Seven months into one of the largest disruptions in the history of our global economy, nearly every sector, every community, and every household has felt the impacts of the COVID-19 pandemic. For many of our nation’s farmers, sorely needed emergency relief never came because the programs intended to serve them were targeted to the largest and wealthiest farms. To date, farm relief programs have proven unworkable for most small-scale, diverse, and value-added producers (e.g. organic, local, grassfed).

This week, the U.S. Department of Agriculture (USDA) is launching a second round of COVID-19 relief payments that will hopefully reach more farmers who were left out of previous aid programs. In this blog, we break down what farmers need to know about USDA’s revamped Coronavirus Food Assistance Program (CFAP-2):

• What is CFAP-2?
• Who is eligible?
• What commodities are eligible and how are payments calculated?
• How can farmers apply?
• What documentation will be required?
• Is CFAP-2 right for me?
• CFAP-2 en Español

What is CFAP-2?

Last week, USDA began releasing details of a new version of the Coronavirus Food Assistance Program (CFAP-2) that will provide $13.21 billion in aid to farmers over the next few months. USDA plans to distribute CFAP-2 payments this fall to farmers to partially compensate for losses experienced from April 1, 2020 – August 31, 2020 (or from April 16th for livestock) where prices, markets, and supply chains have been impacted by the COVID-19 pandemic. Unlike CFAP-1, a commodity need not have experienced at least a 5% decline in price to be eligible for a payment. 

This second iteration of CFAP is a separate program but retains most of the elements of CFAP-1 that closed on September 11, 2020. However, CFAP-2 also includes significant improvements that are certain to benefit many farmers who weren’t eligible for or compensated fairly by the original program. The key revisions in CFAP-2 include an additional round of price loss based payments for commodity crops covered under CFAP-1, a new fixed $15/acre payment for many grain, oilseed, and hemp crops that were not previously eligible, and a modest, revenue based payment program for specialty crop and other producers that greatly expands eligibility to include nearly all crops and many types of livestock. Funding for CFAP-2 is from existing Commodity Credit Corporation (CCC) funds and does not require Congressional approval to implement. 

The application window for CFAP-2 is from September 21, 2020 – December 11, 2020 and checks are expected to be mailed to farmers within a week or two of approved application. 

USDA’s Farm Service Agency (FSA) will be responsible for issuing checks to farmers.

Who’s eligible for CFAP-2?

Most farmers are eligible for payments under the new CFAP-2 program; however there are some producers and some crops that are still ineligible for payments (detailed below). 

To be eligible for a payment, a producer must: 

• Complete a CFAP application form and provide any required documentation within 60 days of signing their application
• Be a producer having a share in the eligible commodity between April 1 – August 31, 2020 (revised)
• Be in the business of farming at the time of application to the program (new)  
• Be either a: 
  • U.S. Citizen
  • Resident Alien providing land, capital, and active personal labor in the farming operation
  • Partnership of U.S. Citizens
  • Corporation, Limited Liability Company, or other organization recognized under State law
  • Indian Tribe or Tribal Organization
  • Foreign Person providing land, capital, and active personal labor in the farming operation
  • Foreign Entity that has more than 10% of its beneficial interest held by individuals that are not US Citizens or Lawful Aliens
  • A beneficiary or heir of a trust or estate who has contributed at least 400 hours of active personal labor and/or active personal management to the farm operation (new) 

Eligibility Restrictions 

Federal, state, and local governments are prohibited from participating in CFAP-2. An individual or entity with an average adjusted gross income (AGI) of more than $900,000 – based on the average gross incomes for 2016, 2017, and 2018 tax years – is also ineligible unless they derive at least 75% of their income from farming, ranching, or forestry related activities, in which case there is no AGI restriction. There is no AGI limit for joint ventures or general partnerships. This AGI threshold is significantly less strict than in previous USDA support payment programs which means that large, complicated operations may be eligible for an even greater proportion of available aid.

Contract growers who do not have price risk in the crops or livestock they produce remain ineligible for CFAP payments.

Payment Limits 

There are maximum payment limits for the CFAP program at the individual and farm level:

• $250,000 to an individual
• $750,000 to a single farm operation established as a corporation, limited liability company, limited partnership, estate or trust (with multiple shareholders contributing to the total.)

