Apr 17, 2020
$19 billion in coronavirus relief coming for food industry, $2.1 billion for specialty crops

U.S. Secretary of Agriculture Sonny Perdue announced April 17 the $19 billion Coronavirus Food Assistance Program (CFAP).

USDA logoThis new U.S. Department of Agriculture (USDA) program will take several actions to assist farmers, ranchers and consumers in response to the COVID-19 national emergency. President Trump directed USDA to craft this $19 billion immediate relief program to provide critical support to our farmers and ranchers, maintain the integrity of our food supply chain, and ensure every American continues to receive and have access to the food they need.

“During this time of national crisis, President Trump and USDA are standing with our farmers, ranchers, and all citizens to make sure they are taken care of,” Secretary Perdue said in a statement. “The American food supply chain had to adapt, and it remains safe, secure, and strong, and we all know that starts with America’s farmers and ranchers. 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.”

CFAP 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 USDA existing authorities. The program includes two major elements to achieve these goals.

  • Direct Support to Farmers and Ranchers: The program will provide $16 billion in direct payment 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.
  • 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 food service entities, to purchase $3 billion in fresh produce, dairy and meat. We 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.
On top of these targeted programs, USDA will utilize other available funding sources to purchase and distribute food to those in need.
  • 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.
  • The FFCRA and CARES Act provided an 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.

Breakdown

Sen. John Hoeven (R-North Dakota) issued further detail of the package via a press release.

USDA will provide $16 billion in direct payments to farmers and ranchers including:

  • $9.6 billion for the livestock industry, breaking down as $5.1 billion for cattle, $2.9 billion for dairy and $1.6 billion for hogs
  • $3.9 billion for row crop producers
  • $2.1 billion for specialty crops producers
  • $500 million for others crops

Producers will receive a single payment determined using two calculations:

  • Price losses that occurred Jan. 1-April 15, 2020. Producers will be compensated for 85% of price loss during that period.
  • Second part of the payment will be expected losses from April 15 through the next two quarters, and will cover 30% of expected losses.

The payment limit is $125,000 per commodity with an overall limit of $250,000 per individual or entity. Qualified commodities must have experienced a 5% price decrease between January and April.

USDA is expediting the rule making process for the direct payment program and expects to begin sign-up for the new program in early May and to get payments out to producers by the end of May or early June.

NPC reaction

The National Potato Council issued the following statement welcoming U.S. Secretary of Agriculture Sonny Perdue’s announcement of the $19 billion Coronavirus Food Assistance Program (CFAP):

“The U.S. potato industry is $4 billion annually with 60 percent of that total involving food service. Potato growers appreciate Secretary Perdue’s rapid action intended to stabilize family farms whose survival is threatened due to the mandated food service shutdown. Today’s announcement is a down payment on those efforts that will require additional resources and flexibility to deliver the necessary relief for our great potato industry,” said Kam Quarles, CEO of the National Potato Council.

CFAP 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 USDA existing authorities to: 1) provide $16 billion in direct support based on actual losses for agricultural producers where prices and market supply chains have been impacted by the COVID-19 shutdowns; and 2) partner with regional and local distributors to purchase $3 billion in fresh produce, dairy and meat.

Various elements will require improvements or additional resources in order to provide relief for the potato industry. These include:

  • Broadening the scope of producers eligible for direct payments to include representative potato producers impacted due to the foodservice shutdown;
  • Ensuring that payment distributions are fair, equitable, and achieve the intended goal of providing relief to family farms involved in the potato industry; and,
  • Rapidly purchasing potatoes in volumes necessary to provide them to needy recipients and ensuring that the supply chain operates efficiently so damage to both the current (2019 crop) and the upcoming (2020) crop are sufficiently mitigated.

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