Beef Producers Should Consider Signing Up for CFAP-2

By:  David Marrison, Extension Educator, ANR, Coshocton County

Deadline to sign-up for CFAP-2 is December 11, 2020

The COVID pandemic has created disruption in many areas of agriculture.  Instead of our usual market cycles, farmers saw prices move up and down in ways contrary to typical market cycles.  To help farmers mitigate the impact of the coronavirus, the Coronavirus Food Assistance program (CFAP) was released in April with program sign-up ending on September 11, 2020.

On September 17, the USDA announced additional assistance through a second version of this program titled Coronavirus Food Assistance Program 2 (CFAP 2). Nearly all agricultural commodities are eligible for payments under this program.  These payments will be made for three different categories which include:

• Price Trigger commodities– suffered a five percent-or-greater national price decline in a comparison of the average prices for the week of January 13-17, 2020, and July 27-31, 2020.
• Flat Rate crops– These crops either do not meet the 5-percent price decline trigger noted above or do not have data available to calculate a price change.
• Specialty (sales-based) commodities -This category includes specialty crops and livestock. Payments will be made on sales-based approach based on 2019 sales

This article is written specifically for beef producers. Additional information for other commodities covered in CFAP 2 can be found at: https://www.farmers.gov/

Beef Cattle:

Beef cattle (excluding breeding stock) are eligible for CFAP 2 payments as a price trigger commodity.  This is because the average mid-January to late-July live cattle December futures price declined by $12.10 per cwt., or 9.9 percent.  Additionally, feeder cattle November futures declined 8.2 percent ($12.77 per cwt) during the same time period. It is estimated that $2.82 billion in payments will be made to beef producers in CFAP-2.

For beef cattle, payments under CFAP 2 will be equal to:

• The producer’s owned inventory of eligible beef cattle, excluding breeding stock, on a date selected by the producer from April 16, 2020, through August 31, 2020,
• Multiplied by the payment rate of $55 per head, up to $250,000 or 4,546 head per producer.

Payment Example:

Joe Bull have a small herd of beef cattle in Eastern Ohio.  The largest number of beef animals he owned from April 16 to August 31 was 72 on July 23, 2020.  This included 30 brood cows, 10 fat cattle intended for slaughter, 20 feeder calves, 10 heifers, and 2 breeding bulls.  In this example, Mr. Bull would be eligible to receive a payment of $2,200 for his eligible animals (fat cattle, feeders, & heifers) which were in inventory on July 23, 2020 (See Table 1).

Table 1: Example Beef Payment under CFAP 2

Eligibility

Any individual or legal entity who shares in the risk of producing a commodity may apply for CFAP 2. Producers must be in the business of farming and producing commercially produced commodities at the time of submitting their application to be eligible.

Commodities grown under a contract in which the grower has ownership and production risk are eligible for CFAP 2.

To be eligible for payments, a person or legal entity must have an average adjusted gross income of less than $900,000 for tax years 2016, 2017, and 2018. However, if 75 percent of their adjusted gross income (AGI) comes from farming, the AGI limit of $900,000 does not apply and the person or legal entity is eligible to receive CFAP 2 payments up to the applicable payment limitation.

Persons and legal entities also must also comply with the provisions of the “Highly Erodible Land and Wetland Conservation” regulations, often called the conservation compliance provisions; and not have a controlled substance violation.

Operations can qualify for up to three payment limitations if they provide at least 400 hours of active personal labor, active personal management, or combination thereof with respect to the production of 2020 commodities.

• Two payment maximum limit = $500,000 or 9,091 head.
• Three payment maximum limit = $750,000 or 13,636 head.

It should be noted the combined payment for the entity could be limited based on the percentage distribution of ownership shares of the entity.

Application:

To complete the CFAP 2 application, producers will need to reference their sales, inventory, and other records. CFAP 2 is a self-certification program, this documentation will not need to be submitted with the application. Because applications are subject to County Committee review and spot check, some producers will be required to provide documentation. Producers should retain the records and documentation they use to complete the application. More information can be found at:  farmers.gov/cfap/apply.

Applications can be completed online, manually, or through your local FSA office.   You can find contact information for your local USDA Service Center at farmers.gov/coronavirus/service-center-status.

Additional information about the application process, including a Excel calculator, is available here https://www.farmers.gov/cfap.

Sources:

Coronavirus Food Assistance Program 2, Cost Benefit Analysis
https://www.farmers.gov/sites/default/files/documents/CFAP2-CBA-09252020.pdf

Coronavirus Food Assistance Program 2.0
https://u.osu.edu/ohioagmanager/2020/10/21/coronavirus-food-assistance-program-2-0/