This week we have seen a flurry of activity from the federal government to address both the cause of, and the negative impacts from, the COVID-19 pandemic in the agricultural economy. To address the spread of COVID-19, the Department of Health and Human Services plans to invest nearly $10 billion to expand access to COVID-19 vaccines. To address the ill economic effects of COVID, USDA plans to invest more than $12 billion for the “Pandemic Assistance for Producers” program, which will help farmers who previously did not qualify for COVID-19 aid and expand assistance to farmers who have already received help. Further, Congress has passed legislation to extend the Paycheck Protection Program (PPP) deadline for two months.
Investment to Expand Access to COVID-19 Vaccines
As part of continued efforts to ensure COVID-19 vaccines reach all people and all communities, the U.S. Department of Health and Human Services has planned series of actions to expand access to COVID-19 vaccines to the hardest-hit and highest-risk communities across the country, including rural America. Portions of the $10 billion in funding, will impact rural areas and the agriculture industry in the following ways:
- $6 Billion Investment in Community Health Centers to Expand Access to Vaccines in Underserved Communities.
- HHS will invest more than $6 billion to expand COVID-19 vaccinations, testing, and treatment for vulnerable populations; deliver preventive and primary health care services to people at higher risk for COVID-19; and expand health centers’ operational capacity during the pandemic and beyond, including modifying and improving physical infrastructure and adding mobile units.
- The Health Resources and Services Administration (HRSA), will provide funding starting in April to nearly 1,400 centers across the country. Community Health Centers serve 1 in 5 people living in rural communities.
- $3 Billion to Strengthen Vaccine Confidence.
- HHS through CDC will invest $3 billion to support local efforts to increase vaccine uptake and equity. This funding will go directly to states, territories, and some large cities, enabling them to support local health departments and community-based organizations in launching new programs and initiatives intended to increase vaccine access, acceptance, and uptake.
Congress Extends PPP Application Deadline
Congress recently approved Farm Bureau-backed legislation that extends the Paycheck Protection Program application deadline by two months, from March 31 to May 31, helping more farmers participate in the loan program.
The existing March 31 deadline did not allow enough time for newly eligible farmers to apply, nor did it adequately account for the required eight-week waiting period between first draw approval and second draw applications.
The Consolidated Appropriations Act of 2021, passed in December, contained additional funding for the program, allowed for a second loan and expanded eligibility to self-employed farmers who file a Schedule F, and, more recently, eligibility was further extended to single-member LLCs and qualified joint ventures. However, work still needs to be done to expand this eligibility to farm partnerships. The Small Business Administration has said they will release a determination on partnership eligibility, but as of this writing that announcement is still forthcoming.
Additional USDA Assistance for Livestock & Row Crop Producers
This week, USDA announced more than $12 billion for the “Pandemic Assistance for Producers” program, which will help farmers who previously did not qualify for COVID-19 aid and expand assistance to farmers who have already received help. Farmers who previously submitted CFAP applications will not have to apply again. Sign-up for the new program begins on April 5. Click Here for USDA’s full announcement.
Assistance for Non-Specialty and Specialty Crops
Price Trigger and Flat-Rate Crops
USDA has expanded direct financial assistance for commodity producers with the intent to expedite payments totaling more than $4.5 billion, impacting more than 560,000 producers. Producers of 2020 price trigger crops and flat-rate crops are eligible to receive a payment of $20 per eligible acre of the crop. Price trigger commodities, as defined in the second Coronavirus Food Assistance Program, are major commodities that meet a minimum 5% price decline for the week of Jan. 13-17, 2020, and July 27-31, 2020. These crops include barley, corn, sorghum, soybeans, sunflowers, upland cotton and all classes of wheat, among others found here.
Flat-rate crops either do not meet the 5%-or-greater national price decline trigger or do not have data available to calculate a price change. For flat-rate crops, CFAP 2 payments were calculated based on eligible acres of the crop planted in 2020. More than 230 fruit, vegetable, horticulture and tree nut commodities were eligible for CFAP 2 along with honey, maple sap, and turfgrass sod; more information can be found here. These commodities will also receive a payment of $20 per acre.
