Category: Financial

Farm Business Association data on farm family living expenses

Ann Johanns

Several states provide farm financial summary data each year. The information available varies by state and the following is an updated summary of what states include farm family living expense data. The original source of this information can be found in the February 2017 Ag Decision Maker newsletter article, Why have farm family living expenses been identified as a problem?.

Iowa Farm Business Association (IFBA)

Iowa State University Extension and Outreach reports summarized Iowa Farm Business Association data in AgDM File C1-10, Farm Costs and Returns. However, family living expenses are no longer broken into a unique category in revisions dated after 2009.

Illinois Farm Business Farm Management Association (Illinois FBFM)

The Illinois FBFM uses the Owner Withdrawal approach. FarmDocDaily’s When Creating 2021 Budgets, Keep In Mind Family Living Costs include a summary separating family living expendables, capital purchases for family living, and income and social security tax payments. The 2019 averages were $78,894 for noncapital, $5,446 for capital items “such as the personal share of the family automobile, furniture, and household equipment,” and $24,525 for income and social security taxes. The 2017 averages were $79,798 for noncapital, $5,744 for capital items “such as the personal share of the family automobile, furniture, and household equipment,” and $28,435 for income and social security taxes. The totals are useful, but the single category of noncapital does not provide much detail on categories of spending.

Farm and Family Living Income and Expenditures reports high and low third costs of living for a family of three to five in 2019 on the final page. Expendables is expanded to four categories. The categories are Contributions, Medical, Insurance (life and disability), and Expendables. Summing the noncapital and capital living expenses, the low third had a total cost of living of $57,337 and the high third was more than twice as much at $143,785 before income and social security taxes.

In this report, three categories are added. The same categories are used in the full report. Twenty-three percent of the 5,500 Illinois FBFM members provide the information necessary to report Owner Withdrawals with the additional detail.

Kansas Farm Management Association (KFMA)

The KFMA provides An Analysis of Family Living Expense Categories.

Thirty-seven percent, of the 898 KFMA members analyzed, reported family living expenditures in 17 categories. Figure 2 gives the family living expense categories from that report and provides a visual realization of the changes in expenditure for the nine largest categories. A farm family looking at the graph may be able to think about changes in their own expenditures, and areas where costs could be cut. Home repairs, contributions, recreation, and household all increased dramatically beginning in 2006 through 2014, and have declined or remained steady since. Total family living expenses have remained fairly flat since 2015, with an average change of just 0.3% over the past 6 years. Large increases in the category of health insurance have been off-set by declines in categories such as home repairs and recreation (categories also strongly impacted by COVID-19 in 2020).

In An Analysis of Family Living Expense Categories, the correlation between net farm income and family living expenses is explored. Greg Ibendahl writes, “Family living is correlated to net farm income (correlation 0.62) but it appears to have a lag as the jump in family living expenses happened after the jump in net farm income. In publication GI-2016.7, we hypothesized family living was based on a four- year average of net farm income. Also, while net farm income in 2015 declined to near zero, family living is only starting to show a decline. Although total family living expenses declined slightly… some expense categories showed steeper declines…home repairs, contributions, medical, gifts and auto all showed declines in 2015.” This hypothesis is supported by the flat total family living expenses from 2015 to 2020 while net income rose substantially (26% average increase each year).

Southwest Minnesota Farm Business Association, Missouri Farm Business Management Association, and Nebraska Farm Business Incorporated

The Minnesota, Missouri, and Nebraska associations use the same family living expense categories. Page 22 of the Southwestern Minnesota Farm Business Management Association Annual Report and page 15 of the Missouri Farm Business Management Analysis Record Summary show the allocation of Owner Withdrawals. Nine percent of the 109 Missouri FBMA members reported family living expenditures in detail and 32% of the 108 Southwest Minnesota FBMA members reported family living expenditures in detail.

