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CFAP 2: Dairy payment is $1.20 per hundredweight

Progressive Dairy Editor Dave Natzke Published on 18 September 2020

Editor's note: The original article has been edited to clear up information on the dairy payment rate.

Details of a second Coronavirus Food Assistance Program (CFAP 2) have been announced. For dairy producers, direct payments will equal $1.20 per hundredweight (cwt) on eligible milk production for the last nine months of 2020.

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The sign-up period will be open from Sept. 21-Dec. 11, 2020, at USDA Farm Service Agency (FSA) county offices. CFAP 2 is considered a separate program and requires a separate sign-up, even if the producer signed up for and received payment under CFAP 1. Producers who did not sign up for CFAP 1 are eligible to sign up for CFAP 2.

Payments will be made shortly after applications are approved.

Dairy details

Dairy payments will be equal to $1.20 per cwt on:

1. The producer’s total actual milk production from April 1-Aug. 31, 2020, and

2. An FSA estimation of a producer’s milk production from Sept. 1-Dec. 31, 2020 (based on the daily average production from April 1-Aug. 31, multiplied by 122 days).

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100% of the payment will be made once a farm’s eligibility is determined, meaning there will be no 20% holdback as with earlier assistance.

According to the USDA, the average futures price decline for milk from mid-January to late July was about 12%. An 80% factor is applied to the price difference, and the payment rate is further adjusted to reflect the portion of second-quarter payments covered under CFAP 1.

Dairy operations applying for CFAP 2 must be in the business of producing and commercially marketing milk at the time of application. Dairy operations that dissolve or have dissolved on or after Sept. 1, 2020, are eligible for a prorated payment for the number of days the dairy operation commercially markets milk from Sept. 1-Dec. 31, 2020. Dairy operations that dissolved before Sept. 1, 2020, are ineligible for CFAP 2 payments.

“This latest round of CFAP assistance will help many family dairy farmers suffering from the economic affects of the COVID-19 pandemic,” said Jim Mulhern, president and CEO of National Milk Producers Federation. “It will not address the needs of all dairy farmers, but it will help bolster the safety net for many as we enter the fall and winter months.”

General information

As with CFAP 1, the program is designed to provide assistance to producers suffering financial losses due to ongoing market disruptions and associated marketing costs related to the COVID-19 pandemic. Total funding for CFAP 2 is $14 billion, with funds coming from the Commodity Credit Corporation (CCC) Charter Act and the Coronavirus Aid, Relief and Economic Security (CARES) Act.

Through Sept. 14, the USDA had paid out about $9.9 billion of a total budget of $16 billion for CFAP 1. Application period for CFAP 1 closed on Sept. 11.

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Payment categories

CFAP 2 payments will be made for three categories of commodities:

  • Price trigger commodities – Price trigger commodities are major commodities that meet a minimum 5% price decline over a specified period of time. Most major field crops are included in this category, with payments on a per-acre basis. Dairy is also included in this group.

  • Flat-rate crops – This group includes crops that either do not meet the 5% price decline trigger or do not have data available to calculate a price change. Payments are on a per-acre basis. Alfalfa is included in this group.

  • Sales commodities – Sales commodities include specialty crops, aquaculture, nursery crops and floriculture – other commodities not included in the price trigger and flat-rate categories. Goat milk is included in this group.

Dairy goat milk, beef cattle

Dairy goat milk producers are also eligible for payments under CFAP 2 as a sales-based commodity. Payment factors are based on 2019 sales unless the producer is new in 2020; then 2020 sales as of the application date will be used to calculate payments.

Eligible beef cattle will be based on the maximum owned inventory of eligible livestock on a date selected by the producer between April 16-Aug. 31, 2020. The payment is equal to $55 per head. Breeding stock are not eligible for payments. For dairy beef, producers are eligible for cattle inventory payment on bull calves and dairy steers, but not for breeding stock

Alfalfa is eligible for a payment under CFAP 2, but hay and crops intended for grazing are not.

Payment limitations separate

As in CFAP 1, payment limitations apply. However, since CFAP 2 is a separate program, payments made under CFAP 1 do not count toward CFAP 2 payment limits.

The total CFAP 2 payment that a person or legal entity may receive, directly through their application or indirectly through attribution of entity payments, is $250,000, except if:

  • Two different members of the legal entity each provide at least 400 hours of active personal labor, active personal management, or combination thereof with respect to the production of 2020 commodities, then an entity may receive up to $500,000.

  • Three different members of the legal entity each provide at least 400 hours of active personal labor, active personal management, or combination thereof with respect to the production of 2020 commodities, then an entity may receive up to $750,000.

Although the payment limitation is increased for corporations, limited liability companies, limited partnerships, trusts or estates, each members’ payment limitation (received directly or indirectly) remains subject to the $250,000 individual person payment limit.

Significantly, this round’s payment limitation provision has been expanded to include trusts and estates for both rounds of CFAP payments, meaning those who were disadvantaged by restrictive trust-related payment interpretations in the first round will have their situation resolved for that round as well as in the latest tranche of aid, according to NMPF. The application of direct attribution is also modified so that payment limits will not be reduced based on ownership shares, providing more equitable support to dairy farmers of various ownership structures.

These payment limit provisions are different from and separate from the payment limitations established by the 2018 Farm Bill.

Producers will also have to certify they meet the USDA’s adjusted gross income (AGI) 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.

Application information

Multiple application options are available.

Documentation to support the producer’s application and certification may be requested. All other eligibility forms, such as those related to adjusted gross income and payment information, can be downloaded. For existing FSA customers, including those who participated in CFAP 1, many documents are likely already on file. Producers should check with FSA county office to see if any of the forms need to be updated.

More information available

Additional information can be found on the CFAP 2 webpage. There is a separate link for frequently asked questions.

Customers seeking one-on-one support with the CFAP 2 application process can call (877) 508-8364 to speak directly with a USDA employee.

Due to the COVID-19 pandemic, USDA FSA service centers are open for business by phone appointment only, and fieldwork will continue with appropriate social distancing. While program delivery staff will continue to come into the office, they will be working with producers by phone and using online tools whenever possible.

Staff training scheduled

The USDA has also scheduled CFAP regional training webinars for state and county office staff on Sept. 18 and Sept. 21.  end mark

Dave Natzke
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