Eligible producers will not need to reapply or submit a new application if they submitted a CFAP 2 application. FSA will automatically issue payments to eligible price trigger and flat-rate crop producers based on the eligible acres included in their CFAP 2 applications.
Expanded Assistance to More Producers
USDA is dedicating $6 billion to develop new programs or modify existing proposals that were included as discretionary funding in the end-of-year COVID-19 stimulus package. USDA is making modifications to direct support payments to account for price differentiation among commodities, including costs for organic certification or to continue or add conservation activities.
USDA will also make available an additional $100 million in Specialty Crop Block Grants that are administered through each state’s Department of Agriculture, along with an additional $100 million for the Local Agriculture Market Program.
Assistance for Processors
USDA is following through on using a portion of the appropriated money for payments to domestic users of upland cotton and extra-long staple cotton between March 1, 2020, and Dec, 31, 2020. The payment rate is calculated by multiplying 6 cents per pound by the average monthly consumption of the domestic user from Jan. 1, 2017, through Dec. 31, 2019, then multiplying it by 10, e.g., cotton payment = $0.60 x (avg. monthly consumption Jan 1, 2017-Dec 31, 2019).
Many producers were left out of the CARES Act and subsequent CFAP iterations because farmers who raise animals under a contract for another entity that owns the animals could not participate. However, these producers saw their income significantly reduced as many of their barns (which they financed the construction of and still were required to service the debt on) remained empty due to supply chain disruptions earlier in the pandemic. The COVID-19 relief bill passed in December identified these producers as being eligible for support. Note: USDA has clarified that payments for contract growers under CFAP Additional Assistance are currently on hold and are likely to require modifications to the regulation as part of a broader evaluation. FSA will continue to accept applications from interested contract growers during this evaluation period.
Included in this announcement is additional inventory-based direct payments for cattle producers. USDA is implementing an increase in CFAP 1 payment rates for cattle based on the number of cattle in inventory between April 16, 2020, and May 14, 2020. USDA estimates that roughly 410,000 producers will be impacted by this and that the total level of support could equal roughly $1.1 billion. These payments will be made automatically, so there will be no need for producers who were already enrolled to reapply. Only producers who previously applied for CFAP 1 are eligible to receive this additional payment. Payment rates are detailed in the following figure.
Because of significant supply chain disruptions, some producers were forced into the heart-wrenching position of having to euthanize their animals. This is the last resort. Farmers do everything they can to avoid this outcome, but in such a tightly coupled delivery system, they were threatened with going out of business having raised animals they could no longer sell. The COVID-19 relief bill passed in December directed the Agriculture Secretary to make payments to producers for losses incurred due to the depopulation of livestock and poultry due to insufficient processing access. The bill laid out that these payments will be up to 80% of the fair market value of the depopulated animals, and for the costs of depopulation. Note: This announcement does not detail support for these producers, and Secretary Vilsack stated that USDA will need to develop programs to reimburse these producers as they were not covered by the previous programs being utilized to make this round of payments.
The information released by USDA on Jan. 15 said swine producers who participated in CFAP 1 would receive an automatic “top-up” payment of $17 per head, increasing the total CFAP 1 inventory payment to $34 per head. Note: additional CFAP 1 payments for swine producers are currently on hold and are likely to require modifications to the regulation as part of a broader evaluation.
There were a series of formula adjustments included in the Jan. 15 announcement that are included in today’s announcement. USDA will finalize routine decisions and minor formula adjustments on applications and begin processing payments for certain applications filed as part of the CFAP Additional Assistance program. Included in those applications for which payments will be processed are pullets (poultry) and turfgrass sod. For specialty crop producers, USDA is modifying the sales-based rules from CFAP 2 to allow specialty crop producers to include crop insurance indemnities and disaster payments in their 2019 sales, which was the basis for determining the amount of support under CFAP 2, or by substituting 2018 sales.
FSA also adjusted the CFAP 2 payment calculation for certain row crops, addressing an issue that existed for producers who had crop insurance coverage but did not have a 2020 actual production history-approved yield. Now, when APH is not available, FSA will use 100% of the 2019 Agriculture Risk Coverage-County benchmark yield to calculate payments, instead of the 85% the earlier CFAP 2 calculations required.
Sign-up for the new program begins April 5.