CFAP 3 Details
Now for the details on what I will call CFAP #3 (assuming President Trump finally signs this bill or Congress overrides his veto).The bill provides about $11.2 billion of direct aid to farmers and processors.
Aid to Producers of Crops
Producers of 2020 price trigger crops and flat-rate crops will receive $20 per planted acre. Price trigger crops are major commodities that suffered a 5% price decline over a specified period. The crops include barley, corn, sorghum, soybeans, sunflowers, upland cotton and wheat. About 240 million acres were planted to these crops so almost $5 billion of the aid will be used for these crops.
Flat-rate crops were described in CFAP #2 and are too numerous to list here but some of the more important crops are alfalfa, canola, flax, oats, peanuts, rice, sugar beets and sugar cane. They also qualify for the $20 per acre payment.
Specialty crop producers have modifications to their payments. First, they are now allowed to include crop insurance and disaster payments in calculation their sales and may elect to use 2018 sales instead of 2019 sales.
Aid for Livestock and Dairy Producers
Contract producers of poultry were mostly left out of the CFAP 1 and 2 since these growers did not own the birds. This bill remedies this by allocating $1 billion of direct aid for any contract grower of livestock (primarily poultry) and will cover up to 80% of losses.
The massive interruption in the livestock supply chain during the early onset of the pandemic resulted in numerous livestock being euthanized. These growers will now be eligible for aid to reimburse them for 80% of the FMV of those animals.
A livestock dealer statutory trust will be created to make sure that livestock producers get paid for their sales.
Cattle producers will receive additional payments based on a formula utilizing differences in the original CARES Act payment rate, the CCC payment rate, and the CFAP 2 payment rate. The bottom line is that the following per head payments will now be made:
- Slaughter cattle: Fed Cattle – $63.00
- Feeder cattle: 600 pounds or more – $25.50
- All other cattle – $17.25
- Slaughter cattle: Mature cattle – $14.75
- Feeder cattle: less than 600 pounds – $7.00
Certain dairy producers would be eligible for increased payments under the Dairy Margin Coverage Program. Smaller producers that were locked into 2011-2013 milk production would be allowed to increase their coverage levels based on 75% of the increase limited to 5 million pounds.
An additional $400 million will be used for a dairy donation program plus an additional $1.5 billion to allow USDA to purchase food products and donate it to food banks, etc.
Assistance for Processors
Domestic users of upland cotton and extra long staple cotton will receive assistance for cotton purchased between March 1, 2020 and December 31, 2020. The payment formula uses average monthly consumption between January 1, 2017 through December 31, 2019 times 60 cents.
Payments will be made to alternative fuel producers (such as ethanol) to reimburse them for damage caused by the drastic reduction in fuel consumption.
Offshore aquaculture producers will receive an additional $300 million of aid. Timber harvesters and hauling businesses will qualify for $200 million of aid.
Conclusion
About $13 million is set aside in the bill to directly help producers and processors. This provides a summary but USDA will need to set up the rules so that producers can know what they need to do to access their aid. This likely will take at least a month or so.
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
Are payments received thru the FSA or USDA subject to tax in 2020 that are denoted Covid-19? Can’t find anywhere