Coronavirus Food Assistance Program
If you are an agricultural producer who has been hurt financially from COVID-19, the USDA has implemented a program to help offset impacts from the coronavirus pandemic called Coronavirus Food Assistance Program (CFAP).
The USDA is accepting applications until August 28, 2020 for food producers who have been directly impacted by COVID-19. Specifically, the program is designed to provide assistance to agricultural producers who have suffered a 5% or greater price decline or who have had losses due to the market supply chain disruptions.
Commodities covered under this program consist of: corn, soybeans, oats, millet, durum wheat, hard spring wheat, wool, livestock, dairy, and a variety of other crops. To see the full list of covered commodities, please visit the USDA website.
To be eligible for payments, a person or 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 comes from farming, ranching, or forestry, the AGI limit of $900,000 does not apply.
Payments are limited to $250,000 per person and legal entity. This amount applies to the total amount of CFAP payments for all commodities combined. CFAP is different than other FSA programs, whereas special payment limitations will be used for applicants that are corporations, limited liability companies, and limited partnerships. These entities may receive up to $750,000 in payments based upon the number of shareholders who contribute at least 400 hours of active person management or personal active labor.
In simpler terms, payment limits made to a corporate entity:
with one shareholder is $250,000
with two shareholders is $500,000, if both shareholders contribute substantial labor or management
with three shareholders is $750,000, if three or more shareholders contribute substantial labor or management
with four or more shareholders is $750,000, if four or more shareholders contribute substantial labor or management
The payment received is determined by a formula that accounts for the volume of the commodity which is multiplied by a USDA determined price based on the national wholesale markets. Records of production and sales will be needed for 2019 and 2020 along with any inventory that has been unharvested or not sold. Further, applicants may also need fill out forms regarding: Farm Operating Plan for Payment Eligibility, Member Information for Legal Entities, Averaged Adjusted Gross Income Certification and Consent to Disclosure of Tax Information.Producers should receive 80% of their maximum payment upon approval of their application with the remaining payment to be received at a later date as funds remain available.
To apply for the Coronavirus Food Assistance Program, producers should apply through their local Farm Service Agency Service Center. An application for CFAP is available here.
For more information on farm law, estate planning, elder law, business, and real estate, subscribe to our quarterly newsletter.