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Farm groups react to $19 billion ag relief program

By: Sean Ellis
Published in Blog on  April 21, 2020

USDA has announced a $19 billion plan to provide financial relief to U.S. farmers negatively impacted by the coronavirus outbreak.

By Sean Ellis

Idaho Farm Bureau Federation

POCATELLO – National farm groups quickly applauded USDA’s April 17 announcement of a $19 billion ag relief program designed to assist producers, and consumers, impacted by the coronavirus outbreak.

But while the Coronavirus Food Assistance Program was welcome news in farm country, there is concern that the direct payments to farmers and ranchers included in the package will not nearly be enough to offset the economic hardship producers have had to endure because of the virus outbreak.

The program will provide $16 billion in direct support payments based on actual losses for farmers and ranchers who have been financially impacted by the response to the COVID-19 outbreak.  

USDA will also partner with regional and local distributors whose workforces have been significantly impacted by the closure of many restaurants and other food-service entities to purchase $3 billion worth of fresh produce, dairy and meat that will be distributed to needy Americans.

Idaho Dairymen’s Association Executive Director Rick Naerebout said the $3 billion food purchasing program will benefit both agricultural producers and needy Americans.

“That should help us clear out some product and get it … into the feeding programs that are seeing a lot of demand right now,” he said. “That’s a win-win. The industry gets some help and the general public gets some help and we get dairy products to hungry families.”

The $16 billion direct payments program, however, won’t do much to help bigger dairies and farms that have been hammered hard by the COVID-19 outbreak, he added. That’s because the program includes payment limits of $125,000 per commodity with an overall limit of $250,000 per individual or farming entity.

A $125,000 support payment for a 200-cow dairy in the Midwest or Eastern part of the United States might help that operation somewhat but it won’t do much for the much bigger dairies in Idaho and other Western states, Naerebout said.

The average size dairy in Idaho has more than 1,500 milking cows and the payments won’t come close to providing the larger-sized dairies in the West any significant amount of support, he said. The same goes for bigger-sized farms, he added.

“The payment limitations are skewed to smaller producers,” Naerebout said. “The average size dairy in Idaho comes nowhere close to getting the assistance it needs to allow it to continue operations.”

“There is no argument with the purchasing program; everyone in the industry sees that as a win-win,” he added. “It’s just the disparity (with the) direct payments that we take issue with. USDA should not be picking winners based on the number of cows you milk or acres you farm.”

The Idaho and U.S. dairy industry has been hit hard by the outbreak, Naerebout said, and prices have fallen significantly below the cost of production for dairy operators.

“This downturn we are going to go through is going to be worse than 2009 for much of the industry,” he said, adding that the 2009 downturn “was the worst downturn in our lifetime.”

Idaho’s potato industry also was not overly excited with how the direct payment program was set up, said Idaho Potato Commission President and CEO Frank Muir.

“It is not what we had hoped for,” he said.

The direct payment limitation of $125,000 per commodity will not go far for the average Idaho potato farm, said Pat Kole, the IPC’s vice president of legal and government affairs.

The basic parameters of the direct payments program landed like a thud among farm groups around the nation, he said.

During a conference call that included national farm groups from across the country, “They all said this is not feasible to have these kinds of limitations,” Kole said.

Using potatoes as an example, Kole said that by the time the average Idaho spud farmer is done planting, they already have spent about $2,000 per acre on seed, fumigants, fertilizer, labor and other inputs. If you divide that $2,000 number by the $125,000 payment limit, that’s 62.5 acres.

“I don’t even know if there is a single potato field (in Idaho) of less than 100 acres,” he said.  

A lot of Idaho’s roughly 500 potato farms had already purchased seed, chemicals and other inputs and cultivated their fields when the coronavirus outbreak took hold, Kole said.

Now potato processors, who have been hit hard by the outbreak, are cutting contracts for potato acreage by 15-50 percent for many farmers.

To put the payment limitation into perspective, Kole pointed out that a potato farm with 650-1,000 acres is a $7-10 million farming operation and that’s not considered a big operation in Idaho.

That $7-10 million total is not how much that size of farm makes but how much it spends in a year.

A farm that size has already put a lot of money into the 2020 season and a $125,000 payment won’t do very much to make up for the loss of 15-50 percent of that operation’s acres.

“There are going to be farms that aren’t going to be able to survive this unless (the direct payment program) is dramatically restructured,” Kole said.

While there appears to be a lot of concern about the benefit the direct payment program will have, most farm groups quickly applauded USDA’s announcement of the overall program.

In a statement, American Farm Bureau Federation President Zippy Duvall applauded President Trump and U.S. Agriculture Secretary Sonny Perdue “for working together to come to the aid of America’s farmers and ranchers. The coronavirus pandemic forced the closing of restaurants, schools and college cafeterias, causing commodity prices to fall off a cliff and serious disruptions to food supply chains. This $16 billion in aid will help keep food on Americans’ tables by providing a lifeline to farm families that were already hit by trade wars and severe weather.”

Duvall also said that “the plan to purchase $3 billion in meat, dairy products, fruits and vegetables will help to stabilize markets and keep farms afloat so they can go about the business of feeding America.”

The National Potato Council issued a statement saying that “potato growers appreciate Secretary Perdue’s rapid action intended to stabilize family farms whose survival is threatened due to the mandated food service shutdown. Today’s announcement is a down payment on those efforts that will require additional resources and flexibility to deliver the necessary relief for our great potato industry.”

A statement issued by the National Cattlemen’s Beef Association applauded “USDA’s work to quickly craft a plan to distribute the funds to those who need it most and we look forward to learning more about that plan very soon.”

The NCBA statement also said that a study it commissioned “estimated that cow-calf producers stand to lose $8.1 billion as a result of the COVID-19 crisis, while the stocker/backgrounder sector losses will reach $2.5 billion and feedlot losses will total $3 billion as a result of the virus that is ravaging the American economy.”

In an April 17 press release announcing the program, Perdue said that “President Trump and USDA are standing with our farmers, ranchers and all citizens to make sure they are taken care of.”

He said that while the American food supply chain has had to adapt, “it remains safe, secure and strong and we all know that starts with America’s farmers and ranchers. This program will not only provide immediate relief for our farmers and ranchers, but it will also allow for the purchase and distribution of our agricultural abundance to help our fellow Americans in need.”

According to the USDA press release, the relief program is meant to help support farmers and ranchers impacted by the virus, maintain the integrity of the United States’ food supply chain, and ensure Americans continue to receive the food they need.

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