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Ag updates: CFAP calls for direct payments to producers; EIDL applications put on hold

May 04, 2020
By: Bradley Cook
Agribusiness

From the CARES Act to H-2A visas, there’s been quite a bit of news coming from the agribusiness industry.

Today we’re covering two programs that have the biggest impacts on producers: CFAP and EIDL.

How the Coronavirus Food Assistance Program (CFAP) will be administered

On April 17, using funding from the CARES Act, U.S. Secretary of Agriculture Sonny Perdue announced the Coronavirus Food Assistance Program.

CFAP calls for direct payments to producers, made up of two components: $16 billion in direct payments to farmers and ranchers and $3 billion in food product purchases for distribution. 

While many questions are left unanswered until rulemaking is complete, we do have some framework for how the program will be administered.

According to the American Farm Bureau Federation, the USDA has disclosed that payments will be determined in two parts. The first part is determined from price losses incurred from January 1, 2020, to approximately April 15-17 (final date determination is pending) and the second part is derived from losses from April 15-17 through the subsequent two quarters.

Producers will be compensated for 85% of the price loss during the first time period and 3% of expected losses for the second time period. USDA expects sign-up for the program to be available in May and has set a goal to distribute payments towards the end of May or early June. 

While payment and income limits still apply, participation in other farm programs is not said to lower a recipient’s CFAP payments.

Under the food purchases and distribution component of the program, the USDA will purchase $3 billion of fresh produce, dairy and meat products. Procurement will include $100 million per month from each category. The USDA will partner with regional and local distributors who will provide a pre-approved box of products to food banks, community and faith-based organizations and other nonprofits. 

The Small Business Administration (SBA) is not accepting new applications for EIDL

The SBA has announced they are unable to accept new applications at this time for Economic Injury Disaster Loans (EIDLs) based on available appropriations.

The EIDL was intended to help small businesses overcome the temporary loss of revenue they are experiencing as a result of the COVID-19 pandemic. Assistance was in the form of an advance up to $10,000, which did not require repayment. 

Ag producers were initially left out of this program but have since been deemed eligible. Applicants who have already submitted their applications will continue to be processed on a first-come, first-served basis.

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Author(s)

Bradley Cook, CPA
Agribusiness Practice Leader
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