April 23, 2020

Ag Economy

USDA Announces Coronavirus Food Assistance Program

By: Chris Laughton


On April 17, the USDA announced $19 billion in relief programs as a step toward a remedy for supply chains and prices during the COVID-19 crisis. The initial elements of the agricultural support programs are as follows:

Direct support to farmers and ranchers: The program will provide $16 billion in direct support to agricultural producers for actual losses resulting from impacts to prices and market supply chains. This program will also assist producers with marketing costs and additional adjustments due to lost demand and short-term oversupply for the 2020 marketing year.

USDA purchase and distribution: The 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. The program will begin with the procurement of an estimated $100 million per month of fresh fruits and vegetables, $100 million per month of a variety of dairy products and $100 million per month of 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 non-profits serving Americans in need.

In addition, the USDA has up to an additional $873 million in so-called “section 32” funding to purchase agricultural products for distribution to food banks. The USDA also has funds available (approximately $850 million) from the Families First Coronavirus Relief Act (FFCRA) and Coronavirus, Aid, Relief and Economic Security (CARES) Act for food bank administrative costs and USDA food purchases.

Industry-specific allocations

Of the $16 billion in direct support for farmers and ranchers, industry-specific allocations show:

  • $9.6 billion for the livestock industry
    • $5.1 billion for cattle
    • $2.9 billion for dairy
    • $1.6 billion for hogs
  • $3.9 billion for row crop producers
  • $2.1 billion for specialty crops producers
  • $500 million for other crops

To qualify for the direct assistance program, there will be two determining factors. First, price loss must be determined using an Agricultural Marketing Service (AMS) price between January 1, 2020 – April 15, 2020. Second, the loss must be at least 5% during the first quarter. Producers will be compensated for 85% of price decline during this period. The second payment calculation will total 30% of a producer's expected losses for the two quarters after April 15, 2020. There is a payment limit of $125,000 per commodity per producer, with an overall individual or entity limit of $250,000.

What’s next?

Additional guidance from the USDA will be provided in the next two weeks. The direct payment portion of the program must go through a formal rulemaking process, and regulation is being sent to the Office of Management and Budget the week of April 20. Additional details on the payment calculation and sign-up requirements are expected to be posted in May. To expedite this process and ensure the money gets to producers by the end of May or early June, the USDA will publish a final rule without public comment.

Tags: livestock, dairy, local food, legislation

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