The Farm Service Agency (FSA) has issued some information clarifying what are eligible contracts that leave price risk open for producers under the Coronavirus Food Assistance Program (CFAP) and what tools constitute removing price risk.
Those deemed contracts that leave open price risk include: basis contracts, basis fixed contracts, delayed price contracts, deferred price contracts, and contracts where no price is established.
Those where price risk is removed (and are considered ineligible contracts) include: cash contracts, fixed price contract, forward price contract, cash forward contract, minimum price contract, hedge to arrive contract, window contract, option contract, futures fixed contract and a futures contract.
The above list applies to contracts entered into on or before January 15.
USDA’s CFAP handbook provides several examples of forward contracts that are eligible, but do not provide the breadth of examples the agency considers as eligible or ineligible contracts.