NSAC's Blog
Is COVID-19 Aid Reaching Farmers?
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.
- Will farmers be required to obtain an FSA number to apply for CFAP-2?
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.
- Is there any reservation of funding, or other mechanism, to ensure that farmers who apply late in the application cycle will receive the payment for which they are eligible?
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.
- What material will be accepted as documentation of 2019 sales from farmers who are subject to a USDA ‘spot check’?
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.
- How will USDA determine which farmers will be ‘spot checked?’ Will this selection process be random, a set percentage of applications made to each program payment option, or based on payment amounts, familiarity of the FSA office staff with the farmer/applicant, or on a perceived risk of fraudulent activity? There is a serious concern that any selection criteria used by the agency be uniform and that the standards applied not increase the probability that small, diversified operations are audited or that applications submitted by historically underserved farmers, including Black, indigenous, and producers of color, are reviewed at higher rates than the total pool of applicants reviewed.
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.
- Who will conduct the ‘spot checks’ of program eligibility? What is the role of FSA field staff and central office staff in identifying cases for review or in conducting the reviews? There is a serious concern that the review of eligibility by agency staff be uniform and equitable.
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.
- When will USDA make Spanish language versions of all CFAP-2 application materials (including supporting documents CCC-902, AD-1026, etc.) available and will both online and paper forms be available? In what other languages will the application documents be available?
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.
- What is the process that USDA will use to inform producers that their CFAP-1 and CFAP-2 applications were denied or that the amount of the payment for which they were approved was “adjusted” by USDA, and is therefore different from that on the farmer’s application? Has USDA sent any denial letters to farmers for either CFAP-1 or CFAP-2?
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.
- Producers that do not have current records on file at their FSA offices will likely need to demonstrate their conservation compliance when applying for CFAP-2 through the submission of Form AD-1026 “Highly Erodible Land Conservation (HELC) and Wetland Conservation (WC) Certification.” Is there a process in place to ensure that farmers that need NRCS determinations of HELC and WC can receive them quickly so that their applications can be submitted and considered before the program closes on December 11th?
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:
- Opening the sales commodity payment program to all direct marketing farmers and other producers who grow products that command a price premium such as organic, pasture raised, or similar.
- Making contract producers eligible for payments CFAP payments.
- Increasing the payment rates for the sales commodity payment program and including a mechanism for farmers to demonstrate – and be eligible to be compensated for – costs they have incurred to adapt to marketing their commodities during the pandemic.
- Ensuring greater training and resources – particularly farmer oriented materials in a variety of languages – for FSA fields staff so that they can better serve all farmers and expand outreach efforts to ensure that all eligible farmers – particularly Black, Indigenous, and Farmers of Color – understand the program and how to apply for assistance.
- Conducting a rigorous analysis of the farmers who applied for, received, or were deemed ineligible to receive assistance under CFAP-1 and -2 to ensure that the programs were administered equitably and that any future program actively counters any bias or discriminatory practices that may be discovered.
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.
Categories: Carousel, General Interest
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