USDA Aid Not Enough

April 21, 2020

A range of farm and ranch groups over the weekend said the $19 billion Coronavirus Food Assistance Program (CFAP) that Agriculture Secretary Sonny Perdue announced late Friday was an important first step, but not enough to stabilize their sectors.

According to a detailed description of the program released by Senate Agriculture Committee Chairman John Hoeven, R-N.D., the program will provide $16 billion in direct payments for farmers and ranchers, funded using the $9.5 billion emergency program and $6.5 billion in Credit Commodity Corporation (CCC) funding.

The $16 billion will include $9.6 billion for the livestock industry ($5.1 billion for cattle, $2.9 billion for dairy, $1.6 billion for hogs). Another $3.9 billion with go to row-crop producers, and $2.1 billion will go to specialty crops (fruit and vegetable) producers. Then there is $500 million for an undefined "other crops."

Producers will receive a single payment determined using two calculations:

-- Price losses that occurred Jan. 1-April 15, 2020. Producers will be compensated for 85% of price loss during that period.

-- The second part of the payment will be expected losses from April 15 through the next two quarters, and will cover 30% of expected losses.

The payment limit is $125,000 per commodity with an overall limit of $250,000 per individual or entity. Qualified commodities must have experienced a 5% price decrease between January and April. A USDA spokesperson said payments would be limited to persons or entities with adjusted gross income under $900,000 unless at least 75% of their income is derived from agriculture.

The program includes another $3 billion in purchases of agriculture products, including meat, dairy and produce to support producers and provide food to those in need. USDA will work with local food and regional distributors to deliver commodities to food banks, as well as community and faith-based organizations to provide food to those in need. USDA will buy products in $100 million monthly increments and pay food distributors to box those products and get them out to food banks.

USDA is expediting the rule-making process for the direct payment program and expects to begin sign-up for the new program in early May and to get payments out to producers by the end of May or early June.

Another $14 billion in funds to the Commodity Credit Corp. will be available for USDA to use in July.

An analysis last week released by the University of Missouri's Food & Agricultural Policy Research Institute (FAPRI) shows a potential of an overall $32.09 billion drop in cash receipts for traditional commodity crops and livestock. FAPRI's analysis does not look at farm products such as the produce industry.

National Cattlemen's Beef Association President Marty Smith, a Florida cattle producer, said: "We appreciate Agriculture Secretary Sonny Perdue's announcement that the agency will soon distribute funding to the cattlemen and cattlewomen who desperately need help during this national emergency."

Smith added, "While the relief funds that have been allocated to USDA by Congress represent a start to stabilizing the industry, there is much more work to be done to protect the cattle producers who are an essential component of the agriculture industry and the anchor for rural America."

National Milk Producers Federation President and CEO Jim Mulhern expressed appreciation to Perdue for including dairy in the disaster assistance package, but said more will be needed to stem steep losses in the dairy sector.

"Dairy's fortunes have been especially grim, given the perishability of our product, its daily harvest and the fact that the virtual shutdown of the food service market has wiped out more than one-third of our product demand," Mulhern said.

"After five years of poor prices, many producers faced financial difficulties even before the coronavirus crisis. Without more aid, this crisis could be their demise. We hope to work with USDA and members of Congress on implementing this plan and on the further assistance that will inevitably be needed due to this deepening crisis."

International Dairy Foods Association President and CEO Michael Dykes said, "With $16 billion in payments to producers and $3 billion for food purchases, including at least $100 million per month in U.S. government purchases of a wide array of dairy products, this is a robust good-faith effort to ensure the dairy supply chain remains intact."

"IDFA requested that USDA and the White House act with urgency to deliver an aggressive mix of direct financial support for producers as well as food purchases to offset growing food insecurity. The administration delivered with a creative approach on the product purchase side of this announcement.

"IDFA is pleased to see USDA go beyond traditional programming to streamline the process and forge an important partnership with the private and nonprofit sectors to incorporate underutilized foodservice infrastructure -- such as transportation and refrigerated storage -- to quickly and efficiently get food to Americans in need.

"For our dairy processors who have lost their foodservice business, IDFA is grateful that these USDA purchases will go to those most in need of nutritious food and spur demand for additional dairy products."

National Pork Producers Council President Howard "A.V." Roth noted that the package includes payment limitations of $125,000 per commodity and $250,000 per individual.

"We fear the lifeline so desperately needed will fall short of what is truly needed," Roth said.

"While the direct payments to hog farmers will offset some losses for some farmers, they are not sufficient to sustain the varied market participants, including those who own hogs as well as thousands of contract growers who care for pigs. All of these participants have made sizable investments in a U.S. pork production system that is the envy of the world. Many generational family farms will go bankrupt without immediate financial aid."

United Fresh President and CEO Tom Stenzel said, "We appreciate the steps taken today, but also must reinforce to Congress that the funds available to agriculture are simply inadequate to keep our industry strong into the future. The programs announced today will limit our ability to reach those who were most impacted by the tragic events around the COVID-19 pandemic."

On Saturday, in a message to United Fresh members, Stenzel added, "Last night's commitment from Secretary Perdue marks an important first step, but certainly not sufficient to meet the true devastation in our industry. Stenzel pointed to problems with the payment cap.

"You and I both know that comes nowhere close to the actual damage in our sector. The $250,000 limit is the same across all of agriculture -- livestock, dairy, other crops and fruits and vegetables, so we were not treated differently from our brethren. But the impact of that limit is drastically different for our high-value crops."

Stenzel offered the example of berries costing more than $10,000 per acre to grow, compared with about $650 an acre to grow corn or soybeans. Then there is the packing, marketing and distribution costs.

"So, while appreciative, we're once again engaging Congress to allocate more resources in a fourth COVID-19 funding program to help keep the overall economy and the fruit and vegetable industry alive."

Western Growers CEO Dave Puglia said the relief package "provides a very limited and conditioned" funding of $2.7 billion in aid for the produce industry. "Clearly, far more will be needed with more reasonable limits," Puglia said.

National Potato Council CEO Kam Quarles said Friday's announcement "is a down payment" but agricultural aid will require more resources to provide relief to potato producers. The scope of producers eligible for direct payments needs to be broadened and payments need to be more equitable. Further, buying potatoes in volumes is needed to provide aid and ensuring the supply chain continues to operate.

Eric Deeble, the policy director for the National Sustainable Agriculture Coalition, said USDA's plan "lacks critical details to confirm whether it will actually reach all who need it." Deeble said nothing in the plan reflects how USDA will follow Congress' direction on the $9.5 billion fund created to include help for farmers that supply local food systems and farmers markets, among others.

"While every farmer harmed by the pandemic is deserving of assistance, there can be no justification for providing so little for the farmers that provide our families real food grown for them in their own communities, while simultaneously doubling payment limits for commodity growers and excluding safeguards that would prevent payments to millionaires," Deeble said.

Renewable Fuels Association President and CEO Geoff Cooper said, "While we appreciate that USDA's new program provides needed assistance to the nation's farmers and ranchers, it is unfortunate and disappointing that the 350,000 workers supported by America's ethanol industry were left behind."

Source: DTN