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Coronavirus

Round 2 of CFAP payments

Coronavirus United State illustration Getty Images/iStockphoto
Legislative Watch: CFAP2 signup begins Monday; large producers favored in MFP; ag plans laid out; RFS waivers denied; E15 allowed; record yields predicted; rules against tariffs; Censky back to ASA; Branstad leaving China.

USDA announced a second round of Coronavirus Food Assistance Program payments that will provide approximately $14 billion to producers affected by market disruptions and increased costs because of COVID-19. Signup begins on Monday and runs through Dec. 11.

This round of payments will cover additional commodities with new methods of determining payments. Commodities that will now be covered include goats, bison, mohair, tobacco, hemp, mink and three classes of wheat: soft red winter, hard red winter and white.

Payments will be made for three categories of commodities.

Price trigger commodities are major commodities that meet a minimum 5% price decline over a specific period of time. Crops covered include barley, corn, sorghum, soybeans, sunflowers, upland cotton and all classes of wheat. According to USDA, "Payments will be based on 2020 planted acres of the crop, excluding prevented planting and experimental acres. Payments for price trigger crops will be the greater of 1) the eligible acres multiplied by a payment rate of $15 per acre; or 2) the eligible acres multiplied by a nationwide crop marketing percentage, multiplied by a crop-specific payment rate, and then by the producer's weighted 2020 Actual Production History approved yield. If the APH is not available, 85% of the 2019 Agriculture Risk Coverage-County Option benchmark yield for that crop will be used."

The marketing percentage and payment rates are:

  • Corn: 40% and 58 cents per bushel
  • Cotton: 46% and 8 cents per pound
  • Soybeans: 54% and 58 cents per bushel
  • Wheat: 73% and 54 cents per bushel

Payments for hogs, cattle and sheep will be based on the "maximum owned inventory of eligible livestock, excluding breeding stock, on a date selected by the producer, between April 16, 2020, and Aug. 31, 2020." Payments rates are $23 for hogs and pigs, $55 per head for beef cattle and $27 per head for lambs and sheep.

Dairy payments will be based on actual production from April 1 to Aug. 31 and production for Sept. 1 to Dec. 31 will be estimated by the Farm Service Agency.

Flat-rate crops are crops that don't meet the 5% price decline trigger or do not have sufficient price data and will be eligible for a payment of $15 per acre. Crops eligible under this method include alfalfa, extra-long staple cotton, oats, peanuts, rice, hemp, millet, mustard, safflower, sesame, triticale, rapeseed and others.

Sales commodities include specialty crops; aquaculture; nursery crops and floriculture; tobacco; goat milk; mohair; wool; etc. Payments will be made by using a "sales-based approach, where producers are paid based on five payment gradations associated with their 2019 sales."

CFAP-2 will have a payment limitation of $250,000 per producer for all commodities combined, regardless of payment type.

Click here for more information.

GAO finds MFP payments favor large producers
A new report by the Government Accountability Office finds the USDA's Market Facilitation Program payments to farmers had regional inequities, favored certain crops and payments favored larger producers.

Senate Agriculture Committee Ranking Member Debbie Stabenow (D-MI) who requested the report along with Sen. Sherrod Brown (D-OH) says, "Unfortunately, the Trump administration's unequal treatment of farmers is a pattern that we're continuing to see in USDA's COVID-19 relief program. The administration needs to stop playing favorites and start helping the farms hit the hardest."

GAO findings include:

  • Inequity between regions — using USDA 2019 MFP data, GAO found:
    • Southern farmers benefited over other regions.
    • Eight of the top nine states with the highest payments per acre were in the South.
    • Southern farmers received higher payments compared to individual farmers in any other region. Georgia with the highest average payments of $42,545 per farmer compared to the national average payment of $16,507 per farmer.
  • Unfairness between crops
    • Cotton and sorghum payments far exceeded payment rates for other crops.
    • Cotton payments equaled 40% of their expected value. This compares to soybeans at 25.3%, wheat at 8.7%, hogs at 7.0%, corn at 4.2% and dairy (milk) at 1.1%.
    • Less than 10% of payments went to specialty crops, dairy or hog producers.
  • Large farms benefited over smaller farms
    • In 2019, USDA doubled the payment limit from $125,000 to $250,000 per person which benefits larger producers.
    • 1.3% of the total program recipients, approximately 10,000 farms, benefited from the change in payment limits by receiving an additional $519 million.
    • The average payment to owners of these large farms was $169,758, an increase of $44,758 per person due to the higher payment limit.
    • The average payment to all recipients was $16,544 per person.
    • The top 25 farms received an average of $1.5 million per farm with over 70% of the large operations in the South.

