted that one of the biggest CFAP benefits to all dairy farmers right now are the nearly $450 million in new dairy purchases that were recently announced through the $317 in dairy product awards for the new food box program May 15 through June 30 and the $120 million in additional Section 32 dairy purchases out for bid for delivery to food programs in July.

The good news is that cheese, butter, powder, and milk futures prices have been rallying over the past four weeks with near-term Class III milk contracts well into the $17s — more than $5/cwt higher than the current for May. Mulhern expects to see a volatile pattern in dairy product and futures markets for the rest of this year.

To stay up to date on information from USDA about the CFAP payments, including an FAQ, click here

The 40-page official rule on was published today, May 21, in the Federal Register. Read it here.

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