CARES Act Provides Relief to the Agricultural Sector
President Trump signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law on March 27, 2020. This economic stimulus package included provisions providing financial relief to individuals, businesses, as well as the agricultural industry. The Act provides nearly $49 billion to producers, nutrition assistance programs, and rural development programs under USDA jurisdiction. While we are still waiting for details on how these programs will be implemented, this post provides a general overview of the new USDA programs.
USDA Disaster Relief
Congress set aside $9.5 billion to support agricultural producers impacted by the Covid-19 emergency. This includes producers of specialty crops, direct market producer who supply local farmers markets, restaurants and schools, and livestock producers. To date, the USDA has not provided any information on how that aid will be distributed.
There is also financial assistance to several agencies to support salaries and program costs to ensure these program remain open to respond to Covid-19 and support producers. Specific USDA agencies and their allocations include:
- Animal and Plant Health Inspection Service (APHIS): $55 million
- Agricultural Marketing Service (AMS): $45 million
- Food Safety and Inspection Services (FSIS): $33 million
- Foreign Agricultural Service (FAS): $4 million
- Farm Service Agency (FSA): $3 million
Commodity Credit Corporation
The Commodity Credit Corporation (CCC) currently has $30 billion budgeted for programs such as Price Loss Coverage (PLC), Dairy Margin Coverage (DMC), Market Facilitation Payments (MFP) and conservation programs. The CARES Act provides an additional $14 billion.
While this type of funding has generally been reserved for commodity producers, specialty crop producers and farmers selling to local markets may also qualify. This is especially important as farmers seek new streams of revenue. Additionally, marketing assistance loans may be extended to twelve months from nine months.
Anticipating many Americans experiencing a loss of income, the CARES Act provides additional financial assistance to several nutrition programs. These additional payments include:
- $8.8 billion for child nutrition program;
- $15.8 billion for the Supplemental Nutrition Assistance Program (SNAP); and
- $450 million for the Commodity Assistance Program for emergency food assistance programs. Of that, up to $150 million may be used for commodity distribution costs.
The CARES Act also addresses provides funding to various USDA Rural Development programs. The Act grants $20.5 million to support the cost of loans for rural business development programs. An additional $25 million is allocated for the Distance Learning and Telemedicine grant program. $100 million is provided for the ReConnect Program which facilitates broadband development in rural areas.
Lenders are able to offer payment deferrals for borrowers experiencing financial hardship due to Covid-19 under the USDA Business and Industry Guaranteed Loan Program, Rural Energy for America Program (REAP), Community Facilities Guaranteed Loan Program, and Water and Waste Guaranteed Program. Payments may be delayed for up to 180 days. Guaranteed lenders may approve and make covered loans under the Small Business Administration’s paycheck Protection Program (PPP). For additional information on payment deferrals, visit the USDA Rural Development website here.
Mortgage Foreclosure and Eviction Moratorium
The CARES Act allows a borrower who has a federally backed mortgage guaranteed, insured, or made by the USDA to request a forbearance if the borrower is experiencing financial hardship due to Covid-19. This includes the Single Family Housing Guaranteed Loan program. This can be done by submitting a request to the borrower’s servicer and also affirming the borrower is experiencing financial hardship. No additional proof is required. Examples of these loans include single-family housing Direct and Guaranteed loans and multifamily Direct and Guaranteed loans.
Once forbearance is granted, it will last for an initial 180 days. Borrowers can request an additional 180 days if needed during the Covid-19 emergency. No additional fees, penalties, or interest may be accrued at this time. Borrowers may also request to shorten the forbearance duration.
Additionally, any person who participates in the rural housing voucher program may not be evicted for nonpayment of rent until July 25. 2020. No fees, penalties, or other charges may be collected against the tenant for nonpayment of rent.
These are big changes which will impact producers and rural families throughout the country. The USDA is continuing to work on specifics such as eligibility requirements and program implementation. While the situation continues to evolve and new information is provided, we will continue to keep you informed of any updates.
The Center for Agricultural Law and Taxation does not provide legal advice. Any information provided on this website is not intended to be a substitute for legal services from a competent professional. The Center's work is supported by fee-based seminars and generous private gifts. Any opinions, findings, conclusions or recommendations expressed in the material contained on this website do not necessarily reflect the views of Iowa State University.