Total MFP payments for 2019 totaled $14.4 billion went to approximately 644,000 farming operations. States receiving the highest total payments were Iowa at $1.58 billion, Illinois at $1.4 billion, Texas at $1.075 billion, Minnesota at $1.066 billion and Kansas at $1.01 billion.

Biden and Trump lay out rural priorities
There are 46 days until this year's presidential election and rural voters are getting attention from both President Donald J. Trump and former Vice President Joe Biden.

Recently, Trump and Biden laid out their priorities for "Rural America" in their responses to an American Farm Bureau Federation questionnaire. The questionnaire focuses on 12 areas including farm policy, trade, labor, regulatory reform, sustainability and energy.

Click here to see the candidates' responses.

EPA denies gap RFS waivers
Environmental Protection Agency administrator Andrew Wheeler announced that he was denying 54 "gap-year" small refinery exemptions for years 2011-18. There are still 14 gap-year waivers under review at the Department of Energy. In addition, the EPA has 31 waivers under consideration for 2019 and 2020 Renewable Fuel Standard compliance years.

The Renewable Fuels Association says in a press release, "We are pleased to see EPA is officially denying 54 so-called 'gap-year' small refinery exemption petitions, and we look forward to EPA similarly denying the remaining 14 petitions once they are received from DOE. Rejecting the petitions is simply the right thing to do, and today's decision marks a big step forward toward fully restoring integrity to the Renewable Fuel Standard. This should serve as the final nail in the coffin of these gap-year petitions, and we are eager to put this dark and sordid chapter in the history of the RFS behind us once and for all."

The issue of RFS waivers and ethanol policy has become a political issue in the presidential race in the Midwest and the Iowa Senate race.

Reuters reported last week that Trump had ordered the EPA to deny small refinery petitions. It is now reporting the Trump administration is considering at least $300 million in aid to U.S. oil refiners that are denied exemptions for 2019.

Biden in a press statement regarding EPA's announcement says, "Failing to address waivers for this year or last year isn't a win for our farmers — it adds further insult to injury. And it's a standard that ought to be unacceptable. Lip service 50 days before an election won't make up for nearly four years of retroactive damage that's decimated our trade economy and forced ethanol plants to shutter."

E15 allowed in standard gas pumps
This past weekend President Trump tweeted that 15% ethanol gasoline will be allowed to be dispensed from standard fuel pumps that currently dispense 10% ethanol pending state approval. The cost has been a roadblock in convincing retailers to install new blender pumps. There are questions how soon this will take effect.

Record corn and soybean yields
USDA's latest crop estimates is projecting record yields for corn and soybeans in 2019.

The 2019 corn production is estimated at 14.9 billion bushels which is an increase of 9% over last year. The average U.S. corn yield is estimated to reach a record high of 178.5 bushels per acre or 11.1 bushels over last year.

Soybean production is estimated at 4.31 billion bushels, an increase of 21% over last year. Yields are forecast to reach a record high of 51.9 bushels per acre.

USDA's National Agricultural Statistic Service also considered the effect of derecho on Iowa producers. NASS lowered corn harvested acreage in Iowa by 550,000 acres. It left soybean acres unchanged.

WTO rules against U.S. tariffs on China
The World Trade Organization ruled in favor of China's challenge of U.S. Section 301 tariffs. The WTO says the tariffs imposed in 2018 on $234 million of Chinese goods violated international trade rules in how it singled out China for separate tariffs than other countries.

The decision will not have much impact for the time being because the United States will appeal the decision. Currently the WTO's Appellate Body does not have enough members to function because of the Trump administration's refusal to allow for the appointment of new members.

Censky stepping down at USDA
Deputy Secretary of Agriculture Steve Censky announces he will be leaving USDA after the November election to return to the American Soybean Association as chief executive officer, a position he held for 21 years prior to USDA.

Censky says, "It has been a true honor to serve my country on behalf of American agriculture. These past few years have seen tremendous developments, and I am humbled to have served a role in implementing a farm bill, launching the USDA's Agriculture Innovation Agenda, supporting America's farmers against trade retaliation, and now assisting farmers and ranchers and feeding families affected by the coronavirus pandemic."

Branstad leaving China
U.S. Ambassador to China Terry Branstad announces he would be stepping down effective early October. In a statement Branstad says, "I am proudest of our work in getting the Phase One trade deal and delivering tangible results for our communities back home. Our goal remains meaningful, measurable results for American families. We have made significant progress and we will not stop pressing for more."

Branstad has been a strong voice for U.S. agriculture while serving as ambassador and was very involved in the Phase One negotiations.

Source: P. Scott Shearer, who is solely responsible for the information provided, and wholly owns the information. Informa Business Media and all its subsidiaries are not responsible for any of the content contained in this information asset.
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