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Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations
payments,3 including this additional assistance, as provided in 9.7e.

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CFAP 2
In this final rule, USDA is also including certain producers that raise swine and poultry including broilers, pullets, layers, chicken eggs, and turkeys under a production contract that sustained revenue losses due to market disruptions and reduced harvesting facility output resulting from the COVID19 outbreak. A swine or poultry contract producer is one who produces swine or poultry owned by someone else under a production contract. Not all production contracts operate the same way, so not all contract producers will be eligible. Only those producers who grow or produce an eligible commodity under contract for or on behalf of another person or entity and are not entitled to a share from sales proceeds of the commodity are eligible.
For example, a farmer who raises chickens pursuant to a production contract where such chickens are owned by a company that produces chicken products could be an eligible contract grower if such farmer does not receive payment for chickens that die before reaching maturity or when young animals are not supplied to the farmer by the company, or whose income is reduced when fewer young animals than normal are provided by the company.
USDA did not include swine and poultry contract producers in CFAP 1
because the impacts to these producers from COVID19 was not known at the time the rule was published in the Federal Register on May 21, 2020. The impacts from COVID19 on contract producers such as delayed delivery of young poultry and hogs to contract producers, decreased housing densities, additional costs for keeping animals longer than typical durations, and damage caused by animals too large for housing, were known when USDA
published the rule implementing CFAP
2 in the Federal Register on September 22, 2020. However, those producers could not be included since CFAP 2
payments were issued using funds authorized under CCC Charter Act 15
U.S.C. 714cb, d, and e to assist with the transition to a more orderly marketing system, and swine and poultry contract producers do not ordinarily market the animals they raise.
CARES funding, as authorized, remains available until expended to support 3 Corporations, limited liability companies, limited partnerships, trusts, and estates may qualify for an increased CFAP 1 payment limitation. See 7
CFR 9.7e.

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agricultural producers impacted by COVID19, including producers of specialty crops, producers that supply local food systems including farmers markets, restaurants, and schools, and livestock producers. This remaining CARES Act funding will assist contract producers facing reduced revenue due to the impacts noted above.
Certain contract producers have been eligible for assistance under the Livestock Indemnity Program LIP;
Emergency Assistance for Livestock, Honeybees, and Farm-Raised Fish Program ELAP; and the Livestock Forage Disaster Program LFP since these permanent supplemental disaster programs were authorized in the 2008
Farm Bill Pub. L. 110234; 7 U.S.C.
9081, see also 7 CFR parts 760 and 1416. These programs provide financial assistance to contract producers who are impacted by adverse weather events such as hurricane, flood, blizzard, disease, drought, or extreme cold or heat. Including certain swine and poultry contract producers in CFAP 2
parallels their inclusion in these permanent supplemental disaster programs that provide financial assistance to contract producers due to weather events that are not expected.
The impacts of a global pandemic are beyond normal production conditions and have had a negative financial impact on swine and poultry producers including those raising animals under a production contract.
USDA is including this subset of contract producers because the COVID
19 global pandemic not only disrupted protein markets as consumer consumption abruptly shifted from food service to home preparation, but also reduced harvesting facility output because of COVID19 outbreaks among the workforce and when facilities reduced processing capacity to ensure worker health. Swine and poultry contract producers provided data and other information to USDA to illustrate the impact of these coronavirus disruptions on their operations. The impacts of slowdowns and shutdowns at processing facilities in late spring and early summer are still being felt in the poultry and swine industry. In some instances, companies managed and continue to manage the lack of harvest capacity by reducing or eliminating new production, which means that contract producers had fewer animals to produce under contract per cycle or did not have young animals delivered by the company for some periods. In other situations, companies required some contract producers to keep animals longer than they typically keep them before shipping them to the harvesting
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facility, which actions increased costs such as producer labor, and for additional wear and tear and water use associated with larger animals. In addition, swine and poultry contract producers cannot use their specialized growing facilities for other purposes to generate revenue as the sector works through the supply chain bottlenecks.
Contract producers are eligible for payments if they produced swine or poultry including broilers, pullets, layers, chicken eggs, turkeys under a contract in both the 2019 and 2020
calendar years, suffered a loss in eligible revenue for the period from January 1, 2020, through December 27, 2020, as compared to the period from January 1, 2019, through December 27, 2019, and meet all other requirements for CFAP
eligibility. Eligible revenue is the revenue received by a contract producer for contract production of the eligible commodity, as reported on Internal Revenue Service Form 1099. Payments to eligible contract producers will be calculated by subtracting the contract producers eligible revenue for the period from January 1, 2020, through December 27, 2020, from their eligible revenue for the period from January 1, 2019, through December 27, 2019, and multiplying the result by 80 percent.
This calculation is subject to the availability of funds and will be factored, if needed. Contract producers must submit a complete CFAP 2
application between January 19, 2021, and February 26, 2021. Contract producers are subject to a payment limitation of $250,000 for all CFAP 2
payments,4 including any CFAP 2
payments received for other commodities not grown under a contract, as provided in 9.7e.
USDA has determined that producers of pullets, water buffalo, yak, and turfgrass sod face continuing market disruptions, low farm-level prices, and significant marketing costs associated with the COVID19 outbreak, similar to producers of commodities that were previously determined to be eligible for CFAP 2 assistance. As a result, USDA is amending the definitions of Other livestock and Sales-based commodities in 9.201 to include those commodities. USDA will reopen signup specifically for pullets, turfgrass sod, and contract growers on January 19, 2021. through February 26, 2021. The change to accept applications for water buffalo and yak was previously implemented by USDA; therefore, the 4 Corporations, limited liability companies, limited partnerships, trusts, and estates may qualify for an increased CFAP 2 payment limitation. See 7
CFR 9.7e.

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