Administration releases details of COVID-19 aid to farmers

$16 billion in direct payments for market disruptions, but some Ag groups say more will be needed

Growers of strawberries and other specialty crops will be able to receive payments for crops that spoiled because COVID-19 restrictions shut down food service markets. (Paras Griffin/Getty Images)
Growers of strawberries and other specialty crops will be able to receive payments for crops that spoiled because COVID-19 restrictions shut down food service markets. (Paras Griffin/Getty Images)
Posted May 19, 2020 at 5:53pm

The Trump administration unveiled the ground rules Tuesday for distributing $16 billion in direct payments to farmers and ranchers feeling financial pain from COVID-19, but several agriculture groups say producers may need more federal aid in the future.

The Agriculture Department will use $9.5 billion provided by Congress to pay farmers and ranchers facing price declines and $6.5 billion from the Commodity Credit Corporation to make direct payments to farmers hurt by market disruptions caused by the COVID-19 pandemic. The department also adjusted the limits for payments to individual recipients.

The details come a month after Agriculture Secretary Sonny Perdue broadly outlined a total aid package of up to $16 billion in payments and up to $3 billion in commodity purchases for food banks and other nonprofit organizations. The department has moved ahead with awarding $1.2 billion in contracts for the Farmers to Families Food Box purchase program.

President Donald Trump hosted Perdue, several farmers and American Farm Bureau Federation President Zippy Duvall as he announced that signup at local Farm Service Agency offices for payments will start May 26.    

The USDA provided more details in an announcement. 

The $9.5 billion in payments, using funds provided in a March economic relief bill, will go to farmers and ranchers hit by price declines of at least 5 percent from mid-January 2020 to mid-April 2020. Growers of crops such as almonds, sweet corn, strawberries, squash and other specialty crops can receive payment for crops that shipped from their farms but spoiled because COVID-19 restrictions shut down food service markets. They also can be paid based on harvested crops that did not leave the farm or that had to be destroyed. 

The $6.5 billion will be used to pay producers affected by COVID-19 market disruptions.

Jim Monroe, a spokesman for the National Pork Producers Council, said hog farmers appear likely to receive more aid under the plan than they did in 2018 and 2019, when the USDA distributed more than $23 billion in direct trade aid to compensate farmers for lost foreign markets during trade disputes.

Monroe said the industry estimates it will lose $5 billion because pork slaughter and processing plants have closed or slowed work as hundreds of employees have either tested positive for the virus that causes COVID-19 or fallen ill. Hog producers have begun destroying market-ready animals because slaughterhouses are backed up.

“At the start of this week, more than 116,000 hogs daily could not be harvested for the food supply,” Monroe said in a statement. “NPPC continues to advocate for solutions to sustain pork producers through a crisis that, without additional government intervention, will likely lead to consolidation and contraction in a highly competitive farm sector.”

The National Potato Council said the aid for crops like potatoes will not be enough because of a glut of potatoes that has accumulated after a fall in demand from major customers like restaurants.

"The resulting oversupply of 1.5 billion pounds of potatoes could fill the U.S. Capitol 14 times over,”  National Potato Council CEO Kam Quarles said in a statement.    

"Based upon the limited resources announced today under this direct payment program, the potato industry is strongly urging Congress to act rapidly to provide more resources and flexibility to fill this huge gap and maintain producers’ livelihoods,” Quarles said.

The USDA will accept applications through Aug. 28. If approved, applicants will receive 80 percent of the maximum total payment with the remaining portion to be paid at a later date.

Limit modifications

The maximum payment will be $250,000 per person or per entity. Originally, the $250,000 maximum would have favored those who grow crops. But complaints from dairy and livestock groups that they were likely to get less because they raise animals and not crops prompted changes that could allow livestock applicants to achieve the higher limit.

Applicants that are corporations, limited liability companies or limited partnership may receive up to three additional payments of $250,000 if they have three people who meet the definition of actively engaged in providing personal labor or personal management for the farm operation.

All applicants must certify they meet the adjusted gross income limit of $900,000 unless they can show that at least 75 percent of their income comes from farming, ranching or forestry-related activities.

The National Milk Producers Federation, which represents dairy cooperatives, said the aid under the plan would help its members deal with “an unprecedented market collapse.”  

But federation President and CEO Jim Mulhern said the adjustment to payment limits are not enough.

“We believe more flexibility in payment limits and some changes to payment calculations will be needed in future rounds of funding to meet the unprecedented challenges faced by producers of all sizes, in dairy and throughout agriculture," he said in a statement. "We look forward to working with federal officials and lawmakers on additional assistance.” 

Kevin Ross, president of the National Corn Growers Association, called it “a first step to getting farmers, and our customers, back on solid footing.”

But the organization also said it looked forward to continued talks with members of Congress and the Trump administration about ways to address COVID-19 damage to agriculture.