The Department of Agriculture has announced a $19 billion program that combines direct payments to producers and $3 billion in commodity purchases for distribution through food banks and faith-based organizations.
President Donald Trump and Ag Secretary Sonny Perdue announced the program Friday evening at the White House. The program, funded through existing dollars available through USDA’s Commodity Credit Corp. as well as a $9.5 billion allocation in the coronavirus recovery package passed last month.
“This program will not only provide immediate relief for our farmers and ranchers, but it will also allow for the purchase and distribution of our agricultural abundance to help our fellow Americans in need,” Perdue said.
According to a USDA release, the direct payments will be “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.”
According to a release from Senate Appropriations Subcommittee Chair John Hoeven, R-N.D., the $16 billion in direct payments are weighed heavily toward the livestock industry. According to Hoeven, $9.6 billion in direct payments will go to livestock producers — $5.1 billion to beef cattle, $2.9 billion to dairy farmers, and $1.6 billion to hog producers. Another $3.9 billion will be targeted to row crop producers, $2.1 billion will go to specialty crop producers, and $500 million will go to products deemed “other crops.”
In a statement, American Farm Bureau Federation President Zippy Duvall said the $16 billion in direct payments “will help keep food on Americans’ tables by providing a lifeline to farm families that were already hit by trade wars and severe weather.”
Producers will receive a single payment based on calculations of losses in two periods: from the beginning of the year to April 15 and from April 15 through the end of September. Producers will be compensated for 85% of the price loss experienced during the early period and 30% of expected losses for the second period. Only commodities that experienced at least a 5% decrease in prices between the beginning of the year and mid-April will be eligible.
“We appreciate the President and USDA Secretary Perdue working to get this round of assistance out quickly, and we will continue our efforts to ensure that these resources are used to assist our producers as effectively as possible,” Hoeven said in a statement. “Our farmers and ranchers have continued to provide our nation with food, fuel and fiber during this pandemic, and we need to ensure they have the support necessary to continue their essential work.”
Perdue told reporters he hopes to see checks to producers by the end of May. “It’s an arduous process but we are committed to move out on this as quickly and expeditiously as possible,” he said.
The commodity purchases will be targeted toward “fresh produce, dairy, and meat products,” USDA noted. The Department plans to purchase $100 million per month “in a variety of dairy products” and another $100 million per month worth of meat products. The money will be sent to distributors and wholesalers, who will “provide a preapproved box of fresh produce, dairy, and meat products to food banks, community and faith based organizations, and other nonprofits serving Americans in need.”
The payments represent the third consecutive year the Trump administration will offer direct assistance to producers on an ad hoc basis.
In 2018, the first iteration of the Market Facilitation Program was created to respond to the trade war between the U.S. and China. That year, about $12 billion in funding was split between MFP, commodity purchases, and trade promotion; MFP was based on actual production with soybean producers receiving $1.65 per bushel of the crop. Corn producers were frustrated with their payment: one penny per bushel of production.
The next year, another iteration of the program was created that continued the commodity purchases and trade promotion programs, but changed the formula for MFP. In 2019, payments were based on the historic impact of a county’s commodity mix.
While the funding announced tonight is the largest amount of direct payments in any of the last three years, sources tell Agri-Pulse additional CCC funds are expected to be requested in future rounds of coronavirus recovery legislation on Capitol Hill.
“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,” National Cattlemen’s Beef Association President Marty Smith said in a statement.
Perdue also told reporters “we do anticipate further needs” and said USDA will be looking at losses in the coming months.
National Pork Producers Council President Howard “A.V.” Roth said NPPC fears the program “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,” he said.
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Several details remain unanswered about the program, including how USDA will determine individual payments as well as the economic justification for support offered to each sector.
“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,” National Milk Producers Federation President and CEO Jim Mulhern said in a statement.
While several segments of agriculture were included in the announcement, the biofuels industry was not, something Perdue said could be attributed to being “just more than we could do.”
“Frankly at this point, there’s just not enough money to go around,” Perdue told reporters. "The demand from all the sectors was even more than we could accommodate at this time.”
USDA will also spend an additional $873.3 million to purchase more ag products for food banks and $850 million for food bank and administrative costs. Of that $850 million, a minimum of $600 million will be designated for food purchases.
Story updated at 7:35 p.m. and 10:15 p.m. to include additional details and reaction.
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