By Max Fisher, Vice President of Economics and Government Relations
Secretary of Agriculture Sonny Perdue on April 17 announced the Coronavirus Food Assistance Program, which will assist farmers, ranchers and consumers in response to the COVID-19 national emergency.
The new U.S. Department of Agriculture (USDA) program will use the funding and authorities provided in legislative emergency responses – the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the Families First Coronavirus Response Act – as well as other USDA existing authorities.
Direct Support: The program will provide $16 billion in direct support based upon actual losses for agricultural producers where prices and market supply chains have been adversely affected and will 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.
Producers will receive a single payment determined using two calculations:
- Price losses that occurred Jan. 1-April 15, 2020. Producers will be compensated for 85 percent of price loss on their inventory at risk during that period. For field crops, 2019 crop year inventory at risk (not sold or forward contracted) as of January 2020 will be eligible for the direct support. For commodities that trade on futures exchanges, futures contract prices will be used to measure the price loss.
- The second part of the payment will be based on expected losses from April 15 through the next two quarters and will cover 30 percent of expected losses.
The payment limit is $125,000 per commodity with an overall limit of $250,000 per individual or entity. Qualified commodities will be required to have experienced a 5 percent price decrease between January and April.
USDA has allocated the $16 billion in direct support among the following agricultural sectors:
- $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
USDA 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. USDA will begin with the procurement 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 then will 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.
Further, 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.
In addition, the CARES Act and the Families First Coronavirus Response Act provided $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 needs and product availability.
USDA plans to release further details on the Coronavirus Food Assistance Program after it receives regulatory approval to administer the program from the Office of Management and Budget. USDA officials said they hope to begin the sign-up in May and issue the first payments by late May.
For resources and information on USDA’s work during the COVID-19 pandemic, visit https://www.usda.gov/coronavirus.