Basics of the CFAP Direct Payments for Corn, Soybean, and Cotton

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Posted for Dr. Aaron Smith, Associate Professor and Extension Economist, Department of Agricultural and Resource Economics, University of Tennessee Institute of Agriculture

The USDA has started accepting applications for CFAP payments to producers that have been adversely affected by the COVID-19 pandemic. Multiple crops and livestock categories are eligible for payments (a full list can be found here). This post will provide a simplified summary for corn, soybeans, and cotton.

The background of the program and the payment mechanisms is lengthy and can be confusing, but once the information is boiled down the payments cotton, soybean, and corn producers will receive is straight forward. For unpriced eligible inventory, payments will be made at the following rates:

Corn $0.335/bu

Cotton $0.095/lb

Soybeans $0.475/bu

Eligible inventory is the lower of self-certified, unpriced inventory that a producer has ownership in as of January 15, 2020, or 50 percent of the eligible producer’s 2019 production of that commodity (payments are for old crop only not the current planted crop). Unpriced inventory means any production that is not subject to an agreed-upon price in the future through a forward contract, agreement, or similar binding document.

So for example, if a producer has 10,000 bu of unpriced corn in storage the total payment would be:

10,000 bu x $0.335/bu = $3,350; USDA will issue 80% of the payment initially and 20% at a later date that has not been specified and is subject to funding availability.

$250,000 payment limits apply per legal entity (limits can expand to $500,000 or $750,000 for corporate entities with multiple shareholders).

Winter wheat is not currently eligible to receive a payment.

Corn silage is eligible to receive a payment but will be converted to bushel equivalents. The payment calculator that can be downloaded below will convert tons of silage to bushel equivalents.

Applications for CFAP payments started May 26 and will end August 28, 2020. Applications will be completed with your local USDA FSA service center (see below).

Additional details are available PDF, Payment Calculator, Video, and UT Extension COVID-19 Resources for Producers. Questions can be emailed to Dr. Aaron Smith – aaron.smith@utk.edu.

Check for clarifications, updates, and notice of funding availability for additional commodities.

USDA Service Centers are open for business by phone appointment only. While program delivery staff will continue to come into the office, FSA staff will be working with producers by phone and using online tools, therefore applications may be submitted via mail, fax, or via electronic means. Producers should call their local office prior to sending applications electronically. If a producer is a new customer to USDA, we ask they have the following information available during the initial contact with the local FSA office. The information includes but not limited to: Name and address, Personal information, including your Tax Identification Number, Farm operating structure, Adjusted Gross Income compliance certification to ensure eligibility, and direct deposit information to enable payment. More information regarding the CFAP application and associated forms are available online at www.farmers.gov/cfap.

 

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