Trump launches coronavirus aid to agriculture, with a $750,000 top payment
The Trump administration modified its $16 billion coronavirus aid program for agriculture so it will be easier for farmers, particularly livestock producers and specialty crop growers who complained of inadequate support, to collect larger payments, to a maximum of $250,000 per person or $750,000 for corporate entities. Enrollment will begin on Tuesday, announced President Trump, with farm leaders joining him at the White House.
“You’ve got to sign up to pick it up, to get the money,” said Trump. “We’ll start issuing payments within one week of receiving your application.”
The cash payments are intended to offset the impact on farm income of the coronavirus pandemic, which has slashed market prices for most major commodities and stifled consumer demand. The FAPRI think tank estimated last month that farm income could plunge by 19% this year from levels expected before the virus pushed the U.S. toward economic recession.
Cattle and hog farmers, joined by allies in Congress, were among the most vocal in calling for the administration to alter its proposed limits of $125,000 per commodity and a total of $250,000 per farmer of entity. Thin profit margins require operators to produce large numbers of livestock or make huge investments in fruit and vegetable farms to make a living, they argued in seeking more generous rules. Most producers specialize in one type of livestock, so the effective limit would be $125,000, they said.
In the package unveiled by Trump, the payment limit is $250,000 per person for all eligible commodities and $750,000 for payments to limited partnerships, corporations and limited liability companies. Up to three shareholders in the corporate entities are eligible for payments of $250,000 each if they contribute at least 400 hours a year in management or labor. So long as operators make at least 75% of their adjusted gross income from agriculture, there is no income barrier to applicants.
READ MORE: CFAP applications to open May 26
“We listened to them. We adjusted the payment limit,” said Agriculture Secretary Sonny Perdue in a broadcast interview earlier this month. The USDA did not disclose the new standards until the White House announcement on Tuesday.
The USDA said it would make a first-round payment of 80% of the money a farmer is due, with the rest to be made later. The agency will have access to an additional $11 billion after it submits a June 30 financial statement on the Commodity Credit Corp, known as “USDA’s bank.” Perdue has said that he expects aid will be needed beyond the $16 billion. Enrollment runs through August 28.
“This assistance is a first step to getting farmers, and our customers, back on solid footing,” said Kevin Ross, president of the National Corn Growers Association. Farm and ranch groups issued similar statements, thanking the administration for the assistance while saying more needs to be done.
Many commodities qualify for aid — most prominently, corn, soybeans, Upland cotton, sorghum, cattle, hogs, milk, and nearly four dozen fruits, vegetables, and nuts — but eligibility was not universal. A 5% decline in market price was required for eligibility. As a result, rice, peanuts, and Pima cotton were ineligible. Durum and hard red spring are eligible while all other classes of wheat are not. Panic buying amid talk of export controls supported wheat and rice prices during late winter and early spring.
“It is clear that all wheat producers experienced substantial price losses during the designated time frame and should be eligible for assistance,” said Michigan farmer Dave Milligan, president of the National Association of Wheat Growers. The USDA overlooked low prices at local elevators for wheat when assembling its eligibility formula, said Milligan.
For row crops, the USDA said, “Producers will be paid based on inventory subject to price risk held as of January 15, 2020. A payment will be made based 50% of a producer’s 2019 total production or the 2019 inventory as of January 15, 2020, whichever is smaller, multiplied by the commodity’s applicable payment rates.” Analysts said the language on “inventory subject to price risk” needed clarification. There were different payment formulas for livestock, dairy and specialty crops.
Payment rates would be 95¢ a bushel for soybeans, 67¢ a bushel for corn, 62¢ a bushel for sorghum, 39¢ a bushel for durum, 38¢ a bushel for hard red spring wheat, and 19¢ a pound for cotton.
“These payments will help keep farmers afloat while market demand returns as our nation reopens and recovers,” said Perdue.
This will be the third year in a row that the administration has created a stopgap aid program that is more generous than the crop subsidy programs that are part of the so-called farm bill, with a nominal limit of $125,000 per farmer. In 2018 and 2019, the trade-war payments provided by the administration had limits twice as high.
For the USDA home page for the Coronavirus Food Assistance Program, click here.
The text of the USDA final rule for CFAP is available here.