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USDA announces $19 billion plan to help farmers, consumers

Jan Shepel
Correspondent
Tom Kopak, with Kemps, hooks up a trailer before backing it into a dock at the company in Cedarburg on Wednesday, April 15, 2020. The nonprofit Hunger Task Force says it will commit up to $1 million to a newly created Wisconsin Dairy Recovery Program aimed at helping farmers and food pantries.

WASHINGTON, D.C. –  Late on Friday (April 17) the U.S. Department of Agriculture announced a $19 billion plan called the Coronavirus Food Assistance Program (CFAP) to help farmers, ranchers and consumers and maintain the food supply chain, which has been badly damaged as the coronavirus pandemic swept across the nation, It has forced dairy producers to dump their milk – some without any compensation – vegetable growers to plow their produce under and meatpackers to close their doors.

Agriculture Secretary Sonny Perdue announced the plan Friday evening, saying that CFAP would provide immediate relief for farmers and allow for the purchase and distribution of agricultural products to “help Americans in need.” It will allocate $16 billion in direct payments to producers and $3 billion to be used for purchasing commodities for use in food banks.

Farm groups were quick to express their appreciation for some sort of aid plan for farmers, but the nation’s largest dairy organization noted that dairy farmers will inevitably need further help to weather the economic damage kicked up by the pandemic.

Perdue said the newly announced program will use funding and authority from several laws that Congress has recently passed (The Coronavirus Aid, Relief and Economic Security Act or CARES and the Families First Coronavirus Response Act or FFCRA). Other already-existing USDA authorities are also going to be called upon to purchase more products for food banks.

The newly announced program will provide $16 billion in direct payments to farmers and ranchers based on their actual losses, where prices and market supply chains have been impacted. It will “assist producers with additional adjustments and marketing costs resulting from lost demand and short-term oversupply” for the 2020 marketing year caused by the pandemic. Dairy farmers will receive $2.9 billion of the $16 billion in direct payments to various commodity producers. 

The second part of the new program will secure purchases of $3 billion of dairy products, meat and produce from local and regional food distributors to create boxes of food for hungry Americans. These boxes will go to food banks and other non-profit groups for distribution. Perdue said the program is authorizing purchases of $100 million per month of fresh fruits and vegetables, $100 million per month in dairy products and $100 million per month in meat products.

The USDA said that in addition to those massive purchases, there is an additional $873 million 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, market analysis and food bank needs.

Agriculture Secretary Sonny Perdue announced that CFAP would provide immediate relief for farmers and allow for the purchase and distribution of agricultural products to “help Americans in need.”

No DMC re-do

During a media teleconference Friday evening, Perdue said he had chosen not to re-open enrollment for the Dairy Margin Coverage (DMC) safety net program for dairy farmers. Because it is an insurance program “like the safety net for crops it would violate the principle for farmers to not take insurance when they should and then expect disaster coverage later on,” he said. “I feel very strongly about that. We literally begged people to sign up.”

He also told reporters that a program for temporary supply management that had been sought by several dairy groups was also not included because it was too expensive.

“I don’t expect we’ve met all the needs,” Perdue said. “We won’t make everyone content with this. I’m regretful we won’t be able to hit the bulls-eye every time.”

Perdue said that before the pandemic’s effects, Americans were used to eating half of their calories outside the home. When the restaurant and institutional side of the economy closed, it caused a “misalignment of consumption and supply,” he said.

There is no provision in this program to help the ethanol industry and thereby the corn growers who benefit from it. “I know the biofuel industry is facing big challenges, but there’s not enough money to go around,” Perdue said.

The USDA will have to publish a rule to enact CFAP and develop software to process claims through the Farm Service Agency. The Secretary said he hoped farmers could get their payments by the end of May. “I’m pushing to get them out as quickly as possible.”

Farmers will have to apply with the Farm Service Agency and demonstrate their damages.

The “pre-approved boxes” of food that will go out to food banks for distribution will be paid for by USDA, assembled by food wholesale/logistics companies, like Sysco, and then forwarded to food banks, he said, “to make it as easy as possible for food banks, as they tell us they are short of volunteers. We want to take a load off the food banks.”

The Agricultural Marketing Service is the procurement arm of the agency, and will be in charge of what Perdue called the logistical Rubik’s Cube.

Reaction from farm groups

As he thanked the Trump administration for the help, American Farm Bureau Federation President Zippy Duvall noted that as the coronavirus pandemic forced the closing of restaurants, schools and college cafeterias, it caused commodity prices to “fall off a cliff” and brought 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,” he said.

The coronavirus pandemic forced the closing of restaurants, schools and college cafeterias, causing commodity prices to “fall off a cliff” and cause serious disruptions to food supply chains.

“The plan to purchase $3 billion in meat, dairy products, fruits and vegetables will help to stabilize markets and keep farms afloat so they can go about the business of feeding America. 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,” Duvall said.

The National Milk Producers Federation said it appreciated this step in helping dairy farmers, “even as more will be needed.” The dairy cooperative association expressed appreciation for including dairy in its $19 billion-dollar disaster assistance package, but noted that “more will be needed to stem steep losses in the dairy sector.”

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, said Jim Mulhern, president and CEO of NMPF.

“Dairy’s fortunes have been especially grim,” he added, given the highly perishable nature of dairy products, their daily harvest and the fact that the virtual shutdown of the food service market has wiped out more than one-third of dairy’s product demand.

Further assistance inevitable

“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,” Mulhern said, adding “further assistance will inevitably be needed due to this deepening crisis.”

Wisconsin-based Edge Dairy Cooperative and Dairy Business Association had advocated for both parts of the plan Perdue described Friday evening. In a statement, the groups said “the pandemic continues to wreak havoc on our economy, millions of Americans cannot afford food -- many for the first time in their lives -- and our farmers who produce this food are struggling to survive financially. This federal assistance will be a bridge for both.”

The National Farmers Union said the USDA’s announced relief plan “could not come soon enough.” Rob Larew, NFU president, expressed appreciation for the agency’s efforts to provide much-needed relief and reiterated the importance of dividing aid fairly and establishing longer-term solutions to market challenges.

“In good times and bad, family farmers and ranchers work tirelessly to put food on our tables. But right now, they are facing immense challenges,” Larew said. “Critical markets have evaporated overnight, demand has shifted dramatically, processing facilities have halted operations, and commodity prices have cratered – all of which are cutting into already-thin margins. Without immediate assistance, many more family farms could be forced out of business, which would devastate rural communities and threaten our food supply.

“To ensure the most effective use of these funds, payments must be commensurate with demonstrated need, and should be implemented in conjunction with policies that addresses fundamental market challenges,” he said.