USDA announces COVID-19 relief program for farmers, ranchers
By Amanda Bilek, senior public policy director for the Minnesota Corn Growers Association
On April 17, the United States Department of Agriculture (USDA) announced initial details for a Coronavirus Food Assistance Program (CFAP) to help partially address financial impacts to U.S. farmers and ranchers as a result of the COVID-19 pandemic.
The $19 billion aid package directs $3 billion in food product purchases by USDA and $16 billion in direct assistance to farmers. Funding for CFAP utilizes the $9.5 billion appropriated from the CARES act and $6.5 billion from the Commodity Credit Corporation (CCC). Readers might recall that the CARES act replenished the CCC with $14 billion, and Secretary Perdue has publically stated that those funds will be available in July and anticipate a future COVID-19 aid and relief package from USDA.
We expect a number of additional details to be included in a draft interim final rule anticipated in the next couple of weeks, but we outline below the details we currently have on the $16 billion in direct assistance to farmers.
Relief directed to different agriculture sectors break down along the following lines:
- $3.9 billion for row crop producers
- $9.6 billion for livestock ($5.1 billion for cattle, $2.9 billion for dairy, $1.6 billion for hogs)
- $2.1 billion for specialty crop producers
- $500 million for other crops
The CFAP program will have a single payment determined by two calculations. The first calculation will account for price loses that occurred from January 1 to April 15, and compensation is limited to 85 percent of total prices loss during that period. The second calculation will be based on expected price loses from April 15 through the next two quarters of 2020, and payments will be limited to 30 percent of expected price loses. In order to qualify, a commodity must have experienced a 5-percent decrease between January – April. Payment will be capped at $125,000 per commodity or $250,000 if there are documented loses on more than one commodity.
We look forward to seeing more details particularly specific rates per commodity and calculation methodology on current losses and forecasting future losses. We anticipate these details will be made available in a draft rule. Secretary Perdue has indicated they are hopeful to begin sign-up in early May with assistance delivered to farmers end of May or early June.
Since Secretary Perdue has made comments regarding the $14 billion in CCC replenishment available in July, we do anticipate a future aid package. Given what has been outlined in the initial details, $3.9 billion will not be enough to help cover row crop losses, but this round of assistance is weighted towards livestock which is currently incurring significant loses and has no long-term storage options.
Agriculture groups have been providing analysis to USDA to document losses. In a new analysis from the National Corn Grower Association, cash corn prices have declined by 16 percent on average and several regions are experiencing a price decline of more than 20 percent, since March 1. The analysis projects a $50 per acre revenue decline for the 2019 corn crop.
Analysis from groups such as the National Pork Producers Council and National Cattleman’s Beef Association also demonstrate producer losses and bolster the case for future assistance to help cover losses.
We are disappointed to not see any direct assistance for ethanol producers included in this package. According to recent analysis from the Renewable Fuels Association, due to the drop in demand from COVID-19 and challenging economics prior to the pandemic, U.S. ethanol sales could decrease by $10 billion and decrease the contribution to gross domestic product by one-third. According to estimates, roughly half of the nation’s production capacity is currently shut down.
Paycheck Protection Program
Congressional leaders and the administration have been negotiating on another aid package for the economy and replenishment of fundsfor the Paycheck Protection Program (PPP) has been a key item. On Tuesday afternoon, a deal between negotiators was reached and the Senate approved a $484 billion aid package. The PPP will receive an additional $320 billion, with $60 billion carved out for community banks and smaller lenders. The package also provides additional funding for the Economic Injury Disaster Loan (EIDL) fund of $60 billion, with $50 billion dedicated to loans and $10 billion to grants. Language also clarifies that farmers and other types of agriculture businesses are eligible for the EIDL funds.
We will continue to keep you updated on policy developments in Washington or St. Paul during this time. We will also be sure to include resources on the MCGA COVID-19 resource page.
Be sure to follow the MCGA blog and its social channels (Facebook, Twitter) for updates. You can also follow me on Twitter (@AjBilek).