The 28 categories used by the Minnesota, Missouri, and Nebraska associations may be a sweet spot between the 17 categories used by the Kansas Farm Management Association, and the 103 categories used by the Bureau of Labor Statistics (Table 1). If the Kansas Farm Management Association categories are used, be sure to add personal taxes, purchases of personal assets, and other non-business expenditures to get to the total Owner Withdrawals.

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Crop insurance coverage-frequently asked questions

Ann Johanns
Map showing ISU Extension Farm Management Specialists
Iowa State University Extension and Outreach Farm Management Specialists

Iowa State University Extension and Outreach Farm Management Specialists, https://www.extension.iastate.edu/ag/farm-management, provide expertise regarding crop insurance and adverse events. Losses due to adverse weather conditions such as hail, frost, freeze, wind, drought, and excess moisture are insurable losses under multiple peril crop insurance. In 2021, the impact of drought conditions has continued for much of Iowa. Losses due to drought are an insurable loss under multiple peril crop insurance.
Another dynamic added to the mix is yield loss due to chemical drift, which is not a covered loss under multiple peril crop insurance.

Question: How many of Iowa’s corn and soybean acres are covered by crop insurance?

Iowa farmers planted 23 million acres of corn and soybeans in 2021. Approximately 90% of those acres have been insured using Revenue Protection (RP) multiple peril crop insurance. These insurance policies can guarantee various levels of a percentage of the farm’s average yield times the higher of the projected price (average futures price in the month of February) or the harvest price (average futures price during the month of October), using the November 2021 futures contract for soybeans and the December 2021 futures contract for corn. Most farm operators carry a guarantee of their APH from 65% to 85% level of coverage. The projected prices (futures average prices in February 2021) were $4.58/bu for corn and $11.87/bu for soybeans, respectively.

Drought damaged corn; photo courtesy of Meaghan Anderson, Extension Field Agronomist
Drought Damaged Corn; Photo courtesy of Meaghan Anderson, Extension Field Agronomist

Question: What should an insured farmer do once a crop loss is recognized?

  1. Notify the insurance agent within 72 hours of the discovery of damage, but not later than 15 days after the end of the insurance period. A notice of loss can be made by phone, in writing or in person. Although drought loss is not immediate, farmers should contact their agent as soon as they feel a loss is present.
  2. Continue to care for the crop using good farming practices and protect it from further damage, if possible.
  3. Get permission from the insurance company, also referred to as your Approved Insurance Provider (AIP), before destroying or putting any crop to an alternative use.

Question: Who will appraise the crops and assess the loss?

The crop insurance company will assign a crop insurance adjuster to appraise the crop and assess the loss. The insured farmer must maintain the crop until the appraisal is complete. If the company cannot make an accurate appraisal, or the farmer disagrees with the appraisal, the company can have the farmer leave representative sample areas.
These representative sample areas of the crop are to be maintained – including normal spraying if economically justified – until the company conducts a final inspection. Failure to maintain the representative sample areas could result in a determination that the cause of loss is not covered. Therefore, no claims payment to the producer.
Once appraised the crop can be released by the company to be:

  1. Destroyed – through tillage, shredding, or chemical means; or
  2. Used as silage or feed.

Question: Once released, may I harvest my corn as silage for feed?

Check with your crop insurance company. In a county where corn can be insured as grain only, the corn will be released, or harvested as silage or sold as feed. Any grain will be counted as production for your claim. In a county where corn can be insured as silage, the harvested silage will be counted as production.

Question: What is the difference among insurance units?

Many farmers have chosen to insure their crops using enterprise units in order to pay less expensive insurance premiums. Under enterprise units, losses are calculated by crop by county. Therefore all the corn planted by a farmer in a given county would be added together to determine a loss. If a farmer has chosen optional units, then losses are calculated by crop by field unit. Premiums are typically higher if choosing optional units but a good yield on one field does not cancel out the loss on another field.

Question: When will farmers be receiving indemnity payments for their crop insurance losses?

