GOP lawmakers say they're keeping an eye on USDA's Commodity Credit Corp. spending authority to ensure the department can cover regular payments to farmers as well as compensation to producers for impacts from avian flu – and new trade wars.
The CCC is essentially a revolving fund and must be replenished by Congress periodically, usually once a year, to make sure USDA has adequate spending authority to make farm bill payments, dispense farm loans and still cover other needs that arise.
CCC's spending authority under a statutory provision known as Section 5 is capped at $30 billion. Congressional aides say USDA's available authority is down to about $4 billion. A continuing resolution that Republicans pushed through the House on Tuesday, 217-213, didn't include replenishment.
“I'm concerned about it [the CCC],” said Sen. John Hoeven, a North Dakota Republican who chairs the Senate Agriculture Appropriations Subcommittee. “I'm working on that right now.”
The CCC was established in the 1930s to protect farm income and commodity prices. USDA's borrowing from the account is typically repaid during the annual appropriations process, but a series of stopgap bills that funded the government at existing levels this year has left it depleted.
With the administration eying the CCC to fund trade assistance to farmers, USDA's bird flu mitigation and Agricultural Risk Coverage and Price Loss Coverage payments due in October, lawmakers are eager to avoid a situation where payments are delayed over lack of funding.
“We're walking through the cash flows,” Hoeven told Agri-Pulse. “You could have [trade compensation payments] get delayed, or you could have, actually, some of the actual farm program payments get delayed. And that's what I don't want. I want to make sure we manage the timing of the cash flows so it works,” he added, referring to the market facilitation program during the first Trump administration to reimburse farmers for lost exports as a result of tariffs.
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Some money comes back into the CCC each month from farm loan repayments. But it is not enough to cover all the outgoing, Patrick Westhoff, who leads the Food and Agricultural Policy Research Institute at the University of Missouri, told Agri-Pulse.
“It's not a huge amount,” Westhoff said. “There would not be enough to cover October payments," absent an effort to top up the CCC’s borrowing ability, he added.
Lawmakers may or may not have more chances to replenish the CCC before the fall. The House GOP's CR would keep the government funded through Sept. 30, the end of fiscal 2025, but the bill likely faces strong Democratic opposition in the Senate. The measure will need at least seven Democratic votes to pass the Senate.
Trump's first trade aid effort cost far more than $4 billion
Agriculture Secretary Brooke Rollins is preparing a CCC-funded program to compensate farmers for the impact of retaliatory tariffs. The initiative would likely be similar to programs that provided $28 billion to farmers during the first Trump administration. President Donald Trump has unveiled plans to impose sweeping reciprocal tariffs that could spur retaliation against U.S. ag exports.
Scott Gerlt (ASA photo)“I have some concern,” Scott Gerlt, chief economist at the American Soybean Association, told Agri-Pulse, “Four billion dollars isn't a lot compared to the potential losses. And so, if the administration is going to make any sort of a trade aid from CCC, they would likely require Congress to step in earlier to replenish.”
Trump’s proposed tariffs this time are far broader and could lead to greater losses if trading partners retaliate in kind.
However, House Agriculture Committee Chair Glenn "GT" Thompson, R-Pa., was doubtful that U.S. agriculture would suffer export losses that required significant payments from the CCC. Thompson told Agri-Pulse that he expects reciprocal tariffs to spur other countries to lower the duties on U.S. products.
"I'm expecting this is really going to work out well for the American farmer," Thompson said.
Senate Ag Committee Chair John Boozman, R-Ark., argued that if the CCC needs access to additional borrowing, he is confident that Congress would act. Appropriations bills need to secure 60 votes in the Senate, however, which would mean securing some Democratic support.
“The nice thing about agriculture is it’s generally not partisan. So, I think most members understand how difficult it is for our farm community right now,” he said. The next step would be to make the case as to why we'd need to top it off again.”
There is precedent for Congress acting mid-year to refresh the CCC account. Congress approved a mid-year replenishment in the 2020 fiscal year as part of the CARES Act to provide coronavirus relief. That allowed the CCC to borrow more than $45 billion in a single year, according to Congressional Research Service estimates based on USDA data.
However, a Democratic aide told Agri-Pulse that their party’s lawmakers may be less inclined to help the Trump administration soften the impacts of its own trade policy on U.S. farmers.
COVID drew “a lot more sympathy,” the aide said, given the unprecedented and unforeseen impact on supply chains and international markets. “[It] certainly was a lot more understandable than this sort of self-inflicted wound that we have from the Trump administration.”
A Republican aide argued that ultimately Democratic support for replenishing the CCC would depend on the legislative vehicle and what other measures might be included in the package.
Hoeven also pointed out that Congress approved $33 billion in disaster assistance late last year that would provide some support to farmers.
“So, there's a lot of cash flows, but all those have to be managed as we sequence these programs so a farmer isn't waiting when he expects to get a payment or assistance at a certain time,” Hoeven said. “There’s a lot to it.”
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