The USDA announced that beginning May 26, they will receive applications from farmers for payments via the Coronavirus Food Assistance Program (CFAP). Eligible growers will receive one combined payment from two different sources (CARES and CCC):
A single payment will be made based on 50 percent of a producer’s 2019 total production or the 2019 inventory as of January 15, 2020, whichever is smaller, multiplied by the commodity’s applicable payment rates.
There is a cap on payments of $250,000 per person/legal entity, with certain business structures being eligible to receive $250,000 per shareholder up to 3 shareholders.
Producers must provide the following information for CFAP: • Total 2019 production for the commodity that suffered a five percent-or-greater price decline • Total 2019 production that was not sold as of January 15, 2020. Producers will be paid based on inventory subject to price risk held as of January 15, 2020.
[Note: the final rule mentions "self-certification" of inventories. It is unclear whether this will allow for bushels on DP, basis contracts, etc to be considered inventory at price risk.]
A producer will be paid on that commodity in storage, but the inventory cannot be higher than 50% of total 2019 production that the producer reported to the Farm Service Agency. Effectively, a farmer who grew 100,000 bushels or more in 2019 and has 50,000 bushels of 2019 corn in storage, unsold, on Jan. 15 would be paid on the 50,000 bushels
Yet, it is more complicated the way the rule is spelled out.
Half of that 50,000 bushels would be paid 32 cents from the CARES Act, and the other 25,000 bushels would be paid 35 cents from the Commodity Credit Corp. Essentially, USDA officials explained, when it is boiled down, the 50,000 bushels would be multiplied by 33.5 cents. That breaks down to 50,000 x 0.335, or $16,750.
For soybeans, the payment rates are 45 cents a bushel from the CARES Act and 50 cents a bushel from CCC. A farmer with 50,000 bushels unsold in storage from the 2019 harvest on Jan. 15 would be paid on 25,000 bushels at 45 cents a bushel. The other 25,000 bushels would be paid at 50 cents a bushel. That equates to $23,750 (50,000 x 0.475).