Adjusters will be busy with the increase in losses in areas that have been impacted. As soon as you are finished harvesting notify your insurance agent and an adjuster will be assigned to you. Insurance companies cannot defer payments to the next tax year, but claims adjusted late in the year may not be paid out until the following year.

Question: What is the maximum price that the harvest time indemnity price (average October futures price) can reach?

The maximum harvest indemnity price values for 2021 are twice of the projected price; or $9.16/bushel for corn and $23.74/bushel for soybeans, respectively.

Question: Can indemnity payments be deferred for income tax purposes until 2022?

A taxpayer using the cash method of accounting claims the income in the year they receive the payment. The insurance company will send the insured a 1099 form showing the amount and tax year to report the income.
A farmer, if they are using the cash method of accounting for reporting taxes, can elect to defer crop insurance payments if the loss is due to yield loss and they normally sell more than 50% of their crop the year following harvest. They cannot defer any loss that is due to price loss. Farmers that are using the accrual method of accounting for reporting taxes cannot defer crop insurance payments.

Question: Will I be asked to provide proof of my bushels this year for crop insurance verification?

All multiple peril crop insurance users are subject to production verification on a random basis. If a claim that exceeds $200,000 is filed for an individual crop and policy, verification of production is automatically required by regulation. This also requires a 3-year audit.

Additional Resources

Ag Decision Maker Crop Insurance Files, https://www.extension.iastate.edu/agdm/cdcostsreturns.html#insurance
Managed Haying or Grazing of CRP Acres, https://www.extension.iastate.edu/agdm/livestock/html/b1-60.html
Ag Decision Maker Crop, Livestock, and Weather Outlook resources, https://www.extension.iastate.edu/agdm/outlook.html
ISU Extension and Outreach Drought Resources, https://www.extension.iastate.edu/disasterrecovery/drought
Special Rule for Taxing Crop Insurance and Disaster Payments, https://www.calt.iastate.edu/blogpost/special-rule-taxing-crop-insurance-and-disaster-payments
RMA Crop Insurance and Drought-Damaged Crops, https://www.rma.usda.gov/en/News-Room/Frequently-Asked-Questions/Crop-Insurance-and-Drought-Damaged-Crops
RMA Extends Deadlines, Waives Interest Deferral for Emergency Drought Relief, https://www.rma.usda.gov/News-Room/Press/Press-Releases/2021-News/RMA-Extends-Deadlines-Waives-Interest-Deferral-for-Emergency-Drought-Relief
RMA Authorizes Emergency Procedures to Help Drought-Impacted Producers, https://www.rma.usda.gov/News-Room/Press/Press-Releases/2021-News/RMA-Authorizes-Emergency-Procedures-to-Help-Drought-Impacted-Producers

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Managing farm costs key to profitability in 2021

Ann Johanns 2 Comments
Alejandro Plastina

Written by Alejandro Plastina, Extension Economist, plastina@iastate.edu

Corn and soybeans futures prices have recently rallied to their highest levels in years, providing hope for a market-driven profitable 2021 crop year. However, the only certainty about future prices is that they will continue to change until their expiration date, and they could plummet as fast as they rallied. Unless farm operators use futures or options to create a floor for their crop prices, current future prices might foster a false sense of security.

Winter is a great time for farm operators to concentrate on calculating their own costs of crop production, not only because they have more control over costs than crop prices, but also because knowing their break-even prices might ease the struggle to lock-in profits before harvest time. The latest issue of the ISU Extension and Outreach, Estimated Costs of Crop Production, reports average cost estimates for Iowa farms in 2021, and provides guidelines to help farmers calculate their own costs of production.

Estimated Costs of Crop Production in Iowa
Figure 1.

Total costs of corn and soybean production per acre are expected to increase, respectively, by 2.1% – 3.4% and 2.6% in 2021. However, higher expected corn yields over a 30-year trend for 2021 suggest that on a per bushel basis, costs would increase by 1.0% – 2.6% to remain below their 2019 marks (Figure 1). Fuel and insecticide costs, interest expenses on pre-harvest input financing, and crop insurance premiums are projected lower in 2021.

