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Kent Thiesse

Sign-up for the Caronavirus Food Assistance Program (CFAP) payments began on May 26 at local Farm Service Agency offices and will continue through Aug. 28.

Currently, FSA offices are open for business by phone appointment only. However, the application process is fairly easy for producers to complete. Once farmers have completed necessary FSA farm program eligibility forms, they will be able to complete the CFAP application on-line and submit it to their local FSA office. The forms and other CFAP details are available at www.farmers.gov/CFAP.

A number of questions keep popping up regarding CFAP payment eligibility and calculations.

Is USDA already making CFAP payments to producers?

As of June 15, USDA had paid out nearly $2.9 billion in CFAP payments to producers of various agricultural commodities. The CFAP payments are intended to offer direct financial assistance to offset losses from commodity and product sales that were associated with the Covid-19 pandemic. There are $16 billion available for the CFAP payments, including $9.5 billion from CARES Act funds and $6.5 billion from USDA Commodity Credit Corporation funds.

Why is there a variation in the CFAP payment processing in different areas?

The amount of CFAP payments being processed has varied from state to state, as well as from county to county. This is primarily due to staffing availability and other FSA program demands at local FSA offices. Farmers and ranchers are asked to be patient with the processing of CFAP applications at local FSA offices. There should be adequate funds to cover the initial round of CFAP payments through Aug. 28.

What is the breakdown of the early CFAP payments which have already been made to farmers ?

Following is the early breakdown of $2.9 billion in CFAP payments which have been made as of  June 15 — including the average CFAP payment per eligible producer:

Non-specialty (field) crops — $758.5 million (27 percent of total). The average payment has been $6,747 per producer.

Specialty crops (fruits and vegetables) — $53.2 million (2 percent of total). The average payment has been $35,234 per producer.

Livestock (cattle, hogs and sheep) — $1.4 billion (48 percent of total). The average payment has been $9,527 per producer.

Dairy — Nearly $667 million (23 percent of total). The average payment has been $55,194 per producer.

If I am a new producer to FSA programs, what additional FSA forms do I need to complete ?  

For producers who normally enroll in farm programs, the FSA offices likely already have most of the background information needed to apply for CFAP payments. For producers who are new to utilizing FSA programs and services, they may need to complete all or some of the following FSA forms: CCC-901 (Identifies all members of a farm or ranch that is a legal entity, including name, address, and tax identification number); CCC-902(Farm operating plan for payment eligibility); CCC-941 (Reports the adjusted gross income to determine payment eligibility); CCC-942 (Reports the amount of the AGI that is derived from farming); AD-1026 (Ensures compliance with highly erodible land and wetland conservation practices); and SF-3881 (Collects customer banking information to allow FSA to direct deposit CFAP payments).

All of the listed FSA forms are available at www.farmers.gov/CFAP.

What commodities are eligible for CFAP payments?

Field crops (corn, soybeans, spring wheat, durum wheat, sorghum, oats, malting barley, canola, upland cotton, millet, and sunflowers); livestock(cattle, hogs, sheep, wool and dairy); and specialty crops(numerous fruits, vegetables, nuts, and other specialty crops are eligible).

For a complete list go to www.farmers.gov/CFAP.

Are breeding animals eligible for CFAP livestock payments?

Any breeding stock sold for market between Jan. 15 and April 15 would be eligible for the CARES funding portion of CFAP payments. Dairy cows or heifers are not eligible to be counted as breeding stock; but would be eligible for CARES payments if they were sold for market from Jan. 15 to April 15. Dairy CFAP payments are based on milk production during the first quarter of 2020. 

Following is a breakdown of the breeding livestock for various livestock species which were in inventory from April 16 to May 14, regarding eligibility for CFAP payments:

Cattle — Beef cows and calves, bred and open heifers, and bullsare eligible to be counted as inventory for CCC payments. There are many different categories of beef cattle.For a complete list of beef cattle categories, go to www.farmers.gov/CFAP.

Hogs — Sows and bred giltsare eligible to be counted as inventory for CCC payments.

Sheep — Breeding ewes less than 2 years oldare eligible to be counted for CCC payments.

Why is there so much confusion regarding the CFAP payments for field crops ?

There continues to be considerable misunderstanding of the CFAP calculations for field crops. Many producers are feeling the official CFAP payment calculator is under-estimating the CFAP payments. However, the official FSA CFAP calculator is correct. The most common mistake being made by producers is to fully factor downward the maximum bushels on which the CFAP payments are being made. Initially, the eligible bushels for CFAP is the lesser of 50 percent of the total 2019 production for a crop or the bushels of unpriced inventory on Jan. 1, 2020. The CFAP payment calculation step which is usually missed is taking the eligible bushels times 50 percent before calculating the CARES and CCC portions of the CFAP payments. The initial CFAP payment, which is made after CFAP enrollment is completed, is 80 percent of the total calculated CFAP payment.

