Which is Better - CFAP or MFP

Published on: 08:58AM May 20, 2020

After spending over two hours yesterday writing the blog post on the Coronavirus Food Assistance Program (CFAP), I thought today I would write up an example showing how the CFAP payment for a corn and bean farmer may compare to the 2019 Market Facilitation Program (MFP) payment.

Remember that the CFAP payment was designed to solely reimburse farmers who had inventory on hand that COVID-19 affected the pricing of that inventory.  It was not designed to provide payments for crops sold and cash collected.

Our example is a 5,000 corn and soybean farmer in the Midwest that has a 50/50 rotation.  Yields are 200 bushels for corn and 60 bushels for beans.

During 2019, the farmer received $300,000 of MFP payments assuming a $60 per acre payment and no payment limitation.

For 2020, CFAP will provide payments based on the inventories held by the farmer.  I went through and calculated expected payments based on the following inventory levels as of January 15, 2020:

  • 70% corn and beans on hand - $167,125 payment
  • 50% corn and beans on hand - $119,375 payment
  • 30% corn and beans on hand - $71,625 payment
  • 10% corn and beans on hand - $23,875 payment

As you can see, there is likely no case where a Midwest row crop farmer will receive more CFAP payments this year versus MFP payments from last year.  The actual payment amount could be different for the inventory level over 50% of production could be different since I still can't quite determine how FSA is calculating that amount.

However, on the livestock side, payments under CFAP are likely to be substantially higher than under MFP.

 

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