USDA outlines aid for farmers
The Agriculture Department is working around the clock to expedite federal aid for farmers suffering financially from COVID-19 market disruptions, Agriculture Secretary Sonny Perdue said last week.
The USDA hopes to begin purchasing and distributing $3 billion in produce, dairy and meat products under the Coronavirus Food Assistance Program (CFAP) within two weeks, Perdue said. However, it could be a month or longer before the agency begins making $16 billion for direct payments to farmers, he said.
“We’re working daily, and sometimes 24 hours a day,” Perdue said. “The direct support will require rulemaking, but we hope to have sign-ups beginning in late May, as quickly as we’re able to.”
More than half of the direct payment funding — $9.6 billion — is designated for livestock farmers, including $5.1 billion for cattle, $2.9 billion for dairy and $1.6 billion for hogs. The package also includes $3.9 billion for row crop producers, $2.1 billion for specialty crop producers and $500 million for other crops.
American Farm Bureau Federation (AFBF) President Zippy Duvall said the funding provides “a lifeline to farm families that were already hit by trade wars and severe weather.”
Still, economists and agriculture groups noted that the $19 billion package falls well short of the mounting losses faced by farmers who have seen the prices they receive for their livestock, milk and crops fall by as much as one-third after the coronavirus pandemic forced the closing of restaurants, schools and college cafeterias.
“If you are a 2,500-sow producer, the ($250,000) payment limit represents about $4 per pig of your annualized production … at a time when you are losing in excess of $40 per head with the prospects of the same indefinitely into the future,” Joe Kerns, managing director at Kerns and Associates in Ames, wrote in a column for National Hog Farmer.
Under CFAP, producers will be compensated for 85% of price losses that occurred for qualified commodities between Jan. 1-April 15, and 30% of expected losses from April 15 through the next two quarters. The payment limit is $125,000 per commodity with an overall limit of $250,000 per individual or entity.
Specific price and payment calculations for each commodity are still being worked out.
“There really are more questions than answers, and more uncertainty that we’re going to have to go through,” said Sam Funk, Iowa Farm Bureau senior economist.
“We absolutely don’t have any details,” Iowa Sen. Charles Grassley said in his weekly conference call with ag reporters. “It’s a whole new program and we’ve never used the CCC (Commodity Credit Corporation), as far as I know, for support for livestock farmers, unlike corn and soybean.”
In the meantime, farmers are advised to start collecting detailed production records so they are ready when the USDA opens applications for assistance. That includes records for livestock marketed or euthanized and any milk dairy farmers were forced to dump as a result of COVID-19 supply chain disruptions.
“Since the length of enforced social distancing measures remains to be seen, there will be some self-certification of losses, so producers will need to save records and paperwork to demonstrate losses,” said John Newton, AFBF chief economist.
No funding was earmarked for ethanol manufacturers, who have shuttered almost 50% of production capacity as demand for the fuel slumped following COVID-19 shutdowns.
“Frankly, at this point there’s just not enough money to go around,” Perdue said. “The demand from all of the sectors was even more than we could accommodate.”
Under its food purchase program, the USDA will buy $100 million per month each for dairy products, meat products and fresh fruits and vegetables. The agency will partner with regional distributors to provide the products in pre-approved boxes to food banks and other non-profit groups.
The USDA will have more funding available for potential coronavirus aid in July when $14 billion allocated to the Commodity Credit Corporation becomes available. Congress could also provide another round of funding, Grassley said.
“We may have to make a decision on that soon, but right now we are going to have to wait until the money that is out there now is already expended,” he said. “We will determine the aid as needed.”
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