USDA rolls out new COVID-19 payments for farmers & ranchers

Surrounded by farmer leaders, Secretary Sonny Perdue and daughter Ivanka Trump at the White House on Tuesday, President Donald Trump unveiled the broad outlines of the next coronavirus relief payments for farmers and ranchers. Farmers can start enrolling May 26 for $16 billion in coronavirus relief payments, but the Agriculture Department has decided to prorate the aid to ensure there is enough money to go around. 

Farmers will receive 80% of their Coronavirus Food Assistance Program payment in the initial distribution. The remaining 20% will be paid at a later date as funds remain available within the $16 billion limit for the program, according to details released by USDA on Tuesday. 

Cattle, dairy and hog producers as well as corn and soybean growers are expected to collect the largest shares of USDA’s $16 billion in coronavirus relief payments, which are designed to compensate for losses in sales or market value between January and April. 

But dozens of fruit and vegetable crops also are eligible for $2.1 billion in direct payments.

Producers that fall into one of the following categories may be eligible to receive a direct payment:

• Sales with a price loss of 5% or more between January 15 and April 15, 2020. Almonds, artichokes, beans, broccoli, cabbage, carrots, cauliflower, sweet corn, cucumbers, eggplant, lemons, iceberg and romaine lettuce, dry onions, peaches, pears, pecans, bell and other types of peppers, rhubarb, spinach, squash, strawberries and tomatoes are eligible.
• Shipments that left the farm by April 15 and spoiled due to no market or for which no payment was received. All specialty crops are eligible.
• Shipments that have not left the farm or mature crops that remained unharvested by April 15. All specialty crops are eligible.

The payment calculations vary depending on the commodities. Payment rates are available at this link. More commodities could be added, if they can provide the data needed to convince USDA they should be included. That’s a major reason that USDA will prorate the initial payments to 80% of a producer's eligible total. 

“During the pandemic, farmers, ranchers and their employees have worked hard to fulfill their commitment to provide essential food and farm products, but the market impacts of the pandemic have rocked every segment of the California farm economy,” said California Farm Bureau Federation President Jamie Johansson.

“The new Coronavirus Food Assistance Program offers a lifeline to many farmers and ranchers who may be struggling to keep their essential businesses afloat. From a survey of our members, we know family farmers and ranchers have lost sales, customers and off-farm income due to the pandemic — all while their operating costs have risen. We hope aid will be distributed quickly and equitably to farmers and ranchers representing the full range of California agriculture. We will work with Congress and the administration to ease restrictions on the aid and expand it to parts of agriculture not now included, such as nursery crops and wine grapes.”

Commodities that did not suffer a 5%-or-greater price decline from mid-January 2020 to mid-April 2020 are not eligible for CFAP. Specifically, this includes sheep more than two years old, eggs/layers, soft red winter wheat, hard red winter wheat, white wheat, rice, flax, rye, peanuts, feed barley, Extra Long Staple (ELS) cotton, alfalfa, forage crops, hemp, and tobacco. However, for all commodities except for hemp and tobacco, USDA may reconsider the excluded commodities if credible evidence is provided that supports a five percent price decline. USDA said it was particularly interested in the obtaining information with respect to the following specific categories: Nursery products, aquaculture products, and cut flowers. Read more about this request for information.

Cattle producers are expected to receive payments totaling just over $5 billion after the payment limits are considered, according to USDA's cost-benefit analysis released Tuesday along with the final rule for the Coronavirus Food Assistance Program. There is a payment cap of $250,000 per person or entity. The cattle payments are based on both market losses between January to April as well as the current herd. 

Dairy producers are expected to receive $2.8 billion after a $700 million reduction because of payment limits. Hog producers are estimated to receive $1.6 billion after a $1 billion reduction because of the payment limits. 

Not accounting for the impact of the payment limits, corn payments are estimated at $2.3 billion and soybeans at $845 million. Cotton growers, who have seen some of the biggest market losses from January to April, a drop of 25%, are expected to receive $442 million. Commodities had to suffer market losses of at least 5% to be eligible for the program. 

Specialty crop growers are expected to qualify for $2.1 billion after payment limits. The largest amounts for individual commodities, not accounting for payment limits, will be for strawberries ($291 million), beans ($247 million) and broccoli ($205 million).

Without the payment limits, producers of all the eligible commodities could have qualified for as much as $19 billion, USDA estimates. 

“This program is an important down payment in helping farmers and ranchers deal with the unprecedented and unexpected economic fallout related to COVID-19,” according to an analysis by the American Farm Bureau Federation. “However, more help will likely be needed as the full extent of the crisis becomes known.”

