Ag secretary outlines $19 billion COVID-19 relief package

Ag secretary outlines $19 billion COVID-19 relief package

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USDA offers assistance in the forms of direct support to farmers and purchasing food for distribution to those in need

Citing a “dramatic shift in our consumption patterns” and a “misalignment of production and supply,” U.S. Secretary of Agriculture Sonny Perdue announced the $19 billion Coronavirus Food Assistance Program (CFAP) to assist the agriculture industry as it deals with the novel coronavirus (COVID-19) pandemic.

“I think more than ever now, our country knows where our food comes from. They’re depending on our farmers and ranchers who grow and produce that food that we need to live, and I think in times of national emergency such as this, that’s become even more apparent,” Perdue said during a telephone press conference on the evening of April 17.

“The food supply chain has been resilient while having to adapt very quickly when food that used to go to restaurants now needs to go to retail outlets. I think when you really think about the fact that when about half of our calories are consumed outside of 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. As a result, farmers are seeing prices and their market supply chain affected by the virus like they never could have expected.”

With those struggles in mind, Perdue outlined the CFAP program, which will use the funding and authorities provided in the Coronavirus Aid, Relief, and Economic Security Act (CARES), the Families First Coronavirus Response Act (FFCRA), and other U.S. Department of Agriculture (USDA)-existing authorities. The program includes two major elements to achieve these goals: direct support to producers, and USDA purchase and distribution.

Direct support to farmers and ranchers

CFAP will provide $16 billion in direct support based on actual losses for agricultural producers where prices and market supply chains have been impacted and will assist producers with additional adjustment and marketing costs resulting from lost demand and short-term oversupply for the 2020 marketing year caused by COVID-19.

Perdue, in his call, said this part of the program is for producers “who have experienced unprecedented losses during this pandemic.”

While he did not specify how the funds were to be broken down, he said the direct support portion of the program will be based on evaluations from Robert Johansson, USDA chief economist, who looked at commodity-specific losses occurring during the time frame spanning from mid-January to mid-April. Perdue said the monies are open to farms and ranches, “regardless of size.”

Perdue hoped payments would be sent out before the end of May.

He also said the USDA anticipates there will be further needs, and acknowledged that this portion of CFAP will fall short of covering all losses brought on by the pandemic.

“We know the disruption of markets and demand is significant. These payments will only cover a portion of the impact,” he said.

“We’re not going to make everybody content with this – this initial crunch – and many people will feel like it’s insufficient, but we’re doing everything we can to cover as many people, both smaller farmers and larger farmers in that effort, and we’ll have to see where the gaps are in order to address later on. It is regretful.”

USDA purchase and distribution

USDA will partner with regional and local distributors, whose workforce has been significantly impacted by the closure of many restaurants, hotels and other institutional foodservice entities, to purchase $3 billion in fresh produce, dairy and meat.

The agency 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. 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 nonprofits serving Americans in need.

Perdue did not offer any further breakdown on which types of meat products would be in the distribution, nor did he mention whether eggs would be included in this part of the package.

He said foodservice partners, such as Sysco, will be helping USDA deliver foodservice products, easing the burdens of food banks who may be short on volunteers and staff to handle all of the distribution responsibilities.

On top of these targeted programs, USDA will utilize other available funding sources to purchase and distribute food to those in need. For example, USDA has up to an additional $873.3 million available in Section 32 funding to purchase a variety of agricultural products for distribution to food banks. The use of these funds will be determined by industry requests, USDA agricultural market analysis and food bank needs.

In addition, the FFCRA and CARES Act provided at least $850 million for food bank administrative costs and USDA food purchases, of which a minimum of $600 million will be designated for food purchases. The use of these funds will be determined by food bank need and product availability.

Reactions from agriculture organizations

American Farm Bureau Federation President Zippy Duvall said his organization appreciates the efforts of the USDA.

Duvall issued the following statement: “The coronavirus pandemic forced the closing of restaurants, schools and college cafeterias, causing commodity prices to fall off a cliff and serious disruptions to food supply chains. This $16 billion in aid will help keep food on Americans’ tables by providing a lifeline to farm families that were already hit by trade wars and severe weather. … Farmers and ranchers proudly accept the responsibility of feeding this nation and it’s heartbreaking to be forced to dispose of milk and plow under crops of fresh food at a time when others are going hungry. We also appreciate the additional funding from other sources to help deliver food from farms to food banks.”

National Milk Producers Federation President and CEO Jim Mulhern felt the CFAP was a good start, but believes more help will be needed.

“Federal dairy assistance is critically needed as the nation’s dairy farmers face an unprecedented collapse of markets resulting from the shutdown of much of the economy. The plan announced today should provide important relief to some producers, and we look forward to learning more of its details in coming days to fully understand its scope and implementation,” said Mulhern.

“Dairy’s fortunes have been especially grim, given the perishability of our product, its daily harvest and the fact that the virtual shutdown of the foodservice market has wiped out more than one-third of our product demand. After five years of poor prices, many producers faced financial difficulties even before the coronavirus crisis. Without more aid, this crisis could be their demise.”

Howard “A.V.” Roth, president of the National Pork Producers Council (NPPC) had similar feelings that CFAP will help, but is likely to ultimately fall short.

“We fear the lifeline so desperately needed will fall short of what is truly needed. 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 U.S. pork production system that is the envy of the world. Many generational family farms will go bankrupt without immediate financial aid,” Roth stated.

“We are thankful for USDA commodity purchases, a step that will hopefully help move a backed-up supply of pork to those who need it, creating much-needed plant capacity to harvest market-ready hogs that have lost value as they have backed up on farms because of COVID-19.

“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.”

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