By Megan Roberts, Extension educator, meganr@umn.edu
You’ve likely seen that both the Minnesota state legislature and the federal government passed bills in response to the COVID-19 situation. But what do these policies mean financially for hog producers? This article offers a short summary of some of the recent legislation.
The CARES Act created the Payroll Protection Program (PPP), which can cover 2.5 months of payroll and certain other eligible expenses. For producers without employees, PPP can cover up to 2.5 months of lost owner compensation (2019 tax record must show positive net farm income for this option). Additional laws have increased PPP forgivable loan funding, extended the PPP deadlines, and made agricultural enterprises eligible for another Small Business Administration program, Economic Injury Disaster Loans (EIDLs and EIDL advances). The application period for PPP, administered by local lenders, runs through August 8. The application period for EIDLs, administered directly through Small Business Administration, are ongoing.
The CARES Act also created partial funding for the USDA’s Coronavirus Food Assistance Program (CFAP). Additional funding comes for the Commodity Credit Corp (CCC) and together the program will fund $16 billion dollars of direct aid to farmers through Farm Service Agency (FSA). Producers whose products saw price declines or who had increased marketing costs earlier this year because of COVID-19 are eligible. Most crops and livestock (including hogs), milk, many specialty crops, and wool qualify for payments. To see if you qualify and get help preparing an application, call or email your local FSA office. Or, you can apply online at farmers.gov/cfap. The application period runs through August 28.
To be eligible, you must own your animals and have been subject to price risk. These eligibility requirements mean contract growers are generally ineligible for CFAP. If you meet eligibility requirements, there are two parts to the hog and pig payments for CFAP: CARES Part 1 payment and CCC Part 2 payment. The Part 1 payment is for “total owned, unpriced inventory as of January 15, 2020, that was sold between January 15 and April 15.” The Part 2 payment is for the “highest inventory of owned eligible livestock, by species and class, on a date selected by the producer between April 16 and May 14.“ Part 1 payments (based on owned hog sales) are further broken down by size of animal – pigs less than 120 lbs receive a higher $28 CARES part 1 payment than the lower $18 payment for hogs of 120 pounds or more. The Part 2 payment (based on highest owned inventory during the height of hog processing plant closures) is the same $17 regardless of pig or hog weight. FSA will ask a producer to fill out a CFAP form with inventory numbers and to have documentation available for all reported numbers. Part 1 and Part 2 payments are summed and added to any other CFAP payments. Producers receive 80% of their CFAP payment 7-10 days after their application is processed. The final 20% of the CFAP payment will be issued if funds remain at the end of the program.
Source: www.farmers.gov/cfap/livestock
To talk to an Extension expert on these programs, the Ag Business Management team partnered with Extension’s Farm Information Line (FIL). Trained agricultural experts are available to take your call on the FIL. Call the Farm Information Line at 1-800-232-9077. Afterhours: Leave a voicemail and the Farm Information Line will return your call the next business day. Anytime: Email at fil@umn.edu.
You’ve likely seen that both the Minnesota state legislature and the federal government passed bills in response to the COVID-19 situation. But what do these policies mean financially for hog producers? This article offers a short summary of some of the recent legislation.
Federal programs
The Families FIRST Act requires all employers to offer paid sick time for eligible absences related to COVID-19. Farmers are not exempt from this requirement, but there is federal financial support to help offset the potential payroll costs of paid sick time.The CARES Act created the Payroll Protection Program (PPP), which can cover 2.5 months of payroll and certain other eligible expenses. For producers without employees, PPP can cover up to 2.5 months of lost owner compensation (2019 tax record must show positive net farm income for this option). Additional laws have increased PPP forgivable loan funding, extended the PPP deadlines, and made agricultural enterprises eligible for another Small Business Administration program, Economic Injury Disaster Loans (EIDLs and EIDL advances). The application period for PPP, administered by local lenders, runs through August 8. The application period for EIDLs, administered directly through Small Business Administration, are ongoing.
The CARES Act also created partial funding for the USDA’s Coronavirus Food Assistance Program (CFAP). Additional funding comes for the Commodity Credit Corp (CCC) and together the program will fund $16 billion dollars of direct aid to farmers through Farm Service Agency (FSA). Producers whose products saw price declines or who had increased marketing costs earlier this year because of COVID-19 are eligible. Most crops and livestock (including hogs), milk, many specialty crops, and wool qualify for payments. To see if you qualify and get help preparing an application, call or email your local FSA office. Or, you can apply online at farmers.gov/cfap. The application period runs through August 28.
To be eligible, you must own your animals and have been subject to price risk. These eligibility requirements mean contract growers are generally ineligible for CFAP. If you meet eligibility requirements, there are two parts to the hog and pig payments for CFAP: CARES Part 1 payment and CCC Part 2 payment. The Part 1 payment is for “total owned, unpriced inventory as of January 15, 2020, that was sold between January 15 and April 15.” The Part 2 payment is for the “highest inventory of owned eligible livestock, by species and class, on a date selected by the producer between April 16 and May 14.“ Part 1 payments (based on owned hog sales) are further broken down by size of animal – pigs less than 120 lbs receive a higher $28 CARES part 1 payment than the lower $18 payment for hogs of 120 pounds or more. The Part 2 payment (based on highest owned inventory during the height of hog processing plant closures) is the same $17 regardless of pig or hog weight. FSA will ask a producer to fill out a CFAP form with inventory numbers and to have documentation available for all reported numbers. Part 1 and Part 2 payments are summed and added to any other CFAP payments. Producers receive 80% of their CFAP payment 7-10 days after their application is processed. The final 20% of the CFAP payment will be issued if funds remain at the end of the program.
Source: www.farmers.gov/cfap/livestock
Minnesota programs
Like the federal government, Minnesota also enacted several financial provisions to assist farmers. For example, Minnesota’s Rural Finance Authority has additional low interest loans available to help farmers during this time. The Minnesota Department of Agriculture (MDA) has other programs as well, such as the AGRI Safe at the Farm Market Cost Share to provide financial assistance to direct-to-consumer farms in purchasing equipment and supplies to keep customers safe. MDA has also worked closely with multiple agencies on carcass disposal issues.Additional information
Details on programs are available at Extension’s Agricultural Business Management blog. A brief summary of financial programs is available at z.umn.edu/2020FarmPrograms. More information on COVID-19 and Minnesota’s agricultural response is available at the Minnesota Department of Agriculture’s COVID-19 page.To talk to an Extension expert on these programs, the Ag Business Management team partnered with Extension’s Farm Information Line (FIL). Trained agricultural experts are available to take your call on the FIL. Call the Farm Information Line at 1-800-232-9077. Afterhours: Leave a voicemail and the Farm Information Line will return your call the next business day. Anytime: Email at fil@umn.edu.
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