USDA released details of its $16 billion Coronavirus Food Assistance Program (CFAP) which will provide direct financial assistance to producers of agricultural commodities affected by COVID-19. The Oregon Wheat Growers League (OWGL) welcomed news that eligible commodities for the program include durum, hard red spring wheat and malting barley.However, OWGL expressed significant concerns that most of the wheat produced in the state is excluded from program eligibility.
CFAP funding to farmers and ranchers is intended to support producers
- who have suffered a five percent or greater price decline; or
- who had losses due to market supply chain disruptions due to COVID-19; and
- face additional significant market costs.
Hard and soft red winter wheat, and hard and soft white wheat is not currently included in the program for farm support. While wheat farmers fall within the parameters for loss, the methodology used by USDA to calculate the price loss neglects to incorporate price drops between January and April and does not account for local cash prices that farmers were receiving, which were less than futures prices in many areas of the country.
USDA has indicated it will consider additional crops to be eligible for CFAP by collecting further information on potentially eligible crops. OWGL encourages this revaluation. Clint Carlson, OWGL President stressed the challenges facing Oregon Wheat farmers stating “We are struggling with cash flow like all other farmers and ranchers throughout the nation. Unfortunately, unless USDA reevaluates, we will not have access to these critical resources. Most of our wheat production is soft white wheat, which is specifically excluded from these payments.” Tracking the soft white Portland price from January to April demonstrates the volatility of the soft white market. The market swung more than 8.5 percent from its highest price of $6.33 on January 28 to its lowest point on March 16 of $5.79.
CFAP payments will come from two funding sources: the CARES Act and the Commodity Credit Corporation (CCC). The payment rate for wheat is broken down as such:
- Barley (malting barley only) will be paid $0.34 from the CARES Act and $0.37 from the CCC;
- Durum wheat will be paid $0.19 from the CARES Act and $0.20 from the CCC; and
- Hard Red Spring will be paid $0.18 from the CARES Act and $0.20 from the CCC.
Producers will be paid based on the inventory subject to price risk held as of January 15, 2020. The National Association of Wheat Growers is working to find more details on how this is defined. A single payment will be made based on 50 percent of a producer’s 2019 total production or the 2019 inventory as of January 15, 2020, whichever is smaller, multiplied by the commodity payment rate. Initially, producers will receive 80 percent of their maximum total payment upon approval of their application. The remaining portion of the payment (up to the payment limit) will be paid at a later date as funds remain available.
To be eligible, a person or legal entity must have an average adjusted gross income of less than $900,000 for tax years 2015, 2016 and 2017. If 75 percent of their AGI comes from farming, ranching or forestry, then the $900,000 limit does not apply. There is also a hard cap on payments of $250,000 per person or legal entity—this limitation applies to the total amount of CFAP payments for all eligible commodities. There are also special payment limit rules for participants that are corporations, limited liability companies and limited partnerships (corporate entities).
For all commodities, USDA compared the average price from January 13-17, 2020 with the average price from April 6-9, 2020. For hard red spring, they used the May contract on the Minneapolis Grain Exchange. For durum, that was calculated using 103.4 percent of the hard red spring wheat futures price.
For those with eligible commodities, producers will be able to apply for assistance through the Farm Service Agency beginning on May 26, 2020. Additional information and application forms can be found at farmers.gov/cfap.