USDA COVID-19 Food Assistance Program to Support Farmers

Summary

By Schramm, Williams & Associates, Inc. — The U.S. Department of Agriculture (USDA) announced the $19 billion Coronavirus Food Assistance Program (CFAP) to support farmers and ranchers during the COVID-19 pandemic. This program is comprised of two major elements: direct payments to farmers and ranchers and commodity purchase and distribution.

  • Direct Payments Program – Provides $16 billion in direct support based on actual losses for agricultural producers where prices and market supply chains have been impacted and will assist producers with additional adjustment and marketing costs resulting from lost demand and short-term oversupply for the 2020 marketing year caused by COVID-19.
  • Purchase and Distribution Program – $3 billion of agricultural products, including meat, dairy, and produce will be purchased to support producers and provided food to those in need. USDA will work with local food and regional distributors to deliver food to food banks, as well as community and faith-based organization to provide food to those in need.

CFAP uses funding authorities provided in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Families First Coronavirus Response Act (FFCRA), USDA’s existing CCC funding, and Section 32 authority.

Direct Assistance Program

Source of Funds

This program is funded using the $9.5 billion emergency program secured in the CARES Act and $6.5 billion in Credit Commodity Corporation (CCC) funding.

Payment Allocations

USDA will provide $16 billion in direct payments to farmers and ranchers including:

  • $2.1 billion for specialty crops producers
  • $500 million for others crops

Payment Calculations

Producers will receive a single payment determined using two calculations:

  1. Price losses that occurred January 1 – April 15, 2020.
  2. Producers will be compensated for 85% of price loss during that period.
  3. The expected losses from April 15 through the next two quarters.
  4. Will cover 30% of expected losses.

Limitations

  • The payment limit is $125,000 per commodity with an overall limit of $250,000 per individual or entity.
  • Qualified commodities must have experienced a 5% price decrease between January and April.

Expected Timeframe

Program Sign-up: Beginning in Early May

Payment Distribution: End of May or early June

Food Purchase and Distribution Program

Commodity Procurement

It will begin with the procurement of an estimated:

  • $100 million per month in fresh fruits and vegetables;
  • $100 million per month in a variety of dairy products;
  • $100 million per month in meat products.

Distribution

The distributors and wholesalers will provide a pre-approved box of fresh produce, dairy, and meat products to food banks, community and faith-based organizations, and other non-profits serving Americans in need.

Additional Food Purchasing

In addition to the two targeted programs, USDA will utilize other available funding sources to purchase and distribute food to those in need.

  • USDA has up to an additional $873.3 million available in Section 32 funding to purchase a variety of agricultural products for distribution to food banks. The use of these funds will be determined by industry requests, USDA agricultural market analysis, and food bank needs.
  • The FFCRA and CARES Act provided an at least $850 million for food bank administrative costs and USDA food purchases, of which a minimum of $600 million will be designated for food purchases. The use of these funds will be determined by food bank need and product availability.

Further details regarding eligibility, rates, and other implementation will be released at a later date.

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