A person must ‘provide at least 400 hours of active personal management or personal active labor’ to be eligible for a CFAP-2 payment as part of a corporate farm operation.  

What commodities are eligible and how are payments calculated?

Nearly all crops and many types of livestock may be eligible for payment under CFAP-2 but unlike CFAP-1, different commodities are eligible for very different types of payments. Farmers may be eligible for up to three different types of payments under the new CFAP-2 program depending on what they grow and market. 

Farmers can receive payments for: 

1. Commodity crops, livestock, poultry, and dairy with a minimum 5% price decline over a specified time period with payments based on national wholesale prices, similar to the CFAP-1 program (referred to as price trigger commodities);
2. Minor commodity crops for which there is limited pricing data that will receive a $15/acre flat rate payment (referred to as flat-rate crops) (new); and 
3. Other commodities that are not included in either of the previous two categories will receive payments based on a producer’s revenue from a previous marketing year (referred to as sales commodities) (new).

Price Trigger Commodities

A farmer who grew or sold specific commodities between April 1, 2020 – August 31, 2020 is eligible to receive a payment similar to the payment for which they were eligible under CFAP-1 triggered by a 5% decline in price and proportional to the decline in price. These are known as “price trigger commodities” under CFAP-2. 

• Eligible commodity crops include barley, corn, sorghum, soybeans, sunflowers, upland cotton, and all classes of wheat. 
  • Payments will be based on 2020 planted acres of the crop, excluding prevented planting and experimental acres (new). 
  • Payments will be the greater of: 

1. the eligible acres multiplied by a payment rate of $15 per acre (new); or 
2. the eligible acres multiplied by a nationwide crop marketing percentage, multiplied by a crop-specific payment rate, and then by the producer’s weighted 2020 Actual Production History (APH) approved yield. 
   • If the APH is not available, 85% of the 2019 Agriculture Risk Coverage-County Option (ARC-CO) benchmark yield for that crop will be used.

• Dairy (cow’s milk) is also eligible for payment based on price decline. 
  • Payments will be based on actual milk production from April 1 to Aug. 31, 2020. 
  • The milk production for Sept. 1, 2020, to Dec. 31, 2020, will be estimated by FSA.
• Beef cattle, hogs and pigs, and lambs and sheep are also eligible for payments based on price decline. 
  • Payments will be based on the maximum owned inventory of eligible livestock, excluding breeding stock, on a date selected by the producer, between Apr. 16, 2020, and Aug. 31, 2020.
• Broilers and eggs are now eligible for payments based on price decline (new).
  • Payments are based on 75% of the producers’ 2019 production.

Unfortunately, payments to all row crop, livestock, poultry and dairy producers will be calculated based on conventional, wholesale, commodity prices and will not factor in any price premiums such as organic, grass-fed, pastured, free-range, etc. This is a major shortcoming of this new program and may hamper participation from and benefit to sustainable commodity, livestock, poultry, and dairy producers.

Flat-Rate Crops (new)

A farmer who grew or sold specific commodity crops between April 1 – August 31 may be eligible to receive a new, flat, per acre payment even though there may be insufficient data to demonstrate the decline in price (flat rate crops). 

• Eligible flat-rate crops include alfalfa, Extra Long Staple (ELS) cotton, oats, peanuts, and rice, as well as some crops with relatively small acreage—such as amaranth grain, buckwheat, canola, crambe (colwort), einkorn, emmer, flax, guar, hemp, indigo, industrial rice, kenaf, Khorasan, millet, mustard, oats, peanuts, quinoa, rice, sweet rice, wild rye, safflower, sesame, spelt, sugar beets, sugarcane, teff, triticale, and rapeseed.
  • Payments for flat-rate crops will be equal to eligible acres of the crop multiplied by a rate of $15 per acre. 
  • Eligible acres include the producer’s share of the determined acres, or reported acres if determined acres are not present, excluding prevented planted and experimental acres
• Hay (exempt for alfalfa) and crops with intended uses of grazing, green manure, or left standing are not eligible for payment.

Sales Commodities (new)

Many commodities that are not eligible for either ‘price trigger’ or ‘flat rate’ payments may be eligible for payments based on a producer’s historic revenue. This is an important new program component that was absent from CFAP-1. While the reimbursement rate is modest and it is uncertain what type of documentation will be necessary to show revenue, this payment option will make CFAP-2 open to many more farmers than the program it replaces.  