The estimated cost of production for continuous corn is $3.88 per bushel for a target yield of 166 bushels per acre, and it goes down to $3.82 for target yields of 184 and 202 bushels per acre. The estimated costs of production per bushel for corn following soybeans are $3.34, $3.31, and $3.32 for target yields of 181, 201, and 221 bushels per acre, respectively.

Cost of production estimates for herbicide tolerant soybeans amount to $9.16, $8.94 and $8.74 per bushel for target yields of 50, 56, and 62 bushels per acre, respectively. The total cost per bushel of soybeans is projected at $9.04 for non-herbicide-tolerant beans at 56 bushels per acre, according to the report.

The cost estimates are representative of average costs for farms in Iowa. Very large or small farms may have lower or higher fixed costs per acre. The full report is available online through the Ag Decision Maker website. The publication also includes budgets for alfalfa hay establishment with an oat companion crop and by direct seeding. Annual production costs for established alfalfa or alfalfa-grass hay as well as a budget for maintaining grass pastures are included. Actual costs can be entered in the column for “Your Estimates”, or by using the electronic spreadsheet Decision Tools on the Ag Decision Maker website.

Breakdown of costs for 2021

Costs of Crop Production in Iowa - 2021
Figure 2.

For corn, land costs account for about one-third of total costs of production (Figure 2). Values of $187, $222, and $256 per acre rent charges for the low, medium, and high quality land were assumed. Variable costs represent just over half of the costs of production, and nitrogen and seed costs account for about 43% of the variable costs. Nitrogen price is projected stable at $.34 per pound in 2021, but total nitrogen costs are projected to go up by 6 to 11% reflecting the higher application rates recommended by the ISU Corn Nitrogen Rate Calculator. Corn seed costs are expected to increase by 2% to $262 per bag.

Land costs account for 44% of total costs of soybean production, and variable costs account for an additional 42%. Seed and fertilizers amount to 44% of variable costs. Phosphorus and potassium were charged, respectively, at $.39 and $.30 per pound. Machinery costs are projected to decline by 6% primarily due to lower diesel costs: $2.02 in 2021 versus $2.53 in 2020.

Profitability Prospects for 2021

There is substantial uncertainty regarding crop prices in the coming season. The most recent USDA projections for 2021/22, published in October 2020, put the average US farm prices for corn and soybeans at $3.65 and $10.00. In this scenario, production of herbicide tolerant and non-herbicide tolerant soybean would be profitable for all target yields considered in the report. Net returns per acre to herbicide-tolerant soybean production would range from $42 to $78 per acre, depending on target yield and tillage practice.

Corn production would not be profitable in a continuous corn scenario if the price per bushel is $3.65. Net returns to corn following soybeans would range from $55 to $74 per acre under conventional tillage, and average $82 and $75, respectively, under strip tillage and no-till.

Current futures prices seem to indicate that corn and soybean prices might average $4.45 and $11.40 per bushel in 2021/22, respectively. In this optimistic scenario, corn production would generate profits north of $95 per acre in a continuous corn rotation, and above $200 per acre following soybeans. Profits from soybean production would exceed $110 per acre. However, futures prices are currently reflecting a market reaction to unexpected USDA production and stocks figures, and they could retrench fast once the market reassess the real impact of the new information. In any case, farm operators can always improve their profitability or limit losses by focusing on managing costs and using their break-even estimations to implement a tailored marketing plan.

Cost Calculations

Knowing costs is key, as it is to understand the assumptions behind the budgets used in the calculations. When using the ISU cost of production estimates for 2021, keep several things in mind. First, fertilizer and lime costs include volume and early purchase discounts. Second, farmers paying land rents higher than the ones projected in the report might face higher costs of production. Operator landowners on fully paid land will have much lower accounting costs, since the cash rent used in the report will only be an opportunity cost and not a cash cost (as it is for tenants).

