At a campaign rally in Wisconsin last week, President Trump announced U.S. farmers will receive an additional $14 billion in coronavirus relief aid.
This second round of relief aid builds on the Coronavirus Food Assistance Program (CFAP), the U.S. Department of Agriculture (USDA) program launched in April to allocate $16 billion in direct payments to farmers and ranchers.
However, the initial round of CFAP still has $6 billion unpaid dollars in the pot.
“Just under half of [the additional aid] is probably just repurposing the funds that were not spent in the previous program,” says University of Illinois ag analyst Jonathan Coppess. “I think that’s a fair estimate given what little we know about it at this point in time.”
Signup for CFAP 2 begins on Sept. 21, about a week after the initial round of applications closed on Sept. 11. Coppess says he sees reasons to believe the USDA is rushing out payments.
For example, CFAP 2 payments hinge on losses incurred on the 2020 crop, which hasn’t been fully harvested yet.
“There may be a loss of the 2020 crop. We just don't know because it's not even harvested, it's not in the bin yet. But they're making payments on it,” says Coppess.
Additionally, payments are based on last year’s crop prices.
“Why is it that a week after closing CFAP 1, we’re announcing CFAP 2?” says Coppess. “Why is it we’re paying on a new crop with old crop prices?... I mean it was announced at a campaign rally, so, you know, it’s hard to say that there isn’t a very strong political element to these.”
According to USDA data, livestock producers have received by far the most aid from CFAP 1, accounting for nearly 50% of the $10 billion distributed so far. Geographically, Iowa farmers have received the largest share of CFAP aid, more than $966 million.
In total, CFAP 1 has distributed about $10 billion out of the $16 billion total available.
Coppess and his colleagues have looked into why many CFAP dollars are still unpaid and say it could be due to a miscalculation by the USDA. More specifically, they say it’s possible the USDA was wrong about the inventory of eligible commodities in determining payment amounts.
In a statement, a USDA spokesperson said they are still processing CFAP 1 applications.
“We do not know exactly how much of that money will be left after all applications have been processed. It would be irresponsible to count on this money for the second round of assistance before we have finished processing all applications,” it said.
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