• Eligible sales commodities include (full lists below): 

• Specialty crops including fruits, vegetables, nuts, honey, maple sap, dry edible beans, lentils, dry edible peas, chickpeas, and tobacco (total program tobacco payments not to exceed $100 million);
• Nursery crops and floriculture; 
• Aquaculture grown in a controlled environment; 
• Other livestock not included under the price trigger category that were grown for food, fiber, fur, or feathers. Equines, breeding stock, companion or comfort animals, pets, and animals raised for hunting or game purposes are not eligible.
  • Payments for sales commodities will be equal to the sum of the results for the following calculation:
    • the amount of the producer’s eligible sales within the specified range in calendar year 2019 
    • multiplied by the payment rate for that range in the table below (referred to as Table 2 of paragraph (j) in USDA documents) 

Payment Rates for Sales Commodities 2019 Sales Range Percent Payment Factor 

2019 Sales	CFAP Payment Percentage
Up to $49,999	10.6%
$50,000 – $99,999	9.9%
$100,000 – $499,999	9.7%
$500,000 – $999,999	9.0%
All sales over $1 million	8.8%

Example: A producer’s 2019 sales of eligible commodities totaled $75,000. The payment is calculated as ($49,999 times 10.6%) plus ($25,001 times 9.9%) equals a total payment of $7,775.

• Eligible sales only includes sales of raw commodities grown by the producer. The portion of sales derived from adding value to the commodity, such as processing and packaging, and from sales of products purchased for resale is not included in the payment calculation unless determined eligible by the Secretary. 
• Payments for producers of sales commodities who began farming in 2020 and had no sales in 2019 will be calculated based on the producer’s actual 2020 sales as of the date the producer submits an application for payment.

How can producers apply?

Producers can apply for assistance beginning September 21, 2020. Applications will be accepted through December 11, 2020. Application materials are available at farmers.gov/cfap/apply. Farmers who applied for CFAP-1 will likely already have many required forms on file with FSA. Farmers should check with their FSA county offices to see if any forms need to be updated.

USDA recommends that farmers new to FSA or CFAP first call the CFAP hotline, (877) 508-8364, for one on one support before contacting their county office. 

Farmers will have several options in applying for CFAP-2, including applying online or in person at their local FSA county office. The CFAP Application Portal and Application Generator and Payment Calculator are now available online.

Required forms are similar to CFAP-1:

• CCC 902 – Farm Operating Plan
• CCC 901 – Member Information
• CCC 941 – Adjusted Gross Income
• CCC 942 – Income from Farming
• AD 1026 – Conservation Compliance
• AD 2047 – Customer Information
• SF 3881 – Direct Deposit Information
• FSA 578 – Report of Acreage (price trigger, flat rate only) (new)

What documentation will be required?

In order to calculate payments, producers will need to verify sales and inventory, but will not be required to submit this documentation to FSA along with their application. However, producers should keep this information on file, as FSA may require it at a later point. Examples of supporting documentation include: receipts, ledgers of income, income statements of deposit slips, veterinarian records, register tapes, invoices for custom harvesting, and records to verify production costs, contemporaneous measurements, truck scale tickets, or contemporaneous diaries.

Is CFAP-2 right for me?

CFAP-2 is a better program than CFAP-1. It is available to more farmers, covers more farm products, and contains a payment option based on a farmer’s historic revenue. However, it is far from perfect: the implementation of the new flat rate and sales commodity payment programs may be more complicated than necessary, the payment rates are very modest; contract growers are still excluded from participation; and it is uncertain if USDA will improve outreach efforts to reach farmers who have experienced difficulty accessing services through FSA. It is also likely that CFAP-2 payments will exhaust nearly all available CCC funding, which will make it difficult for USDA to provide scheduled commodity and conservation payments to farmers later this year. While the application is short, it may take some time for producers to compile the necessary records to fill it out. This is especially true for diversified operations and those who sell into marketing channels that command a price premium. 

For more information on CFAP-2, visit USDA’s program website. We will also continue to update our CFAP and COVID-19 resource page as more information and resources become available.