By Ben Brown Assistant Professor of Professional Practice- Agricultural Risk Management, Department of Agricultural, Environmental, and Development Economics and David Marrison, Associate Professor & Extension Educator in Coshocton County
On April 17, the preliminary details about the Coronavirus Food Assistance Program (CFAP) were released by the U.S. Department of Agriculture (USDA) program aimed to assist farmers, ranchers, and consumers in response to the COVID-19 pandemic. The CFAP provides $19 billion in funds authorized through the Coronavirus Aid, Relief, and Economic Security Act (CARES).
The $19 billion program includes two major elements. The first element is for Direct Support to Farmers and Ranchers. This program will provide $16 billion in direct support to farmers based on actual losses where prices and market supply chains have been impacted by COVID-19. The program will also assist producers with additional adjustment and marketing costs resulting from lost demand and short-term oversupply for the 2020 marketing year caused by COVID-19.
It has been reported, although not confirmed by the USDA, that in the direct support program, $5.1 billion will be allocated to support cattle producers, $3.9 billion for row crop producers, $2.9 billion for dairy, $2.1 for specialty crops, $1.6 billion for hog producers and $500 million for other commodities.
The Chairman of the Senate Agricultural Appropriations sub-committee has indicated the direct assistance to producers will be one payment comprised of the sum of two parts. The first part is 85% of the losses incurred between January 1 and April 15, 2020 per commodity. The second part will be 30% of the loss in market prices due to COVID-19 between April and the next two quarters. Secretary Perdue has expressed that payments are intended to be made by end of May or early June. To qualify for a payment, a commodity must have declined in price by at least 5% between January and April 15, 2020. While there are several entities illustrating price declines including The Ohio State University, the price series USDA will use to determine eligibility is uncertain. Federal payment limits apply, set at $125,000 per commodity with an overall limit of $250,000 per individual or entity. USDA has indicated that CFAP may take into consideration other farm program benefits regarding payment limitations, which could limit CFAP payments in the case a producer is receiving payments in other federal safety net programs. The exact program limitations and qualifying support are unknown at the present time. The direct payment program will be administered by the Farm Service Agency. More details will be forthcoming by the Farm Service Agency in the upcoming weeks. Access more information at: https://www.fsa.usda.gov/
The remaining $3 billion dollars of the CFAP allocation will be used for a USDA Purchase and Distribution program. In this program, the USDA will partner with regional and local distributors to purchase $3 billion in fresh produce, dairy, and meat. The USDA will purchase an estimated $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. The distributors and wholesalers will then provide a pre-approved box of fresh produce, dairy, and meat products to food banks, community and faith-based organizations, and other non-profits to distribute. Monthly purchases totaling $300 million will continue until the funds are exhausted.
In addition to the Coronavirus Food Assistance Program, the USDA will utilize other available funding sources to purchase and distribute food to those in need. This includes an additional $873.3 million available in Section 32 funding to purchase a variety of agricultural products for distribution to food banks. The use of these funds will be determined by industry requests, USDA agricultural market analysis, and food bank needs.
Additionally, the FFCRA and CARES Act provided at least $850 million for food bank administrative costs and USDA food purchases, of which a minimum of $600 million will be designated for food purchases. The use of these funds will be determined by food bank need and product availability.
For all the information on USDA’s work during the COVID-19 pandemic and resources available, visit https://www.usda.gov/coronavirus.