More information regarding the Coronavirus Food Assistance Program (CFAP) became available, shedding light on the anticipated direct payments for dairies. The payment rates are higher than previous expectations and will be calculated based on two periods to reflect the first and second quarter. The first part of the calculation will be $4.71/cwt multiplied by the first quarter of 2020’s milk production. The second part of the payment will be $1.47/cwt multiplied by the first quarter of 2020’s milk production times 1.014. This second part of the calculation is supposed to cover losses for the second quarter, so the 1.014 is an adjustment to reflect the fact that second quarter production was higher than the first quarter. To simplify this calculation and find out your total payment, you can take $6.20/cwt and multiply that by the first quarter production volume. No production reductions are necessary to qualify.
USDA will make an initial payment of 80% of an eligible participant calculated payment. This will allow FSA to promptly distribute funds while ensuring the payments do not exceed the maximum funding limit. If funds are still available after the initial payment, USDA will disburse the remainder of the available funding.
No payment cap would have been better, but the agency made some progress in increasing the payment limit from the previously announced $125,000 per commodity. The payment limit is raised to $250,000 per person (for all commodities). There is an exemption for corporations, LLCs and limited partnerships, where up to three individual owners can qualify for payments up to that limit if they are actively engaged in the operation of the farm. This brings the total to a potential of $750,000.
FSA started taking applications on May 26. Make sure to give your local FSA office a call before submitting information or to confirm they received it. No in person visit are required, although some FSA offices may have a drop box option available. Most FSA offices take applications by fax, email or mail. Applications must be printed and signed.
But I would suggest making a phone appointment with your local FSA as early as possible.
Corporations, LLCs, and LPs can have up to three individual owners qualify for payments up to that $250k limit if they are actively engaged in the operation of the farm. This brings the total to a potential of $750,000. Actively engaged is defined as “provided at least 400 hours of active personal labor or active personal management or combination thereof with respect to the production of 2019 commodities”.