About four out of every $10 earned in the agriculture industry in the U.S. in 2020 will come in the form of direct payments from the federal government, according to the U.S. Department of Agriculture.
In early September, the USDA estimated that government payments would make up 36% of the estimated $102.7 billion in farm income this year.
Then, during a campaign stop in Mosinee on Sept. 17, President Donald Trump announced another $14 billion funding for a second round of the Coronavirus Food Assistance Program for agricultural producers who continue to face market disruptions and associated costs because of COVID-19.
According to the American Farm Bureau Federation, almost $10 billion from the first CFAP provided much-needed support to livestock, dairy, non-specialty and specialty crop producers throughout the country.
Many farmers were initially left out of CFAP, and although the program was expanded to include more commodities, aid was only made available for losses suffered before April 15. The deadline for most producers to apply for the first round of CFAP assistance expired on Sept. 11.
American Farm Bureau Federation President Zippy Duvall said he is seeing a need for another round of CFAP payments.
“Farmers and ranchers saw demand for their markets disappear during the initial shockwave of the pandemic. Even though concerns over food supplies have now subsided, the economic hardships are still taking their toll on farm families across the country,” Duvall said in a news release. “We don’t know when this pandemic will end and we are still feeling the effects of trade imbalances and severe weather. This lifeline will keep farmers and ranchers afloat as they continue to keep America’s pantries stocked.”
Before the additional $14 billion CFAP funding was announced, the USDA Economic Research Service estimated that direct government farm program payments were to increase 65.7%, or about $14.7 billion, from 2019 to 2020. As of Sept. 2, the USDA ERS projected direct farm payments for 2020 to total $37,191,748,000.
“America’s agriculture communities are resilient, but still face many challenges due to the COVID-19 pandemic,” U.S. Secretary of Agriculture Sonny Perdue said in a news release about the second round of the CFAP program. “We listened to feedback received from farmers, ranchers and agricultural organizations about the impact of the pandemic on our nations’ farms and ranches, and we developed a program to better meet the needs of those impacted.”
The USDA will use funds being made available from the Commodity Credit Corporation Charter Act and CARES Act to support row crops, livestock, specialty crops, dairy, aquaculture and many additional commodities. USDA has incorporated improvements in CFAP 2 based from stakeholder engagement and public feedback to better meet the needs of impacted farmers and ranchers.
CFAP provides direct relief to producers who faced price declines and additional marketing costs due to COVID-19.
CFAP was announced in mid-April, when Perdue said the program would provide up to $16 billion in direct payments to deliver relief to America’s farmers and ranchers impacted by the coronavirus pandemic.
Wisconsin was among the top five states in the country in farmers receiving payments in the first round of the CFAP, with the dairy sector leading the way.
Peter Vitalioano, vice president of Economic Policy and Market Research for the National Milk Producers Federation, said CFAP payments for dairy are calculated based on milk production and projections through the end of the year. A 200-cow dairy with average productivity would receive about $43,000, and a 500-cow dairy would receive about $107,500.
“This year, we’re going to have very significant direct payments,” Vitalioano said during a Sept. 23 edition of the Professional Dairy Producers of Wisconsin’s Dairy Signal webinar. “Prices this year, including the direct payments, are going to be a little bit better.”
National Farmers Union President Rob Larew conveyed appreciation for the financial support and urged that it be distributed to those who need it most.
“Even as restrictions ease, it is evident that farmers will be feeling the effects of the pandemic for quite some time,” Larew said in a news release. “Markets have been slow to recover, prices remain low, and processing facilities are still backed up. While these challenges persist, farmers will certainly need assistance to stay solvent — and we are grateful that USDA is providing it through another round of CFAP.
“This support is absolutely crucial — but it is just as crucial that it is distributed fairly and equitably. The first round of funding, though greatly appreciated, was not without its flaws; not only did it favor large farms over smaller ones, it also sent millions of dollars to foreign-owned operations and excluded some farmers entirely. With Congressional oversight, we ask that USDA rectify these issues and ensure that payments are commensurate with demonstrated need.”
Producers can apply for CFAP 2 at USDA’s Farm Service Agency county offices. There is a payment limitation of $250,000 per person or entity for all commodities combined. Applicants who are corporations, limited liability companies, limited partnerships may qualify for additional payment limits when members actively provide personal labor or personal management for the farming operation. In addition, this special payment limitation provision has been expanded to include trusts and estates for both CFAP 1 and 2.
Producers will also have to certify they meet the Adjusted Gross Income limitation of $900,000 unless at least 75% or more of their income is derived from farming, ranching or forestry-related activities.
More information and application forms can be found at farmers.gov/cfap.