Farmers are still waiting for $19B in coronavirus aid

Posted at 8:56 AM, May 06, 2020
and last updated 2020-05-06 11:03:24-04

By the time the US Department of Agriculture announced a $19 billion aid package on April 17, farmers were already dumping milk and destroying fresh produce as demand from restaurants evaporated.

It could be weeks longer before any of the money, most of which was appropriated by Congress in March as part of its $2.2 trillion economic stimulus package, gets to the farmers who need it.

A sign-up system for $16 billion in payments isn't expected to be up and running until the end of May. The remaining $3 billion will be used to purchase food and deliver it to food banks, which the agency says may begin in about two weeks.

"USDA is working as quickly as possible to implement the Coronavirus Food Assistance Program," a spokesperson said in an email to CNN.

The delay worries Florida Commissioner of Agriculture Nicole Fried, a Democrat who's elected to her position. A report from her department projected that Florida fruit and vegetable growers lost $522 million through mid-April.

"I fear that by the time these purchases move forward it will be too late in the season for many of our producers to participate with so much of their harvests already lost," Fried wrote in a letter she sent to Agriculture Secretary Sonny Perdue on April 20.

What's more, family farmers likely missed out on getting loans from the small business program because it was unclear at first whether agricultural producers qualified. Agriculture, forestry, fishing, and hunting sectors combined received less than 1.3% of the first round of loans approved through the Paycheck Protection Program.

Coronavirus concerns, commodity price declines and supply-chain disruptions sunk producer sentiment to a three-year low in April, according to the monthly Purdue University/CME Group Ag Economy Barometer.

Getting money in the hands of farmers

Unlike other federal programs, like the direct taxpayer stimulus being handled by the Treasury Department, Congress did not specify how USDA should allocate the money included in the CARES Act which was signed into law in late March.

"It takes time to figure out how to spend the money," said former Iowa Gov. Tom Vilsack, who served as agriculture secretary under President Barack Obama and now heads the US Dairy Export Council.

Congress gave the USDA $9.5 billion to provide financial support for farmers and ranchers but the agency had to decide how payments would be calculated and put a system in place. It's combining that money with $6.5 billion in funds from its Credit Commodity Corporation. The CARES Act also provided $14 billion to replenish the CCC, which will be available in July.

Payment amounts will be based on the price loss that occurred between January and April 15 and the expected losses through the next two quarters.

USDA decided to cap the payments at $125,000 per commodity with an overall limit of $250,000 per farm -- which has drawn criticism from 126 House members and 28 senators from both sides of the aisle. They say the cap will hurt fruit and vegetable growers that have a very high cost of production as well as many ranchers and dairy farmers who invest solely in livestock.

Connecting farmers with those who need the food

"There's currently a disincentive for farmers to donate their food and the government needs to find a way to remove it," Vilsack said.

Demand has plummeted from big buyers like restaurants, hotels, and schools. Instead, with 30 million people out of work, food banks are over burdened. But it's difficult for a producer to shift their distribution channels. Food package for a restaurant looks different than how it's processed for a food bank.

And it can cost farmers more to repackage the produce than simply destroy it.

The USDA is using the $3 billion in aid purchases to address that problem. It is partnering with private distributors who will buy a variety of food and package it into boxes that it will deliver to food banks. The USDA says it will spend $100 million a month on fruits and vegetables, $100 million on dairy products, and a $100 million on meat products.

In the meantime, states have tried to step in. Florida has created a system to help connect farmers directly with buyers, consumers, and food banks. Iowa and Minnesota have launched programs to connect pork producers with local processors as bigger plants shut down because their workers are getting sick.

Other USDA programs are moving faster

Under the CARES Act, Congress also gave the USDA $15.8 billion to meet the increased demand for the Supplemental Nutrition Assistance Program, known as SNAP benefits, and $8.8 billion in additional funding for child nutrition programs.

Plus, another earlier stimulus package that passed Congress earlier in March gave USDA the authority to make emergency SNAP allotments.

Monthly SNAP benefits have increased 40% during the pandemic.


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