Reference yields for corn and soybean budgets in the annual Iowa State University Extension and Outreach report reflect 30-year trend yields. In the latest projections used for the 2021 report, corn yields are 2 bushels higher than for 2020, while soybean yields remained unchanged.

Starting in 2021, the amount of nitrogen applied to corn production follows the recommendations from the ISU Corn Nitrogen Rate Calculator. The projected corn-to-nitrogen price ratio used in the calculator amounted to 12.35. Such methodological adjustment resulted in an average 6% increase in the amount of nitrogen applied to corn following corn, and an 11% increase in the amount applied to corn following soybeans.

Conclusions

Producers must have a strong grasp of their own production costs, and the ISU Extension report provides a step-by-step guide to help them estimate break-even costs, and serves to benchmark operations and trigger relevant questions on how to better manage enterprise costs.

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Ten tactics to face farm financial issues

Ann Johanns
Melissa O'Rourke image

Contributed by Melissa O’Rourke, B.S., M.A., J.D. Farm and Agribusiness Management Specialist, Iowa State University Extension and Outreach, morourke@iastate.edu

The farm economy is cyclical in nature, and in recent years has been impacted by one crisis after another. Agricultural credit conditions are described as having an overall decline which deepened in the first quarter of 2020 after some signs of improvement in the fourth quarter of last year. On the ISU Extension and Outreach Farm Management team, we hear from farmers and agricultural lenders about rising debt levels, cash flow issues and farm financial stress. 

Farm financial stress can generally be thought of as an inability to meet debt service payments – both principal and interest. The severity of the financial stress depends on the debt level, interest rates (cost of the debt), and the farm income available for debt service. In recent years, low interest rates and sufficient farm income have kept financial stress at bay for many operations. Nevertheless, we continue to hear from producers and lenders about elevated levels of financial stress on the farm.

Confronting a tough financial situation is a challenge for anyone. It’s not unusual for producers to procrastinate and avoid facing the problem. Just hoping things will get better is not a solution – but many folks do not know where to start.

Following are several suggested actions to get started in figuring out how to proceed. This list of tactics to consider are not necessarily in a particular order – but presented as possible approaches to move forward and address the problems, depending on the farm business and family circumstances.

Tactic One: Seek support for stress management

Financial difficulties can cause significant emotional stress. Start by talking to someone. Do not be embarrassed to reach out to family members, friends, or professionals who can just listen. A good place to start may be the Iowa Concern Hotline via the website (which includes e-mail or chat) or the toll-free number: 1-800-447-1985. Since 1985, the Iowa Concern Hotline has been available 24/7 with trained counselors who can provide access to an attorney for legal education, stress counselors, information and referral services for a wide variety of topics.

Tactic Two: Gather debt and income information. 

While good accounting would direct us all to have current financial documents – starting with a balance sheet (or net worth statement) and income statement – folks who are facing strained finances may have avoided record-keeping tasks. Start by gathering all debt information – both for the farm as well as personal debt (vehicles, credit cards, personal spending). It’s useful to have an online or computer-based accounting system, but do not hesitate to get back on track with a pad of paper or the back of a pizza box. Write it down – balance owed, to whom, and when the next payment is due (monthly, quarterly, annually) and the payment amount. After starting this process, explore the financial planning resources available on the Ag Decision Maker website. Guidance is available on how to build financial statements, including information on understanding and building net worth statements (the balance sheet) and farm income statements. 

Next, estimate available expected income during the next twelve-month period. Again, include all possible income from on-farm and off-farm sources.

Part of this information gathering should include collecting any written communication or notices that may have been received from lenders. The act of compiling this financial data is a first step in facing the extent of the problems faced. Defining the problem may help stimulate ideas for solutions. And, to get help from advisors, a fairly-accurate picture will be necessary. 

