November 18, 2020
The second iteration of the Coronavirus Food Assistance Program (CFAP-2) developed by USDA to help compensate farmers for losses due to the coronavirus pandemic is working much better and reaching more farmers than the first round of aid launched earlier this year. Since CFAP-2 opened to farmers on September 21, 2020 participation has been brisk and as the program application window has only one month left (closing December 11, 2020), it is time to revisit how the program is benefitting farmers, questions and concerns that have arisen, and if there are any lessons to draw upon for future aid to farmers as the pandemic continues to spread unchecked through most parts of the country.
This blog will highlight some elements of CFAP-2 but for a far more authoritative treatment, please see the Farmers’ Guide to Coronavirus Food Assistance Program 2 recently published by our colleagues at the Farmers’ Legal Action Group (FLAG).
Who Is Benefitting?
The original CFAP-1 program had severe shortcomings but one in particular limited its utility for many farmers. CFAP-1 had a single payment option – the price loss payment – where farmers received a formula payment based on the national average price decline of a crop or commodity. The payment rates were extremely low and the number of commodities that were eligible was limited. While some payment rates were increased and the list of eligible commodities expanded over time, the basic formula remained.
Because the formula employed a national average price decline to calculate payment rates, the checks farmers received did not necessarily reflect what they would have earned in their own market. This was especially true for farmers and ranchers that sold directly to their customers – restaurants, institutions, schools, and everyone at local farmers markets – as they often earn a price premium on these products. So too for producers of organic farm goods or any other products, such as pasture raised meats, that typically command a higher price compared to conventional products.
By the time the CFAP-1 program ran its course, 651,099 farmers had received more than $10 Billion in payments, but it was widely acknowledged that the primary beneficiaries were cattle producers ($4.3 Billion) while diversified specialty crop growers ($834 Million) came up short.
This is where CFAP-2 is a marked improvement over CFAP-1. While CFAP-2 retains the price loss payment for some commodities (a major problem for producers that are still required to take this payment option because of the crops they grow) it also includes two new payment options for farmers – the flat rate and the sales commodities payment. The flat rate payment option pays $15 per acre and is targeted to a wide variety of small grains and other similar non-commodity row crops. This opened the program to many diversified small grain growers and oil seed producers who were excluded from CFAP-1.
The more significant change was the addition of the sales commodity payment, which is open to producers of specialty crops, nursery crops, tobacco, some minor livestock species, and aquaculture products. This payment is based on a producer’s revenue derived from those farm products in 2019 and mirrors the revenue based payment program proposed in the Local and Regional Farmer and Market Support Act (Local Farmer Act), that was developed with support of NSAC and Coalition member the Carolina Farm Stewardship Association. This payment option has been especially important for diversified growers, farmers who grow organic or otherwise higher valued farm products, and producers who sell directly to their customers. Payments based on historic revenue, rather than wholesale price declines, better reflect farmers’ real losses due to market disruptions.
Nearly all crops and products not covered under the other two payment options are eligible for the sales commodity payment and although the payment rates are relatively modest (approximately 10%) they have been well received by diversified growers and specialty crop and livestock producers. With nearly a month left to sign up for the program, CFAP-2 has already paid 576,399 farmers more than $9.5 Billion in payments, well ahead of the CFAP-1 program during the same time period.
What is more telling is the distribution of those payments. While row crop and cattle producers continue to derive the greatest payments, specialty crop and specialty livestock payments have increased from $833 Million under CFAP-1 to $1.2 Billion under CFAP-2 and the rate of payments to farmers for eligible sales commodities continues to grow even as claims for other payments slow. This is particularly remarkable given that early projections of CFAP-2 payments anticipated that specialty crops would likely receive only $313 million in payments.
Are there problems with CFAP-2?
Yes, but there is progress. In the process of helping farmers understand CFAP-2 through webinars and developing supporting materials, a number of questions and concerns have been raised about the structure and administration of the program. NSAC has worked with USDA to get answers to some of the farmer questions which are summarized below.
Yes. An acreage report is required for the acreage-based assistance, which includes both price-trigger and flat rate payments. To file an acreage report, a farm must be established with FSA.
No. The funding allocated for CFAP-2 is based on USDA’s rigorous analysis of the impacts of market disruptions and associated costs caused by COVID-19 (farmers.gov/cfap) and is anticipated to meet the applications submitted by farmers and ranchers. However, there is no contingency in place if demand exceeds existing funding.
The USDA CFAP-2 handbook contains several examples. If selected for spot check, participants will be required to provide documentation to support their certification. The Department recognizes available documentation will vary significantly by commodity as well as method of sale and will work with participants, as appropriate, on any concerns with documentation to support certifications.
Spot checks will be based on a statistically-sound, random sample with additional selections identified to ensure a sufficient sample of all types of commodities is completed to meet program integrity requirements.
The national office outlines and oversees the spot check process. Spot checks will be completed by FSA staff, which may be the local office staff, regional staff, or staff from within the state and/or neighboring state.
Translations for the CFAP 2 application (AD-3117) and CCC-902I (for individuals) will be available soon. The CCC-902E (for entities) is available in Spanish, as is the CCC-902 Continuation. The AD-1026 is currently available in Spanish, Chinese, Russian, and Vietnamese.
If an application is disapproved or any information on the application is adjusted from what is certified by the applicant, the local FSA office provides written notification to the applicant and provides appeal rights. This is the process with CFAP-1, CFAP-2, and all other programs administered by FSA.
CFAP payments will be processed in advance of the determination being completed for any producer certifying in compliance with the highly erodible land and wetland provisions. The determination will still need to be completed but will not result in delaying issuance of payments.
How can future coronavirus aid work better for farmers?
At this moment, the prospects for another coronavirus response bill are dim until the new Congress convenes in January. Control of the Senate is still outstanding, pending runoff elections in Georgia, and the transition between the Trump and Biden Administrations is more fraught than any in living history. This makes the bipartisan work necessary to craft a coronavirus aid package that could help farmers during this difficult year extremely hard to achieve. However, this dynamic is likely to change in the next Congress as rates of coronavirus continue to increase and the spread into rural communities changes the political calculus of some legislators.
In a future coronavirus package (C4), there are a number of actions that could help across all Americans across the entire food system and NSAC recently wrote to Congressional leadership to detail these priorities. In addition to those urgent needs, the next version of CFAP direct farmer aid should be improved by:
NSAC remains committed to ensuring that any future coronavirus response supports farmers, farmworkers, food system workers and all who rely on them for healthy, safe, nutritious food and that it align with the long term goal of creating a more just, equitable, and sustainable food system.