USDA Announces New COVID-19 Relief Program for Farmers
Late Friday, April 17, U.S. Secretary of Agriculture Sonny Perdue announced the creation of the Coronavirus Food Assistance Program (CFAP). This new USDA program will use the money allocated by Congress through the CARES Act, as well as other sources, to assist farmers and ranchers and maintain the integrity of the food supply chain during the COVID-19 national emergency.
Although revealing only high-level details on Friday, the Secretary stated that the CFAP includes two major components:
- $16 Billion for Direct Support: The program provides $16 billion in direct support to farmers and ranchers (1) to compensate for actual losses where prices and market supply chains have been impacted and (2) to 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.
- $3 Billion for 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. The program will begin with the purchase 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 pre-approved boxes of fresh produce, dairy, and meat products to food banks, community and faith-based organizations, and other non-profits serving Americans in need.
The USDA will also use 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. Furthermore, the Families First Coronavirus Response Act and the CARES Act provided 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.
The news release stated that the USDA would be providing more details on the new program soon.
More Details from Senator Hoeven
Late Friday, Senator John Hoeven, chairman of the Senate Agriculture Appropriations Committee, issued a statement providing some additional details on the direct support provisions within CFAP. He said that the $16 billion in direct payments to farmers and ranchers will include:
- $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 others crops
The news release says that farmers will receive a single payment determined using two calculations:
- Price losses that occurred January 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 will be $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.
Senator Hoeven stated that he expects sign-ups for the new program to begin in early May and that payments should begin by the end of May or the beginning of June.
We will watch for further details from USDA on this important new program.
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