Tactic Three: Evaluate the assets

Again, an updated balance sheet would enumerate and place values on current, intermediate and long-term assets. But think about assets that may not appear on the balance sheet. Go over the most current balance sheet available, and add any assets that might not appear there. Include farm and personal assets. Are there items of equipment no longer needed? Is there a motor home no longer in use? Is there a land parcel that is no longer an essential part of the farm operation? Make conservative, best estimates of the value, and consider whether the asset could be used to generate cash.

Tactic Four: Outline possible plans, identify advisors

Have a personal brainstorming session. This is not intended to be a final, detailed plan, but an outline of possible strategies going forward. To assist, think about who might be able to help identify strategies. This might be the farm bookkeeper, accountant, tax or other financial advisor, a personal lawyer, an insurance professional – someone that can help with financial troubleshooting to focus on where solutions may lie. There may be other respected people with good judgment and a set of clear eyes who could give a fresh perspective on the operation. These are the kinds of people to sit down with, talk things through, and see what ideas might arise. 

Tactic Five: Cash generation and belt tightening

Basically, financial problems arise when income exceeds expenses – due to an assortment of causes. Contemplate assets which could be used to generate cash, either through sale or lease—but remember there may be tax consequences of selling depreciated assets. Is there custom work or other services that would raise some income? Explore off-farm employment of one or more household members. Consider both farm business and personal or family-living expenses. Eliminate or reduce discretionary spending. Medical insurance is a significant expense which may be decreased via off-farm employment. Ideas on how to stretch cash flow can be found on the Ag Decision Maker website.

Tactic Six: In-depth farm financial analysis

Iowa State University Extension and Outreach offers a free farm financial planning and analysis program. This service consists of confidential financial counseling, a computerized analysis of the farm business, and possible referral to other useful programs or services. The program uses FINPACK software to provide a more complete picture of the farm’s financial situation. An in-depth plan with options helps a farm operator work with lenders to make decisions for the future. Trained extension associates meet with farm operators to discuss the results of the analysis as well as the impacts of possible changes. The service is offered at no charge. 

Tactic Seven: Communicate with bankers, lenders, creditors

Avoidance is not a winning strategy, and it’s common for those facing financial stress to sidestep those to whom money is owed. Make a list of set times to visit in-person about the situation. Bring along the data that has been gathered – accompanied by an outline of proposals to address the problems. Before the meeting, review guidelines of good communication skills. If communication has become strained, consider bringing along one of the other advisors or professionals that may have assisted in brainstorming or analyzing the situation. A third party may be able to serve in a facilitation role, at least to take some of the stress out of the conversation. As part of the communication process, openly share ideas for cash generation or expense reduction. There is the possibility some aspects of the farm operations have become unprofitable and should be eliminated. Talk about ideas for debt restructure – perhaps debts that could be consolidated, or stretched out to reduce payments.  In this regard, it may be worthwhile to talk to other lenders who might have a different view of the future potential of the farm business.

Tactic Eight: Professional advice on debt restructure or bankruptcy

Depending on a wide range of factors, it may be wise to seek professional advice on the need for debt restructuring. Iowa State University’s Center for Ag Law and Taxation (CALT) provides a number of resources and articles that can facilitate the thought process. In particular, there is an article on how to find an attorney who has expertise in this field and can provide solid advice on next steps.  

Tactic Nine: Explore mediation services

Mediation is a process where parties meet with a neutral third-party who assists in identifying solutions to a problem or dispute. Information is available about agricultural mediation services at the CALT website, including a video about how mediation works. In Iowa, mediation may be a voluntary process – but it may also be mandatory. Iowa Mediation Service is a non-profit organization founded in 1985 and dedicated to solutions for farmers, families, and anyone who may find themselves in need of a dispute resolution expert. There is even a short video that explains agricultural mediation services. If the farm’s financial situation has reached a point where professional mediation services are needed, this is an excellent resource available to Iowa farmers.

