Apr 20, 2020
USDA Announces a New COVID-19 Program for Farmers
On Friday evening, April 17, the United States Department of Agriculture (USDA) announced a new $19 billion program derived in part from funding pursuant to the CARES Act to assist farmers, ranchers, and consumers in response to COVID-19. The new USDA program, called the “Coronavirus Food Assistance Program (CFAP),” will provide direct support to farmers and ranchers and authorized USDA to purchase and distribute produce, dairy, and meat to food banks, community and faith based organizations, and other non-profits.
According to Senator John Hoeven, chairman of the Senate Appropriations committee that oversees USDA spending, USDA will spend $16 billion in direct support to farmers and ranchers based on actual losses for agricultural producers where prices and market supply chains have been impacted by COVID-19. The support will also assist producers with marketing costs resulting from lost demand and oversupply for the 2020 marking year.
- $9.6 billion for the livestock industry
- $5.1 billion for cattle
- $2.9 billion for dairy
- $1.6 billion for hogs
- $3.9 billion for row crop producers
- $2.1 billion for specialty crops producers
- $500 million for others crops
Producers will receive a single payment determined using two calculations:
- Price losses that occurred January 1-April 15, 2020. Producers will be compensated for 85% of price loss during that period.
- Second part of the payment will be expected losses from April 15 through the next two quarters, and will cover 30% of expected losses.
The payment limit is $125,000 per commodity with an overall limit of $250,000 per individual or entity. Qualified commodities must have experienced a 5% price decrease between January and April.
The USDA will release further details for the CFAP regarding eligibility, rates, and other implementation procedures at a later date. However, the USDA is expediting the rule making process for the direct payment program and expects to begin sign-up for the new program in early May and to get payments out to producers by the end of May.
The remaining $3 billion will be used by the USDA to purchase fresh produce, dairy, and meat from regional and local distributors, which will then distribute the commodities to entities serving Americans in need. The program will begin purchasing $100 million per month in fresh fruits and vegetables, $100 million per month in a variety of dairy products, and $100 million per month in meat products.
In addition, the USDA will use existing Section 32 authority to purchase an additional $873.3 million of agricultural products for distribution to food banks, and $850 million for administrative costs for food banks and USDA food purchases as provided by the CARES Act and the Families First Coronavirus Response Act.
In July, the USDA also expects to make additional assistance available to farmers and ranchers through additional money secured in the CARES Act for the Commodity Credit Corporation (CCC) to enhance the Agriculture Risk Coverage, Price Loss Coverage, the Livestock Forage Program and the Market Facilitation Programs.
Find details on the program here.