The Coronavirus Food Assistance Program (CFAP) opened up for applications on May 26, 2020 and ends August 28, 2020. If you have not put in your application for eligible livestock, do not delay further. As of August 3, USDA has distributed $6.3 billion in CFAP funds, and almost 44% ($2.98 billion) of those funds have gone to cattle producers affected by price declines in early 2020. In Oklahoma, over 28,000 cattle producers have received a total of $243 million. These payments represent 85% of the estimated total CFAP disbursement, with the remaining 15% potentially arriving in a second payment based on funds availability. So, total CFAP payments based on quarter 1 sales and quarter 2 inventory could be as high as $7.4 billion nationally and $286 million in Oklahoma. The revenue losses across all of 2020 was estimated to be $9.2 billion* nationally, and in Oklahoma that estimate was $574.5 million**, not accounting for insurance or price risk management.
One way to help explain the difference between CFAP payments to cattle producers and estimated revenue losses may be related to risk management; the larger per head payments shown in the table below were based on cattle sales from January 15 to April 15.
CFAP eligibility was associated with when cattle were sold and whether a cattle producer had ‘price risk’ at the time of sale. Simply put, if you were caught up by the depressed prices that happened in cattle markets, either by selling in the cash market or establishing a forward contract, between January 15 and April 15, USDA considered you to have price risk. If you already had a contract that locked-in prices in prior to January 15, USDA considered you to not have any price risk. If you sold after April 15, those cattle could only count toward inventory.
The cut off on April 15 is another likely reason for a difference between losses and CFAP payments. Payments out of CCC funds for cattle producers were based on the highest inventory from April 15 to May 15, at a rate of $33/head. Many cattle producers held cattle until later than expected this spring, hoping to see markets recover. Based on spending thus far a second payment out of CARES Act funds could occur. The first payment was based on 85% of the calculated CFAP amount, which the remaining 15% in a second payment based on funds availability.
Ad hoc disaster programs like CFAP are not designed to cover the full losses experienced by the producer. However, we may see an expansion of CFAP, or another CFAP-like payment program, to capture quarter 2 losses in a similar way as quarter 1. The Heroes Act, introduced in May, allocated a further $16.5 billion for CFAP programs, and the bill language included payments on cattle sales in quarter 2. The more recently introduced Health, Economic Assistance, Liability Protection and Schools (HEALS) Act introduced in July allocated $20 billion for direct producer payment programs, but did not specify how it was to be spent among commodities. This gives USDA greater freedom, but cattle producers will need to continue advocating for themselves. Neither of these bills have passed into law yet.
Like many other businesses, cattle producers have found themselves in new territory for 2020. Do not leave funds on the table that could help your business get through this difficult situation. If you are unsure how to get started, call your local FSA office or the toll free CFAP hotline at 877-508-8364 to speak to an FSA representative. More information, including information on submitting an application online, is available at www.farmers.gov/cfap.
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