USDA Adds More Crops to CFAP

Published on: 14:30PM Aug 12, 2020

The USDA announced on Tuesday a list of substantially more crops that now qualify for the Coronavirus Food Assistance Program (CFAP).

I must admit that I have not heard of many of the crops listed (such as batatas, cherimoy, escarole, frisee, mamey sopote, yautia/malanga).  Most of the crops added were in the Specialty Crop section, however, liquid eggs, frozen eggs and all sheep were added to livestock.

Additionally aquaculture and nursery crops and cut flowers now qualify for aid too.

Some of the specialty crops now qualify for sales losses not just marketing adjustment losses and some correcting payment rates were made.

Probably the biggest disappointment were the crops that were not added with winter wheat likely being the largest crop.  Only spring wheat qualifies for CFAP payments and USDA continues to state that winter wheat crops did not see more than a 5% reduction in price between January 15 and April 15.

The wheat associations argued that substantial reductions in prices occurred during this period, but prices had rallied enough by April 15 for USDA to say "no damage" was done.

It likely that the next round of COVID-19 stimulus will have some relief for wheat farmers, however, based on how slow Congress is putting a package together that may not happen until late in the year.

Some of the additional crops may qualify for a substantial payment, however, the payment limits may drastically reduce the actual payment allowed.  For example, nurseries and cut flower growers will qualify for a payment equal to 15.55 percent of wholesale value of inventory that was shipped that spoiled or was unpaid plus 13.45 percent of inventory that could not leave the farm due to marketing issues.

Let's assume that Joe Tulip, LLC harvested $20 million of tulips in March of 2020.  $3 million of these tulips either spoiled or have never been paid for.  Additionally, $4 million of tulips were left in the field and plowed under due to cancelled orders.  The total payment that the company qualifies for is $1,004,500, however, since this is an LLC, the actual payment allowed could be as low as $250,000 (could be $750,000 if at least 3 owners provide 400 hours of management and have enough ownership in the LLC).  The payment will help, but it certainly does not offset the damage done to the company.

keyword: