KLA Sends Letter To USDA Requesting CFAP Deficiencies Be Addressed

June 5, 2020

KLA Chief Executive Officer Matt Teagarden sent a letter yesterday to U.S. Agriculture Secretary Sonny Perdue urging USDA to address the deficiencies in the Coronavirus Food Assistance Program (CFAP). The letter highlighted that prior to passage of the Coronavirus Aid, Relief and Economic Security Act, KLA and NCBA had worked to ensure the legislation would provide maximum flexibility in meeting the needs of producers without creating a program based on actual marketings, which had the potential to set arbitrary timelines and skew marketing decisions. The concept initially presented to USDA by the associations was simply to have all producers certify inventory on which a one-time payment would be issued based on losses that had been estimated by a team of livestock economists led by Oklahoma State University Livestock Marketing Specialist Darrell Peel. Instead, and to the significant disappointment of KLA, the letter stated, the agency ignored this concept and decided to base most of the livestock relief on actual sales and chose a timeframe that created severe disparity among recipients. 

To help remedy the aforementioned issues, Teagarden recommended in the letter that USDA increase the $33 CFAP inventory payment to mirror the estimated market damages referenced in the study. He explained this would pose the least amount of market disruption and would not require producers to fill out an additional application. Another suggested alternative was to widen the sales-based payment window. This option is not preferred by KLA, however, because, as Teagarden stated in the letter, “Unless USDA qualifies the entire calendar year, it will simply pick additional winners and losers, further distorting the market.”    The letter also addressed some of the outstanding issues involving eligibility of cattle under CFAP, specifically those sold using grid formula contracts and basis contracts. Teagarden asked that USDA issue official written guidance clarifying that the date the contract was agreed upon is the sales date that should be used for CFAP purposes. This request was made because the Kansas Farm Service Agency already had issued this interpretation and many Kansas producers have signed up using this information. Additionally, the letter expressed KLA’s concern about the payment limitation structure and asked that, if an amended rule is considered, USDA increase the overall limit so it would provide meaningful relief to feeder, stocker and dairy operations.    

To read the letter in its entirety, click here.