More COVID Payments For Farmers and Ranchers

American farmers and ranchers should expect details on a second round of Coronavirus Food Assistance Program payments this week. Agriculture Secretary Sonny Perdue has long hinted that another round of payments would be coming for producers. He confirmed while speaking last week during a virtual conference that rules for assistance were being written and would hopefully be released after Labor Day.

At least $14 billion should be available through the program as provided through the CARES Act. Ag Insider reported that President Trump has suggested the new program will increase spending on producers to $34 billion. That amount would set a new record for farm subsidies, though given current economic conditions, many ag groups say continued aid payments will be necessary for producers. Criticisms of the first payment program said the time frame for eligibility and filing were too restrictive, payments were capped too low, and some crops were excluded even as producers were affected by the economic downturn.

Perdue has said the second round of payments and the rules will take into account the feedback from producers. The USDA recently extended the deadline for submitting applications for specialty crops by two weeks and he said more commodities would be covered in this round of assistance. Montana Senators Jon Tester and Steve Daines both signed a Sept. 2 bipartisan letter to Perdue, calling on the Secretary to expand the assistance to wheat farmers who had been left out of the initial program.

CFAP currently includes aid for some wheat producers, including at-risk 2019 crop losses for hard red spring wheat and durum wheat. But those classes of wheat accounted for roughly 30 percent of wheat production last year, excluding a majority of wheat producers from CFAP payments. The letter pointed out that other crops experienced more than the five percent commodity loss as required for eligibility for CFAP aid.

“Wheat farmers producing hard red winter, soft red winter, and white wheat have also suffered lower commodity prices due to the pandemic. For example, from mid-January to the first full week of August, average weekly futures prices for the September 2020 contract have dropped 18 percent for hard red winter; 12 percent for soft red-winter; and 14 percent for hard red spring,” wrote the 21 Senators from wheat-producing states. “As was shown in the USDA August World Agricultural Supply and Demand Estimates (WASDE) report, demand for wheat for food use has been negatively affected by COVID-19, given a drop in food consumption away from home.”

Montana Grain Growers Association and the National Association of Wheat Growers praised lawmakers for their advocacy for wheat producers. “We applaud both parties for coming together to advocate on such an important issue,” said NAWG president Dave Milligan.

MGGA President Vince Mattson said, “We appreciate Senator Steve Daines and Senator Jon Tester supporting this effort on behalf of Montana grain producers, and also thank Congressman Gianforte for signing on to a companion letter in the House. All Montana wheat growers have experienced economic harm and should be included in any subsequent relief program.”

In Montana, livestock producers have received the bulk of CFAP payments, likely due to the disruption in the food supply chain when meat processing plants across the nation closed down due to COVID-19 outbreaks. CFAP has distributed $150,650,639.20 to Montana ranchers as of Sept. 7. Non-specialty producers have received $9,889,513.07 and specialty producers have been paid $2,610,519.40. Montana dairy producers have seen $3,351,548.66 in federal aid through CFAP.

The second round of federal payments come as producers battle with low commodity prices, as the USDA says farm income is increasing. Pandemic-induced disruptions to the market and changes in demand have driven prices down. The federal government has stepped in to mitigate the market, much as it did in the trade war with China, propping up farmers and ranchers to see them through disruptive times.

USDA’s Economic Research Service reported last week that projections for U.S. net farm income for 2020 show a nearly 23 percent increase from the previous year, largely due to higher government payments to producers. Progressive Farmer reported that beyond crop insurance indemnities, USDA’s Commodity Credit Corp., is expected to pay producers $37.2 billion this year, $14.7 billion more than it paid out in 2019. The higher numbers are attributed primarily to CFAP payments.

USDA has paid out nearly $9.5 billion this year under CFAP. The ERS also calculated $5.8 billion in aid went to ag producers through the Paycheck Protection Program via the Small Business Administration loan program, and $3.8 billion went out as carry-over from the 2019 Market Facilitation Program. USDA said government payments are at a record high. Jim Mintert, Purdue University agricultural economics professor, told AgWeb, “On the surface, the good news is net-farm income is rising. It’s been rising now consistently since 2016. The challenge is the tremendous amount of that rise that’s really coming from government program payments as opposed to the marketplace.”