WASHINGTON – The US Department of Agriculture released its $19 billion Coronavirus Food Assistance Program (CFAP) aimed at providing financial relief to US farmers and ranchers.
Under the program, USDA will provide a single direct payment to farmers and ranchers. Payments will be based on price losses that occurred Jan. 1 to 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, USDA said.
A total of $16 billion in direct payments for farmers and ranchers is funded using the $9.5 billion in the CARES Act and $6.5 billion in Credit Commodity Corporation (CCC) funding. Direct payments to producers include:
- $5.1 billion for cattle
- $2.9 billion for dairy
- $1.6 billion for hogs
- $3.9 billion for row crop producers
- $2.1 billion for specialty crops producers
- $500 million for others crops
“The payment limit is $125,000 per commodity with an overall limit of $250,000 per individual or entity,” USDA said. “Qualified commodities must have experienced a 5% price decrease between January and April.
“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.”
Stakeholders in the meat industry applauded USDA for the funding. However, the National Pork Producers Council (NPPC) sounded a note of caution citing research by industry economists that estimate hog farmers will lose $37 per hog marketed, or $5 billion collectively, for the remainder of 2020.
“We fear the lifeline so desperately needed will fall short of what is truly needed,” said Howard Roth, president of the NPPC. “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 US pork production system that is the envy of the world. Many generational family farms will go bankrupt without immediate financial aid.
“Our farm sector is made up of different market participants who are dependent on one another to maintain profitable operations. Unlike other industries that have received COVID relief aid without restrictions, many of our hog farmers have been left behind. Without quick action to extend support where it is needed most, we will see pork industry consolidation, a decline in healthy competition that drives innovation and the loss of a relished rural lifestyle for many farm families.”
The National Cattlemen’s Beef Association applauded USDA for quickly developing a plan to distribute the funding.
“Earlier this week, a study commissioned by NCBA, estimated that cow-calf producers stand to lose $8.1 billion as a result of the COVID-19 crisis, while the stocker/backgrounder sector losses will reach $2.5 billion and feedlot losses will total $3.0 billion as a result of the virus that is ravaging the American economy,” said Marty Smith, president of NCBA. “Total industry losses are expected to reach $13.6 billion. 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.”
In an April 17 conference call with the media, Agriculture Secretary Sonny Perdue said, “It’s an arduous process, but we are committed to move out this process as quickly and expeditiously as possible. We’re going to push them to get these checks out in May.”
The coronavirus has impacted prices and supply chains in ways farmers and ranchers could never have expected, he added.
“You’ve heard me say that the food supply chain has been resilient while adapting very quickly,” Perdue said. “Food that used to go to restaurants now needs to go to retail outlets. When you really think about the fact that about half of our calories are consumed outside the home, that’s been a dramatic shift in our consumption patterns, and the misalignment of production and supply has created some real challenges here.”
The program is available to farmers and ranchers regardless of size or market outlet if they’ve suffered an eligible loss, Perdue said.
“We’ve also looked ahead to provide additional assistance with the costs and disruptions in the months ahead not really knowing what the demand disruption will be,” he said. “We know that the disruption to markets and demand is significant, and these payments will only cover a portion of the impacts on farmers and ranchers.”
In addition to the direct payments, USDA will spend $3 billion toward the purchase of meat, dairy, produce and other agricultural products intended for food banks as well as community and faith-based organizations that provide food to individuals in need.
“We will begin with the procurement of an estimated $100 million per month in fresh fruits and vegetables, $100 million per month in a variety of dairy products, and $100 million per month in meat products,” USDA said. “The distributors and wholesalers will then provide a pre-approved box of fresh produce, dairy, and meat products to food banks, community and faith-based organizations, and other non-profits serving Americans in need.”
Perdue thanked President Trump for his unwavering support of American farmers and pledged that USDA would implement the plan as “... quickly, effectively and efficiently as we can to provide as direct, quick, immediate financial relief to our farmers and ranchers but also allow for the purchase and distribution of our agricultural surplus to help our fellow Americans in need.”
When asked about priority testing for meat plant workers over other kinds of businesses, Perdue said it was not the role of USDA to get coronavirus tests.
“We try to facilitate the connections that we’re able and to let people know the urgent need there,” he said. “Our processing facilities, certainly in pork, are critical and it’s a just-in-time, synchronized very sophisticated system, and we cannot afford for these plants to be offline for very long. I think the key to getting the workforce back is to identify where the positives are and who can come back to work.
“We are working on that. It’s not a primary USDA function, but we are aware of it. We are talking with everyone to secure these and hopefully we can get these tests at the appropriate plants as quickly as possible so they can get back online.”
Left out of the assistance program was biofuels, and Perdue acknowledged the impact on corn growers.
“Frankly, there’s just not enough money to go around; demand from all the sectors was more than we could accommodate at this time,” he said. “The macro-energy issue is certainly affecting all sectors of energy, so it was more than we could do from the USDA perspective at this time.”