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Inside Washington

Time to get creative with USDA aid

Former agriculture secretary Tom Vilsack and others discuss what is needed to keep rural America afloat post-COVID-19.

Agriculture is a vital part of the fabric of the U.S. economy, and former Agriculture Secretary Tom Vilsack commonly shares the fact that 28% of the entire U.S. workforce is directly connected to food and 20% of the total economic output. The weeks and months ahead will show how this nation will take care of that segment and the continued viability of the food and agricultural sector.

The Coronavirus Aid, Relief & Economic Security (CARES) Act has allocated $14 billion to replenish the Commodity Credit Corp. (CCC) and another $9.5 billion for livestock, dairy and specialty crop growers. Reports indicate details of the program could be forthcoming, but it’s already widely known that might not be enough. The Small Business Assn. (SBA) also has funds under the CARES Act, and SBA reported Thursday morning that the $349 billion in funds for the Payroll Protection Program have already dried up.

Vilsack, while speaking during a Focus on Rural call with other agricultural leaders on Thursday, said the agriculture industry as a whole is entering an unprecedented circumstance that will require creative solutions from the U.S. Department of Agriculture. This includes not just the funds called for under the CARES Act but also creative allocation of USDA’s normal budget funds.

“USDA shouldn’t limit itself in terms of creativity and use of resources to just the aid package,” Vilsack said. Within USDA’s normal budget, a number of programs can be utilized to help offer assistance. This could include rural development resources, ways in which the community facility grants are offered or converting equipment grant programs for schools to provide assistance to help different facets that are struggling that also touch farmers and the communities they live in.

“The key here is to be creative,” Vilsack said.

The biofuel industry is another majorly affected segment of rural America. Emily Skor, chief executive officer of Growth Energy, also participated in the call with Vilsack and said the ethanol industry came into the COVID-19 situation already under significant economic distress, amplified by trade issues with China, historic floods and hostile regulators. She said nearly 30 ethanol plants have publicly announced that they have shut down, but even more have slowed production, as losses are estimated at 37 cents/gal., and the near-term drop in demand means 2.5 billion bu. of corn are not being ground at ethanol facilities.

“It’s a dire situation for the industry. What we need is strong government leadership and government support,” she said.

Vilsack said prior to 2019, the ethanol industry provided stable markets for farmers and corn. In return, it offered hundreds of thousands of good-paying jobs and off-farm jobs in rural America.

For assisting the ethanol industry, Vilsack said it could be important for the federal government to continue to use its purchasing power and encourage the purchase of biofuels to fuel government vehicles. As China institutes the Phase One trade deal, the hope is that it could include the resumption of dried distillers grains imports, which would be another opportunity and benefit for ethanol production facilities for increased revenue streams.

Vilsack said while he was in office, there were restrictions under the CCC for providing direct assistance to cotton producers. He looked at the flexibility and determined that USDA could offer help to cotton gin operators. Similarly, USDA could create a program for ethanol to ensure that ethanol producers won’t have to absorb that full loss of 37 cents/gal.

Vilsack also said there’s a need to include more farmers' voices in the ongoing discussion of what’s next. Regarding the discussion about oil executives working out their own bailout, several members questioned why a similar meeting wasn’t being held with biofuel groups.

In addition, Vilsack said the working groups established by President Donald Trump did have a farmer member with the American Farm Bureau Federation but should also include representatives from groups such as the National Farmers Union and ethanol industry members rather than more focused on “large agribusinesses or foodservice operations.” Although these segments are important, Vilsack said it would be helpful if there were a few more farmer groups on that committee.

Rob Larew, recently named president of the National Farmers Union, added, “As we look at the [federal] response, we also need to make sure that this response is targeted and given to those communities and farmers.” As seen by some of the recent meat processing plant shutdowns, Larew said there is a need for more diversity in the processing end to maintain strong food security.

He said it will be important for the Administration to keep an eye toward long-term viability of rural communities and family farmers. “This Administration has a choice on whether their actions accelerate consolidation or, hopefully, slow it down,” Larew said.

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