Bill Northey, USDA’s undersecretary for farm production and conservation, told Agri-Pulse he was confident payments would reach producers within a week after they enroll. Once an application is completed and approved by the county office “it can go right into our payment system,” said Northey. 

An application and payment calculator will be available online at farmers.gov. Farmers will be allowed to self-certify the amount of sales and inventory they apply to be covered under the program. They also will have to be meet conservation compliance requirements that apply to conventional commodity programs, crop insurance and conservation programs, Northey noted. 

It may be late summer before producers will know whether they will get the full amount of the payment. 

USDA is prorating the payments to ensure they stay under a $16 billion cap. The department needs to reserve money for commodities that aren’t yet eligible and isn’t sure how some commodities will be affected by the $250,000 payment limit, said Northey.

“This money is needed. We want to get it out as soon as we can,” said Northey. “But it is important to be able to have enough money” so farmers who become eligible later “have an equal shot at being able to get paid on with this process.”

Although the CARES Act provided an additional $14 billion that USDA can spend starting in July, he said the department doesn’t know how much of that will be needed to make payments for existing programs and other purposes. 

Northey is expecting a number of groups to request to be included in CFAP.

Wheat growers say that three major classes of wheat were unfairly left out of the program and will ask USDA to reconsider. Other producers of commodities including farm-raised fish, maple syrup and even turtle eggs, a product of Louisiana, have expressed interest in getting into the program. 

Hard red winter, soft red winter and white wheat are not eligible for payments while durum and hard red spring wheat are. 

USDA’s methodology “neglects to incorporate price drops during the January to April time frame when wheat farmers were marketing their crop or that local cash prices that farmers were receiving were less than futures prices in many areas of the country,” said Dave Milligan, a Montana farmer who is president of the National Association of Wheat Growers. He said NAWG provided evidence that prices for those classes fell by at least 10%. 

Conventional eggs may be another issue, according to Northey. Eggs currently weren’t made eligible for CFAP because USDA didn’t distinguish between the impact of the COVID-19 crisis on shell eggs versus eggs that producers sell as liquid product for use in food service and food manufacturing. Prices for liquid egg product dropped dramatically after schools and universities shut down and restaurants and hotels emptied in mid-March, while shell egg prices skyrocketed. 

“I just know we'll get” an appeal for payments to egg producers, “and we should, and they should give us some information and we should see if we can make it work or not or if it's logical,” said Northey. 

The payment calculations vary depending on the commodities, but the concept behind each is the same: The payments are designed to compensate for price losses that affected both crop and animal sales as well as the value of crops and livestock that hadn’t been sold. 

There are slightly different payment rates for money coming from two different accounts USDA is using to fund the program — the Commodity Credit Corp., a revolving fund from which USDA is drawing $6.5 billion, and a $9.5 billion account provided by the CARES Act enacted in March. 

For corn, soybeans, cotton and other row crops, payments will be based on inventory subject to price risk held as of Jan. 15. The payment will be based on 50% of the producer’s 2019 total production or the 2019 inventory as of Jan. 15, whichever is smaller. That amount will be multiplied by the commodity’s applicable CARES Act and CCC payment rates.

The CARES Act and CCC payment rates for corn are 32 cents and 35 cents per bushel, respectively. The rates for soybeans are 45 cents and 50 cents per bushel. For cotton, the rates are nine cents and 10 cents a pound. 

For cattle, hogs, and lambs and yearlings, the payment will be calculated based on the producer’s number of livestock sold between Jan. 15 and April 15, multiplied by the payment rates per head, and the number of livestock the producer owned between April 16 and May 14, multiplied by the payment rate per head. 

Dairy producers will receive a payment based on two different calculations. The first will be based on the farmer’s milk production for the first quarter of 2020, multiplied by $4.71 per hundredweight, representing the national price decline during the same quarter. The second part will be based on a national adjustment to each producer’s first-quarter production, or $1.47 per hundredweight. Milk that had to be dumped because a processor or cooperative wouldn’t take it is eligible to be included in the farmer's production. 

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More details about the payment calculations and eligibility qualifications are available at farmers.gov.

In addition to the direct payments, USDA has implemented the Farmers to Families Food Box Program, in which the USDA Agricultural Marketing Service is partnering with national, regional and local suppliers to purchase fresh produce, dairy and meat products and have suppliers package these products into family-sized boxes, then transport them to food banks, community and faith-based organizations, and other nonprofits.

USDA will also make an additional $873.3 million in Section 32 purchases of specialty crops products for distribution to food banks. The use of these additional Section 32 funds will be determined by industry requests, USDA agricultural market analysis and food bank needs. The latest purchase solicitations are available at www.ams.usda.gov/selling-food-to-usda-terms/solicitations.

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