What is a good explanation for the CFAP payment formula for most field crops?

The CFAP payments are calculated from two different funding sources: CARES Act funds and CCC

Funds. Each has different payment rates which are then combined into a single CFAP payment based on the CFAP payment formula.

Following is a bit more detailed step-by-step explanation of CFAP payment calculations for field crops:

Step 1:The eligible bushels or pounds for CFAP payments with both the CARES and CCC payment formulas will be the lesser of 50 percent of the verified 2019 production for a crop, or the unpriced bushels in inventory on Jan. 15, 2020.

Step 2:The CARES and CCC payments are paid on 50 percent of the eligible bushels (from Step 1).

Step 3: Multiply the bushels (from Step 2) times the CARES payment rate times 80 percent to get the initial CARES payment amount. (CARES payment rates are 32 cents per bushel for corn; 45 cents per bushel for soybeans; and 18 cents per bushel for spring wheat.)

Step 4: Multiply the bushels (from Step 2) times the CCC payment rate times 80 percent to get the initial CCC payment amount. (CCC payment rates are 35 cents per bushel for corn; 50 cents per bushel for soybeans; and 20 cents per bushel for spring wheat.)

Step 5:Add the initial CARES payment amount (from Step 3) and the CCC initial payment amount (Step 4) to get the total initial CFAP payment amount for a crop.

An example of the CFAP payment calculations for corn and soybeans:

A crop producer produced 200,000 bushels of corn and 60,000 bushels of soybeans in 2019 and had 150,000 bushels of corn and 20,000 bushels of soybeans as unpriced inventory on Jan. 15, 2020. 100,000 bushels of corn are eligible (50 percent of 200,000 bushels which is less than the 150,000 bushels in inventory on Jan. 15). CFAP payment bushels would be 50,000 bushels(50 percent of 100,000 bushels). 20,000 bushels of soybeans would be eligible as inventory on Jan. 15 is less than 50 percent of the 60,000 bushels produced in 2019. CFAP payment bushels would be 10,000 bushels(50 percent of 20,000 bushels).

Payment formulas are as follows:

Corn: CARES = 50,000 bushels x 32 cents per bushel = $16,000, x 80 percent = $12,800; CCC = 50,000 bushels x 35 cents per bushel = $17,500, x 80 percent = $14,000. The total initial payment = $26,800 (remaining payment = $6,700).

Soybeans: CFAP = 10,000 bushels x 45 cents per bushel = $4,500, x 80 percent = $3,600; CARES = 10,000 bushels x 50 cents per bushel = $5,000, x 80 percent = $4,000. The total initial payment = $7,600 (remaining payment = $1,900).

Note: If these CFAP calculation steps are followed, the resulting CFAP initial payment should be the same as the CFAP payment which is calculated on the official FSA CFAP calculator.

Will the balance of the CFAP payment be paid later this year ?

The initial CFAP payment being made only accounts for 80 percent of the total calculated eligible CFAP payment. While there is no guarantee at this point, it is highly likely that the final 20 percent of the CFAP payments will be made once the U.S. Department of Agriculture has more funding available. There is also the possibility additional aid programs for selected commodities could be made available by USDA or through legislation passed by Congress.

For the purposes of CFAP payment eligibility, what is the definition of “unpriced” grain?

This has been quite confusing knowing which types of grain contracts are eligible for CFAP payments and which contracts are not. Basically, any bushels under a type of grain contract which still had futures price risk on or before Jan. 15 is still eligible for CFAP payments. However, if the futures price was “locked-in’ before Jan. 15, with only basis risk, then the grain under that type of contract would not be eligible for CFAP payments. USDA released a clarification regarding eligible or non-eligible grain contracts or risk management strategies. Refer to the accompanying table for a complete list of CFAP eligibility for various types of grain contracts.

CFAP applications will be made through local FSA offices. The CFAP payment calculator and application form, FSA forms and other CFAP information is available on the FSA CFAP website at  www.farmers.gov/CFAP.I have also prepared an information sheet, “2020 CFAP Payment Summary”,which is available by sending an e-mail to kent.thiesse@minnstarbank.com.

Kent Thiesse is a government farm programs analyst and a vice president at MinnStar Bank in Lake Crystal, Minn. He may be reached at (507) 726-2137 or kent.thiesse@minnstarbank.com.