Late on Friday, Secretary of Agriculture Sonny Perdue announced the Coronavirus Food Assistance Program (CFAP), a $19 billion payout that includes cash for farmers and ranchers and purchases food for redistribution to food banks. Made up of money from the CARES Act and other existing USDA authorities, this support could be a critical lifeline for struggling farmers. Yet, despite calls from farm groups and members of Congress, CFAP largely leaves out farmers who sell into local markets.
Farmers are estimated to lose $20 billion this year as a result of COVID-19 on top of the hardships that existed before the pandemic. In 2017, over half of all farmers reported negative net farm income. President Trump’s trade war decimated export markets while farmers were already dealing with prices below the cost of production. Extreme weather events are becoming more common, and record flooding in 2019 destroyed crops across the Midwest. Many farmers are unequipped to survive another year of low prices, and this immediate aid is necessary to help farmers stay afloat.
Perdue announced that of the total $19 billion in CFAP, $16 billion will be distributed as direct aid to farmers. Cattle, dairy and hog farmers will get approximately half of the money, with the rest divided among row crops ($3.9 billion), specialty crops ($2.1 billion) and other crops ($500 million). However, the lack of critical details makes it likely that this money will accrue in the hands of the largest farms and neglect small- to mid-sized operations and farmers selling to local and regional markets.
An economic assessment for the National Sustainable Agriculture Coalition estimates that local and regional markets will suffer a loss of up to $1.32 billion from March to May of 2020 as a result of COVID-19. With farmers markets, restaurants, schools and other key markets all but shut down, many farmers will have nowhere to sell their products. There is no language within CFAP about funds designated for producers selling into local and regional markets, and parts of how the aid package is set up will make it hard for these producers to access the money.
One hurdle for small- to mid-sized producers to overcome is that relief is distributed per commodity. Farmers and ranchers will be eligible for up to $125,000 per commodity with an overall payment limit of $250,000 per person or entity. Farmers that make more than $900,000 in adjusted gross income and those who make over a quarter of their income from off-farm sources are ineligible for aid. These payment limits are double the cap for traditional farm subsidies, making it likely that large farms will take more than their fair share of the $16 billion. This is exactly what happened with the farm bailout payments during President Trump’s trade war — the top 10% of recipients received 54% of the trade aid payments. In fact, the top 1% of recipients received an average of $183,000 while the bottom 80% received less than $5,000.
Distributing aid per commodity hinders diversified producers who grow multiple crops or raise multiple types of animals from accessing the money. These producers will have a hard time calculating their losses and fitting cleanly into any of the eligible categories. CFAP is also unclear about how farmers can apply and offers little clarity on technical support. The expected paperwork and lack of technical assistance will make it even more confusing for diversified producers to figure out how to access the money.
Farmers who supply our local and regional food systems are critical to maintain resilient supply chains, yet are routinely left without support. The pandemic has made it clear that global supply chains are extremely vulnerable to disruption; even as grocery shelves are understocked, farmers are dumping milk and leaving crops to rot in their fields due to supply chain disruptions. In Sioux Falls, South Dakota, a Smithfield-owned processing plant that produces over 5% of the nation’s pork closed due to an outbreak among employees, displaying the vulnerability of the country’s meat supply that is controlled by only a handful of global companies. Yet, the lack of small meat processing facilities leaves few alternatives for farmers.
The remaining $3 billion in CFAP will be used to purchase surplus food to give to food banks and other organizations. This money will be supplemented by other available funding sources, including from the Families First Coronavirus Response Act and Section 32, a permanent appropriation that enables the Secretary of Agriculture to purchase surplus food. The oversupply of food that is being dumped or left unharvested should be redistributed to feed hungry Americans, yet farmers cannot afford the costs of harvesting, processing and transporting their products without being paid. CFAP will purchase an estimated $100 million per month in each of the following areas for redistribution: fresh fruits and vegetables, dairy products and meat products.
There are good signs that certain programs through the Small Business Association are being re-designed and replenished to help small farms. The Paycheck Protection Program and the Economic Injury Disaster Loan Program (EIDL) are both receiving additional funds to help more businesses, including farms. While EIDL excluded farms in the initial CARES act, farms with fewer than 500 employees are now eligible.
This stimulus plan is the latest in a long string of ad hoc relief efforts to boost the agricultural economy. Our agriculture system is broken, leaving farmers struggling to keep their operations while agribusiness companies rake in record profits. Farm support during the COVID-19 pandemic should directly support small- to mid-sized farmers instead of exacerbating the problem by concentrating money in the hands of the biggest players.
