Federal aid for producers as uncertainty hits entire chain
for The Fence Post
Cattle producers will see some relief from the pandemic price collapse if they choose to accept the federal assistance available.
While many cattle producers have told their congressmen, representatives and even President Trump that they want a solution to the distressed market rather than a handout, a congressional package will offer assistance to cattle producers.
The United States Cattlemen’s Association estimates that the cattle industry will face at least $14.6 billion in 2020 losses due to the coronavirus pandemic.
Feeder calves sold this October will likely be worth about $150 per head less than they would have been, fed cattle are valued $120-$400 less per head than they would have been at varying times of the year and stocker/backgrounded cattle will likely be worth around $200 less than expected.
The National Cattlemen’s Beef Association estimated total industry losses at about $13.6 billion.
The federal aid is intended to offset these real (current) and projected (future) losses.
“What we’ve learned about the proposal so far is that USDA will issue a single payment determined using two calculations: for price losses that occurred between Jan. 1 and April 15, 2020, producers will be compensated for 85 percent of the price lost during that period. The second part of the payment will help to cover 30 percent of expected losses from April 15 through the next two quarters. USDA’s proposal sets the payment limit at $125,000 per commodity with an overall limit of $250,000 per individual or entity,” said South Dakota Sen. Mike Rounds in a statement.
It is not known yet exactly how price loss will be determined.
The junior Republican senator said the proposal is still subject to change but is a step in the right direction for South Dakota producers. He adds that cattle folks can still make suggestions about how USDA can best distribute the funds by contacting his office.
A USDA news release said the Coronavirus Food Assistance Program or CFAP will provide $16 billion in direct payments to farmers and ranchers affected by the coronavirus pandemic. Currently, cattle, dairy, pork and sheep producers are eligible for assistance, according to South Dakota’s acting executive director of the USDA FSA program, Jamie White, and American Sheep Industry spokesman Chase Adams.
Sen. Cory Gardner, R-Colo., said he reached out to his state’s sheep producers who were hit hard by restaurant closures. With 50 percent of lamb consumed away from home, he said the closures were a blow as well as changes to Easter celebrations that often include lamb. Another blow to growers came as Mountain States Rosen filed for bankruptcy, sending uncertainty through the chain as the company reorganizes. Additionally, growers are facing difficulties with Peruvian shearers and shepherds unable to enter the country.
Additionally, $3 billion is allocated to buy produce, meat and dairy products to then be distributed to food banks, charities and community or faith-based organizations. USDA will buy $100 million per month of dairy products, fresh produce, and meats, for a total of $300 million in products per month.
USDA has up to an additional $873.3 million available in Section 32 funding to purchase a variety of agricultural products for distribution to food banks. The use of these funds will be determined by industry requests, USDA agricultural market analysis, and food bank needs, said a USDA news release.
The FFCRA and CARES Act provided an at least $850 million for food bank administrative costs and USDA food purchases, of which a minimum of $600 million will be designated for food purchases. The use of these funds will be determined by food bank need and product availability, according to USDA.
The CFAP program comes via the CARES Act or Coronavirus Aid, Relief, and Economic Security Act that the president signed March 27.
Sen. Rounds pointed out that there are additional assistance options available:
• In addition to the USDA relief proposal, farmers and ranchers are eligible for certain SBA loans and grants.
• Legislation that passed the Senate this week clarified that ag enterprises are eligible for Economic Injury Disaster Loans (EIDL), which are administered through the Small Business Administration.
• These loans will provide up to $10,000 of economic grants to businesses hurting because of COVID-19, in addition to a loan of up to $2 million.
Cattle producer organizations continue to stress to the administration and to Congress that, while immediate assistance may be needed to slow the bleeding, market fixes are needed to address price disparity between retail beef and live cattle prices. The value for a finished steer dropped by at least $300, while boxed beef prices continue to remain at record or near record levels.
NCBA praised a move to lift payment caps on the Payroll Protection Program, which provides forgivable loans to help small businesses (500 or less employees) pay their employees. According to Forbes, the maximum loan granted from the PPP will be equal to 2.5 times the average monthly payroll costs for the previous calendar year, up to $10 million.
JBS’s Greeley, Colo., facility opened Friday, April 24. Workers who display symptoms of COVID-19 will be tested by public health department staff on site. Gardner said he has been pushing the CDC to appoint a single contact specifically for food supply chain businesses to offer consistent information based on a greater understanding of the many aspects of the chain.
“Understanding the impacts this has, not only on our food supply and food chain, but on the market conditions that a ranching family can face are very significant,” Gardner said. “It’s important to make sure they understand that.”
Gardner said he is meeting with industry leaders to identify and open additional markets for producers. ❖
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