June 11, 2020
New estimates out this week reveal that government payments could reach as much as $50 billion for the year, or 36% of farm income. But as farmers deal with spiraling prices and ballooning supplies, new requests are coming in for more aid.
The CARES Act provided $16 billion for farmers, with some of those funds authorized from the Commodity Credit Corporation account. As the CARES Act was passed at the end of March, the initial request from farm groups and Secretary of Agriculture Sonny Perdue to Congress was for a $50 billion replenishment. Instead, Congress authorized $14 billion additional for the CCC but not until after July 1. USDA could use the remaining $6.5 billion left in the CCC along with an additional $9.5 billion provided in the CARES Act. However, as the losses continue to mount, the question remains how much is needed to keep many farmers on life support.
Patrick Westhoff, director of the University of Missouri’s Food and Agriculture Policy Research Institute (FAPRI), said many people anticipate USDA will issue more money to farmers, similar to what it did under the Coronavirus Food Assistance Program (CFAP), once those funds become available July 1. However, Westhoff said that $14 billion has to get USDA through until the end of the fiscal year or even longer if Congress takes longer to approve its annual appropriations bill by Oct. 1, 2020 for the next marketing year. This would include money for additional farm programs and loans.
The CCC’s borrowing authority is currently set at $30 billion per year. “I don’t know 100% confidence level that appropriations bills will get done in a timely manner,” Westhoff said.
The American Farm Bureau Federation is calling on lawmakers to increase the CCC replenishment funding to $68 billion, in addition to several other changes if and when Congress tackles a fourth round of aid which could come after the Fourth of July recess.
“The economic losses across the U.S. agriculture sector are broad‐based, directly impacting farmers and ranchers and their supply chain partners – from input providers to end users,” wrote Farm Bureau President Zippy Duvall. “Producers have witnessed their markets shrink overnight or even disappear, while supply chains have been stretched to the limit in response to the pandemic. The widespread closures at the retail level are impacting consumer demand and purchasing patterns in ways that the industry has never experienced.”
The USDA’s most recent World Agricultural Supply and Demand Estimates suggest the decline in commodity value for 2019, 2020 and 2021 production adds up to almost $60 billion. This does not include all of agriculture’s losses, which would be billions more.
The U.S. Department of Agriculture began issuing payments shortly after it opened enrollment for CFAP on May 26. As of June 8, the Farm Service Agency had processed $1.4 billion in payments to 80,261 producers. (Click here for the full report and breakdown by sector and state.)
Democrat Congressional members have voiced concerns with the CFAP program as implemented. In a letter to Agriculture Secretary Sonny Perdue on June 9, House Agriculture Committee Chairman Collin C. Peterson (D., Minn.), and subcommittee chairs Jim Costa (D., Calif.), Stacey E. Plaskett (D., Virgin Islands) and Filemon Vela (D., Texas) outlined issues with specialty crops including that CFAP does not include commodities under contract, even though several of the most impacted crops are typically grown under contract, including potatoes and malting barley. CFAP also does not recognize the cost premium of organic crops, by differentiating organic prices for certified organic producers. USDA used data not fully representative of the farmgate value of some specialty crops to determine their eligibility for CFAP and CFAP payment rate.
The letter also shared that USDA chose to cover livestock sales between January 15th and April 15th when COVID-19-related livestock market declines did not begin until February 2020 and some of the lowest market prices persisted well beyond April 15th, effectively arbitrarily picking winners and losers based solely on when livestock was sold without regard to actual market conditions.
The Farm Bureau’s letter also asked for an extension of relief funding for all agricultural losses incurred after April 15.
A separate letter to Perdue signed by 51 members of Congress sent May 29 requested immediate flexibility for cattle producers who sold cattle after April 15, 2020.
"For some cow/calf and stocker producers, the spring sale of calves is the only income from their cattle herd for the year, and now any who sold after April 15 are immediately harmed by USDA's program design. According to USDA Agricultural Marketing Service (AMS) data, 1.55 million feeder and stocker calves have been marketed for the weeks ending from April 17 through May 22," that letter stated. "Millions more calves will continue to be marketed in coming weeks, and those producers will continue to be impacted by both the dramatic price decline in recent months and USDA's failure to adequately design a program that responds to those losses."
The AFBF request also asked for aid for independent and contract poultry producers.
How to pay for the next round of post-COVID recovery support and at what level remains unknown heading into July.
“Those in agriculture know more is needed. But the appetite for another $3 trillion is not there,” said National Cattlemen’s Beef Assn., vice president of government relations Ethan Lane.
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