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Coronavirus

Timing, amounts of COVID-19 aid unknown

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USDA hearing from stakeholders on COVID-19 aid priorities for funds allocated in CARES Act.

As the ripple effects of the COVID-19 pandemic continue to unfold for the agriculture industry, the work for the U.S. Department of Agriculture is to target federal aid that balances the support needed to the many industries affected by the virus. The Coronavirus Aid, Relief & Economic Security (CARES) Act provides the agriculture secretary with $9.5 billion of financial support to go to farmers and ranchers affected by the coronavirus and $14 billion to replenish the Commodity Credit Corp. (CCC).

Zippy Duvall, president of the American Farm Bureau Federation, said in a media call Friday that Agriculture Secretary Sonny Perdue told him the goal is to make the funds “fair to everybody” and get the aid out to producers as fast as possible, but he could not give a timeline.

Paul Schlegel, American Farm Bureau Federation vice president of public affairs, said the bureau, as the largest farm organization with widespread commodity representation, has been in numerous consultations in recent days to compile its requests to USDA. “We’re trying to capture mechanisms to keep growers as whole as we possibly can with the authority the secretary has been given,” he said.

Dale Moore, Farm Bureau executive vice president, added that his understanding is that the $9.5 billion in livestock and specialty grower assistance would be for those commodities that are not covered under Title 1 of the farm bill.

CCC funds

Duvall added that even though Congress did help the industry with the $14 billion for CCC replenishment, they will soon “find out that the amount of money not going to help many of our farmers during this difficult time.”

In general, the CCC Charter Act of 1948 provides authority to USDA to spend funds on a line of credit from the federal treasury; the cap on that line of credit is $30 billion. The CCC line of credit is used to make farm program payments, conservation payments, Marketing Assistance Loans and export activities, pursuant to programs authorized in the farm bill. The CCC was also used to pay out the Market Facilitation Program (MFP) payments in 2018 and 2019.

“CCC would be expected to spend $29.6 billion of the $30 billion line of credit in [fiscal year] 2020 to cover programs, payments and other obligations already in the budget,” according to an article published by economists on the University of Illinois’ farmdoc website. "The reimbursement in the CARES Act most likely reimburses spending for the second and third tranches of the 2019 MFP payments (estimated $9.7 billion), the estimated [ Agriculture Risk Coverage/Price Loss Coverage] payments for the 2018 crop made in October 2019 (estimated $2.9 billion) and possibly [Conservation Reserve Program] rental payments (estimated $1.9 billion).  Whether this reimbursement allows for USDA to initiate a new round of commodity program payments to farmers program remains an open question."

Stakeholder requests

The National Cattlemen’s Beef Assn. (NCBA) stated that its position is that USDA must implement these new authorities as quickly and equitably as possible. Immediately following the signing of the CARES Act on March 27, NCBA wrote Perdue asking for economic assistance for cattle producers that would be “market oriented, not disrupt or mask market signals and not be a permanent subsidy program.”

The Midwest Dairy Coalition, a group of dairy cooperatives based in the Midwest, urged Perdue to initiate a strategic Dairy Product Purchase Plan for donations to food banks and other donation programs, reopen the 2020 signup for the Dairy Margin Coverage (DMC) program and to make additional accommodations for Farm Service Agency (FSA) direct and guaranteed loan borrowers.

Reopening the 2020 signup for the DMC program would allow many farmers who made decisions based on 2020 dairy futures forecasts the chance to receive some coverage from the markets that have taken a very sudden and drastic downturn. In addition, relaxing the procedures on direct and guaranteed loans is much appreciated, the coalition said, while urging additional emergency measures.

American Sheep Industry Assn. president Benny Cox called on USDA to provide relief to America’s sheep and wool producers with assistance. “Our current estimate is that this crisis will have a direct loss at the farm level of $125 million due to the projected loss in consumer demand and decline in slaughter lamb prices, with many more losses expected. It is estimated the total economic impact to the American lamb industry may be in excess of $300 million,” Cox said. Globally, the wool price is 26% lower than it was a year ago.

“We are asking that the department work with the industry to develop a mechanism that would help offset actual and demonstrated losses realized by America’s sheep producers to help us bridge this gap,” Cox added.

Reps. Dan Newhouse (R., Wash.), Sanford Bishop (D., Ga.), Jeff Fortenberry (R., Neb.) and Chellie Pingree (D., Maine) led a bipartisan letter to Perdue supporting relief for farmers and ranchers suffering market losses due to the COVID-19 pandemic. According to USDA, direct-to-consumer food sales in the U.S. totaled $2.8 billion in 2017. Whether it’s direct to consumer, direct to retail or direct to institution, these marketing channels have created important economic opportunities for farmers in their districts, the legislators said.

“As you work to swiftly implement this provision of CARES Act, we urge you to make sure that farmers who have lost direct markets as well as those farmers and ranchers losing income receive their fair share of any relief, especially direct assistance, provided by USDA,” wrote the lawmakers. “Farmers engaged in the local and regional food economy and the various farmers and ranchers of all types of foods are in dire need of immediate assistance.

In a letter, groups representing local and regional market producers asked for direct assistance to meet expected losses of more than $1 billion to the industry segment. The letter cites Congressional Research Service estimates of local food sales at $11.8 billion in 2017, with nearly 8% of U.S. farms and ranches (159,000 operations) participating. A recent report estimated a decline in sales of more than $680 million across key local and regional markets due to COVID-19 for the three months between March and May 2020 alone. Building on that original study, key local and regional food markets are expected to lose more than $1.02 billion in sales from March to December due to the short- and long-term impacts of the pandemic.

In a letter to Perdue, United Fresh and more than 75 other fresh produce organizations urged USDA to take swift action in developing a market stabilization plan for the industry to meet the legislative intent of the CARES Act passed by the Senate and hopefully soon to be passed by the House.

Specifically, the vegetable and fruit growers asked for USDA to move to aggregate all data on losses by Perishable Agricultural Commodities Act (PACA) licensees due to the COVID-19 pandemic. USDA should immediately act to develop a disbursement plan to pay grower-shippers for debts identified from PACA licensees and customers, along with other contractual obligations that cannot be repaid due to the collapse of the foodservice sector. Development of a plan for USDA to purchase fresh fruits and vegetables for federal feeding programs. In so doing, USDA should immediately “step into the shoes” of schools that have cancelled contracts, they said, adding that as they seek to quantify the full international trade impacts of this global crisis, USDA should be prepared to create a program that assists producers with respect to lost international markets.

Financial aid to critical industries

Food industry associations also urged leaders in Congress to provide targeted financial aid to workers in the critical industries as they work to care for, feed and protect Americans through the coronavirus outbreak. Essential critical infrastructure workers are fighting a war against COVID-19 at great personal cost, and these workers should be recognized and supported by the federal government.

“Whether by exempting these essential critical infrastructure workers from federal taxes and requiring immediate adjustments to their tax withholdings or by providing direct payments, the federal government should stand by these workers as they serve as the nation’s lifeline during this difficult time,” the groups said.

The goal is to shape any coming federal legislative effort for further coronavirus relief.

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