What Does CFAP 2.0 Mean for Dairy Producers?

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On Friday, President Trump along with USDA Secretary Sonny Perdue announced a second round of Coronavirus Food Assistance Program (CFAP) will be distributed. Farmers impacted by economic fallout from COVID-19 will be eligible to receive funds from the up to $14 billion allocated for assistance.

In order for dairy producers to receive some of these funds, dairy operations must have been in the business of producing and commercially marketing milk at the time of application. If the dairy operation dissolved on or after Sept. 1, 2020, they are eligible for a prorated payment for the number of days the operation commercially marketing milk from Sept. 1, 2020 through Dec. 31, 2020. If the operation dissolved before Sept. 1, 2020, it is ineligible for CFAP 2 payments.

Payments will be equal to the sum of the following:

  • Producers total actual milk production from April 1, 2020, to Aug. 31, 2020, multiplied by the payment of $1.20 per cwt.
  • Estimated milk production from Sept. 1, 2020, to Dec. 31, 2020, based on daily average production from April 1, 2020 to Aug. 31, 2020, multiplied by 122, multiplied by a payment rate of $1.20 per cwt.

“The CFAP 2.0 gives the producer an influx of capital during a very expensive time of year, however with an extra influx of funds, we have to be careful to not build up production that will suppress milk price in 2021 and beyond,” says Jenny Wackershauser, a risk management adviser at Commodity Risk Management Group. “Keep in mind there are limitations on the direct payments of $250,000 for all commodities based on your entity type and ownership structure.”

Wackershauser advises producers to speak with their Farm Service Agency agent in the coming days to gain further details on how this program could be helpful to their operation. 

“Farmers and ranchers saw demand for their markets disappear during the initial shockwave of the pandemic,” says Zippy Duvall, American Farm Bureau Federation president. “Even though concerns over food supplies have now subsided, the economic hardships are still taking their toll on farm families across the country. 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.”

The CFAP 2 program will include more commodities than the original payments, which focused on livestock, dairy, non-specialty crop and specialty crop producers. The first round of aid was only available to producers who suffered losses before April 15, 2020 and the deadline for most producers to apply for the first round of aid has passed.

“We really struggled last time in trying to figure out different rates for different commodities,” says USDA Undersecretary Bill Northey. “So, this time, we’re looking at specialty crop and specialty livestock, we’re looking at revenue from 2019 and we’re paying a percentage of that revenue—about 10%. A little more for smaller operations and a little less for larger operations.

“We’ve got a bucket that looks at the major commodities like corn and soybeans and wheat as well as cattle and dairy that really does look at a 5% price loss and develops a rate for those commodities,” Northey continues. “So, there’s some similarity [to CFAP 1] there.”

Signup for CFAP 2 will begin September 21, 2020 and continue through Dec. 11, 2020. Funds are being made available from the Commodity Credit Corporation (CCC) Charter Act and CARES Act to support row crop, livestock, specialty crop, dairy, aquaculture and other commodities.

 
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