Tactic Ten:  Contemplate retirement or liquidation

For some folks – depending on age, health, family situation, and many other circumstances – it may be time to consider retirement or partial to full liquidation. Retirement from farming can lead to a new phase of life which could result in new accomplishments. Lessons learned in farming can be a basis for new experiences. While some approach retirement or liquidation with apprehension and a sense of uncertainty, many later report a feeling of relief and freedom to move on to other opportunities and interests. Of course, it is important to consult with a range of advisors regarding tax consequences and obtain guidance on managing future life plans.

In summary, these tactics are offered to provide possible actions for farm families facing financial issues. Consider each action and move forward. Most importantly, avoid isolation at times of stress and work to surround yourself with people who can listen and perhaps provide encouragement or assistance.

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How to streamline your CFAP application

Ann Johanns
Alejandro Plastina

Contributed by Alejandro Plastina, Extension Economist, Assistant Professor, plastina@iastate.edu

If you are a farmer or rancher who faced price declines and additional marketing costs due to COVID-19, you have until August 28, 2020 to file for the Coronavirus Food Assistance Program (CFAP) with your local USDA Farm Service Agency (FSA) office.

The CFAP application form AD-3114 is available online for producers who prefer to fill it out manually. However, according to the Paperwork Reduction Act, filling out the AD-3114 form is estimated to take one hour per response. In order to streamline the CFAP application in times of social distancing and phased reopening of businesses, the USDA has published a CFAP Payment Calculator that serves multiple purposes:

  • helps producers organize the information needed to apply for CFAP;
  • informs producers of the initial payment and the potential for subsequent payments;
  • automatically populates a printable version of the AD-3114 form; and
  • saves in-person or on-the-phone consultations with FSA staff.

This article provides a step-by-step guide to using USDA’s CFAP Payment Calculator. You will need a computer with internet access and spreadsheet software. In order to print the completed AD-3114 form, you will also need a printer connected to the computer.

Follow these steps to calculate your CFAP payment and print the AD-3114 form:

  1. Download the CFAP Calculator and save it to your computer.
  2. Open the Calculator from the saved location. A message highlighted in yellow might appear at the top of the spreadsheet asking your permission to “Enable Editing.” Press the gray button with the legend “Enable Editing” to operate the spreadsheet.
Excel bar for "enable editing"

