USDA Issues Final Rule for Coronavirus Food Assistance Program

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On May 19, the USDA issued a final rule governing the eligibility of agricultural producers for the $16 billion of direct federal aid available through the Coronavirus Food Assistance Program (“CFAP”), which was first announced on April 17.  The final rule contains details regarding the calculation of payments, producer eligibility requirements, and the application process.  Many of those details are summarized on the USDA’s new CFAP webpage, and key information for agricultural producers interested in applying for aid is set forth below.  Beginning May 26, USDA's Farm Service Agency will be accepting applications from agricultural producers who have suffered losses. The application form and a payment calculator for producers will be available online once signup begins.  A growing list of Frequently Asked Questions is also available here.

Calculation of Payments

CFAP payments are designed to provide producers with financial assistance that helps offset sales losses and increased marketing costs associated with the COVID-19 pandemic.  USDA has instituted different payment calculations for each type of producer, and while an online payment calculator is still forthcoming, the general payment calculations for each category can be found by following the links below:

CFAP payments will generally be capped at $250,000 per person or legal entity; however, a corporate entity (corporation, LLC, or partnership) may receive more than $250,000 if it certifies that two or three owners of the company each provide at least 400 hours of personal management or active labor, in which case the company may be eligible to receive up to $500,000 or $750,000, respectively.

USDA will make an initial payment of 80% of the total calculated maximum payment for a producer once the producer’s CFAP application is approved.  The remaining 20% of the calculated maximum payment will be made after the initial round of funding closes, provided that additional funds remain available.

Producer Eligibility Requirements

Generally, in order to be eligible for a payment, a producer must have suffered a 5-percent or greater price loss between mid-January and early-April, or have faced “additional significant marketing costs” due to surplus production or market disruptions related to COVID-19 (e.g., produce shipped but subsequently spoiled due to loss of marketing channel, or cancelled orders resulted in shipments that did not leave the farm or mature crops that remained unharvested).  In addition, the applicant’s Adjusted Gross Income (AGI) for federal income tax purposes is considered for eligibility purposes.  A person or legal entity will be ineligible for CFAP funds if the person or legal entity’s average AGI for the 2016, 2017 and 2018 tax years is greater than $900,000, unless at least 75 percent of their AGI comes from farming, ranching, or forestry-related activities.  With respect to joint ventures and general partnerships, the AGI test will be applied to each member of the joint venture or general partnership.  Participation in the SBA’s PPP or EIDL programs does not impact producer eligibility for CFAP.

For producers of agricultural commodities not included in any of the above categories, USDA is seeking input from producers who believe they’ve suffered a 5    percent-or-greater price decline between January and April 2020, and is especially interested in comments from producers of nursery products, aquaculture products, and cut flowers, which can be submitted pursuant to this Notice of Funding Availability.  Approximately $637 million of CFAP funds have been reserved for producers of agricultural commodities not currently included in the eligible categories.

Application Process

USDA will begin accepting CFAP applications through the Farm Service Agency (FSA) on May 26, 2020, and the application window will be open until August 28, 2020.   Because there is a limited amount of funds appropriated for CFAP, early action is strongly encouraged.  While the main application document has not yet been released, certain supplemental forms required for the application (CCC-901, CCC-941, CCC-942, AD-1026, AD-2047, and SF-3881)  have been published to the CFAP webpage and can be completed in advance.  Producers (especially producers of specialty crops that do not typically work with the FSA) are encouraged to call their local FSA office and make an appointment to discuss their application.  A list of FSA local county offices can be found using the “Find Your Local Service Center” tool on the CFAP webpage.

Key Takeaways

If you don’t already have a relationship with the Farm Service Agency:

  • Use the “Find Your Local Service Center” tool on the CFAP webpage, and call or email your local county office to make a phone appointment to review your application documents.
  • Review and complete the required supplemental forms linked above and on the CFAP webpage.  For assistance with Form CC-901, which describes your legal entity, contact a Stoel Rives corporate attorney.
  • Contact a Stoel Rives attorney with specific questions regarding program eligibility.

If you already have a relationship with the Farm Service Agency:

  • Many of the required supplemental forms for the CFAP application should already be on file with the FSA, but now is a great time to review your most recent filings and update any changes in your legal entities, adjusted gross income, banking information, etc.
  • Contact your local county FSA office to let them know you are planning to apply for CFAP relief and ask for guidance on when and how they would like you to submit your application materials.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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