Overview
CFAP will use funding authorized under the Coronavirus Aid, Relief and Economic Security Act (CARES), the Families First Coronavirus Response Act (FFCRA) and other USDA existing authorities.
The program includes two major elements: Of the $19 billion total budget outlay, $16 billion will be provided as direct payments for farmers and ranchers, and $3 billion will be used to purchase agriculture products, including meat, dairy and produce.
Payment details
Lots of questions remain regarding how direct payments will be determined. Sen. John Hoeven (R-North Dakota), chair of the Senate ag appropriations subcommittee, released additional details.
Preliminary information indicates U.S. livestock producers will receive about $9.6 billion in direct payments. Of that total, dairy farmers will receive about $2.9 billion, cattle producers will receive $5.1 billion, and hog producers will receive $1.6 billion.
Among crop producers, $2.9 billion will be distributed to row crop producers, $2.1 billion to specialty crop producers and $500 million to producers of other crops.
Qualified commodities must have experienced a 5% price decrease between January and April.
A single payment will be determined using two calculations:
- Producers will be compensated for 85% of the price loss during the period of Jan. 1-April 15, 2020.
- Producers will be compensated for 30% of expected price losses from April 15 through the next two quarters of 2020.
The payment limit is $125,000 per commodity, and diversified operations will be able to choose a second commodity, with an overall payment limit of $250,000 per individual or entity.
The USDA is expediting the rule-making process for the direct payment program and expects to begin sign-up in early May, with payments starting by the end of May or early June.
Other details regarding eligibility, rates and other implementation will be released at a later date.
Food purchases and distribution
The second part of the program designates $3 billion for the purchase and distribution of ag products for those in need. On a monthly basis, the USDA will procure an estimated $100 million (each) in dairy products, meat products, and fresh fruits and vegetables.
The USDA will work with local food and regional distributors to provide pre-approved boxes of fresh produce, dairy and meat products to food banks, community and faith-based organizations, and other nonprofits serving Americans in need. In a press release on April 19, the USDA said it would begin inviting proposals over the next two weeks and will award contracts to purchase commodities and assemble and deliver food boxes. The USDA will hold an informational webinar for interested participants on April 21 to provide an overview of the program and instructions for submitting offers.
Brent Gloy with Agricultural Economic Insights offered some analysis of commodity price changes, making calculations based on the average price over the first two weeks of April and comparing them against year-earlier prices and average prices in January 2020. (Dairy was not included in the analysis.)
For corn, the average futures price for April 1-15 was $3.49 per bushel, an 11% decline from last year and a 13% decline since January. Soybean prices have fared a little better, declining by 9% since January.
However, the “real carnage” was seen in cotton, live cattle and hogs, Gloy said. Live cattle prices declined 30% from a year earlier and 28% since January. 
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Dave Natzke
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- Progressive Cattle
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