  1. If a message highlighted in red appears at the top of your screen indicating “Blocked Content”, then proceed as described in Step 4. If no such message appears, go to Step 5.
Excel bar for "Macros warning"
  1. Close the file in the spreadsheet software. To allow your computer to run the program embedded in the Calculator (called “Macros”), use the Windows File Explorer (PC computer) or Finder (Mac computer) to browse to the saved file in your computer, click the second mouse button on the file name to access its Properties, locate the “Unblock” option at the bottom, check the Unblock box, and press OK. Then open the file in the spreadsheet software and click on the “Enable Editing” button. The Calculator should be operational.
  2. The spreadsheet is organized into 5 tabs, but you will enter data only on the “Data Entry” tab, and only in the cells highlighted in light-yellow. You only need to fill out the sections relevant to your operation: Dairy, Non-Specialty Crops, Livestock, Aquaculture/Nursery, and Specialty Crops.
  3. Fill out the top section with State, County, Name, and Address.
  4. If you produced Dairy in 2020, fill out Part 1: enter the total pounds of production, including any dumped milk, in January, February, and March 2020. If you do not produce Dairy, leave Part 1 blank.
  5. If you produced corn, soybeans, oats, or other Non-Specialty Crops (including Wool) in 2019, fill out Part 2: in each row, select a crop from the drop-down menu; enter the 2019 total production across all your farms; and the 2019 total production not sold as of January 15, 2020. If your crop is not listed in the drop-down menu of Part 2, then see if it is listed in the drop-down menu of Part 5. If your crop is not listed in Parts 2 or 5, then it is not eligible for CFAP. If you did not produce Non-Specialty Crops in 2019, leave Part 2 blank.
  6. If you owned Livestock in 2020, fill out Part 3: in each row, select a livestock category; enter the total sales between January 15, 2020, and April 15, 2020 for owned inventory as of January 15, 2020, including any sales of offspring from owned inventory; and the highest inventory between April 16, 2020, and May 14, 2020. If you did not own livestock in 2020, leave Part 3 blank. 
  7. If you were an Aquaculture/Nursery farmer in 2020, fill out Part 4: in each row, enter the name of the commodity that suffered value loss; the total value of sales from all farms between January 15, 2020 and April 15, 2020; and the total value of marketable inventory from all farms as of April 15, 2020. Note that reported losses in Part 4 are not included in the Calculated Initial Payment reported by this Calculator.  USDA is continuing to review data associated with the impact of COVID-19 on value loss crops. Specific value loss crops that meet the eligibility criteria will be identified in the future. If you were not an aquaculture/nursery farmer in 2020, leave Part 4 blank.
  8. If you produced Specialty Crops in 2020, fill out Part 5: in each row, select a crop from the drop-down menu; enter the total value of production sold between January 15, 2020, and April 15, 2020; the total volume of production shipped but not sold between January 15, 2020 and April 15, 2020; and the total acres with production not shipped or sold between January 15, 2020 and April 15, 2020. If your crop is not listed in the drop-down menu of Part 5, then see if it is listed in the drop-down menu of Part 2. If your crop is not listed in Parts 2 or 5, then it is not eligible for CFAP. If you did not produce Specialty Crops in 2020, leave Part 5 blank.
  9. If the CFAP application is for a corporation, a limited liability company, or a limited partnership seeking an increase in the per-person payment limitation, fill out Part 6: enter the names of members/partners or stockholders who provide 400 hours or more of active personal labor or active personal management, or combination thereof, to the farming operation. If 2 or 3 members of the corporation, LLC, or LP are listed in Part 6, the payment limit will be increased from $250,000 to $500,000 or $750,000, respectively. If the application is not for a corporation, LLC, or LP, leave Part 6 blank.
  10. Revise for completeness and correct any mistakes. Check for typos, and make sure you are not leaving out any eligible commodity in the Data Entry tab.
  11. Check your Calculated Initial Payment by clicking on the orange button “GO TO ESTIMATED PAYMENT REPORT” in the top left part of the Data Entry tab. This action will take you to the tab called “ECPR”, and the Calculated Initial Payment amount will appear in the box at the top of the tab. The Calculated Initial Payment equals 80% of the Estimated Gross Payment before limitations and other reductions. For aquaculture/nursery farmers, the Calculated Initial Payment does not include value losses reported in Part 4 (see Step 10).
  12. Your Initial Payment will be the lesser of the Calculated Initial Payment or $200,000 per individual (equivalent to 80% of the $250,000 payment limit per individual). For corporations, limited liability companies, and limited partnerships, the limit is 80% of the payment limitation calculated in Step 12. You can print the calculations in the “ECPR” tab by clicking on the red button at the top of the tab called “PRINT ECPR.” Go back to the “Data Entry” tab by clicking on the blue button at the top called “GO TO DATA ENTRY”.
  13. Save the file for future reference: go to File menu in your spreadsheet software, and select the Save command.
  14. Print the AD-3114 form by clicking on the yellow button “PRINT AD-3114” in the top left part of the “Data Entry” tab. Depending on the number of eligible commodities you produced, some of your commodities might not show up in the printed AD-3114 form. In that case, click on the light-orange button “PRINT AD-3114 Continuation.” Revise the print out for accuracy, sign, and submit the CFAP application to your local FSA Office.

Any part of your Calculated Initial Payment (see Step 14) below 80% of your payment limit and above Your Initial Payment (see Step 15) might trigger subsequent payments at a later date.

Note that the present article was developed for USDA’s CFAP Payment Calculator Version 1, last accessed on May 29, 2020. The USDA might update the Calculator without prior notice and render some or all parts of this information outdated.

For more information on CFAP, visit https://www.farmers.gov/cfap.

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