Milking parlor.
August 10, 2020

Business Trusts Can Limit CFAP Payment Eligibility

 |  By: Jim Dickrell

A California Senator and two Congressmen have written to the United States Department of Agriculture, pointing out that businesses organized as trusts are being treated as single entities, thus potentially limiting their access to Coronavirus Financial Assistance Program (CFAP) payments.

“This effectively means that payments to operations held in trust are capped by a payment limitation designed for a single entity, even when the operation is a general partnership comprised of multiple producers who would otherwise qualify for individual CFAP payment limitations,” write Sen. Diane Feinstein, D., Rep. Jim Costa, D., and Rep. Devin Nunes, R. to USDA Secretary Sonny Perdue.

Feinstein, Costa and Nunes say 25 to 35 percent of California dairy operations are held in trusts while still operating as general partnerships. Jim Mulhern, president and CEO of the National Milk Producers Federation, notes that similar situations occur in other states as well.

“Two dairies next to one another could have suffered the same losses due to COVID-19, and yet one would be unable to receive the same level of needed relief as the other because of business decisions made before the COVID-19 pandemic,” say the California Congressmen.

They also note that up to three shareholders in a corporation are eligible for CFAP payments. They are urging USDA to apply the same rules to trusts. You can read the letter here.