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Farmers left to jockey for bite of rescue funds

By Ryan McCrimmon

The rush is on for farmers looking to stake their claim on a new trove of stimulus funds earmarked for agriculture.

Congress authorized the Agriculture Department to spend billions to help struggling producers, with few strings attached. USDA officials are scrambling to figure out how to disperse aid across the vast farm economy as quickly and evenly as possible.

Numerous industry groups from fresh vegetable associations to dairy farmer coalitions have their own notions on how direct the money and shape policy — and they are enlisting their allies on Capitol Hill to help make their case.

Threading the needle is a tall order. USDA is sure to face heavy scrutiny, especially after some Democrats criticized the trade bailout over the last two years, saying it was unfairly tilted toward Southern states and wealthy farmers. Many commodity groups complained that their sector was shortchanged by the direct payment rates or excluded altogether.

Even before any relief checks have gone out, the powerful American Farm Bureau Federation says more money will soon be needed from Congress.

“We’re going to find out very quickly that amount of money is not going to help sustain a lot of our farmers through this difficult time,” said the group’s president, Zippy Duvall. “The secretary was asking for a lot more.”

In the meantime, lawmakers have flooded Agriculture Secretary Sonny Perdue’s mailbox every day with letters reminding him to make sure farmers in their states aren’t forgotten.

Perdue’s challenge is to get money into the hands of farmers, who are hemorrhaging profits and increasingly dumping their products, as fast as possible — but without skewing their business decisions like which crops to plant or drawing any charges of political favoritism.

“Our goal is to get it done sooner rather than later, but we want it done very inclusively as well,” the secretary said Wednesday during a conference call with reporters. “We are in the process right now of collecting proposals and ideas from every sector affected so we can be balanced and fair in the allocation.”

The $2 trillion economic rescue package signed into law last month includes $9.5 billion for cattle ranchers, fresh produce growers and other agricultural sectors affected by the economic freeze, as well as another $14 billion injection into USDA’s Commodity Credit Corporation, a Depression-era agency set up to stabilize the farm economy.

The $9.5 billion in direct agricultural aid allocated to Perdue’s office names specific sectors that should receive assistance, including dairy and livestock industries; growers of specialty crops like fruits, nuts and vegetables; and producers that “supply local food systems” including schools and farmers markets.

The aid isn’t earmarked exclusively for those groups, and Congress didn’t provide any other directions in the legislation itself.

Dale Moore, AFBF’s executive vice president, told reporters last week that Perdue interpreted the funding provision to apply to “a broader range of folks who are not covered by other aspects” of farm assistance, rather than just the groups that are listed.

Even as the relief bill was being crafted, Western senators went to bat for livestock producers during the negotiations. Now, they’re heaping pressure on USDA to keep cattle ranchers front of mind.

More than 100 lawmakers sent Perdue a letter last week arguing that “there is an immediate need for assistance for our cattle producers” while the impact on other farm commodities was still being measured.

The dairy industry, which has struggled through years of low milk prices, rapid consolidation and rising bankruptcies, is also at the forefront of the farm relief effort. Dairy farmers have called for USDA to buy up their milk products and distribute them to those in need.

Prices for the category of milk used to make cheese is down 28 percent, while the type used for nonfat dry milk has fallen 34 percent since mid-January. Farmers are dumping their products without anywhere to sell them, with important buyers like restaurants and schools shuttered for weeks or months.

The industry has called on USDA to help fill the gap between dairy farmers struggling to sell their products and food banks, school feeding programs and other nutrition assistance efforts. In addition to such purchases, groups have proposed direct payments to dairy farmers and some form of reimbursement for dumped milk, among other ideas.

Similar proposals have been floated for specialty crops, like fresh fruits and vegetables, which are now being left to rot in some regions.

A coalition of produce groups including the Western Growers Association asked USDA to devote $5 billion to assisting their sector through purchase and distribution efforts and by directly offsetting losses for growers and dealers.

The potential price tag for supporting those specifically named groups is quickly adding up. Even local and regional agricultural markets like farmers markets and farm-to-school programs are facing more than $1 billion in losses, according to industry estimates. And of course, they’re not the only farm sectors in need of aid.

There’s also a heavy push to include ethanol producers in any relief program.

Midwestern senators this week asked Perdue to use some of the additional $14 billion in Commodity Credit Corporation spending power to keep the biofuel sector afloat. Gasoline consumption has plummeted, leaving ethanol prices in free fall and a growing number of plants shutting down or going idle. POET, the largest U.S. ethanol maker, just announced that it would idle three of its plants and postpone the opening of a new facility.

The biofuel market carnage, in turn, has brought down corn futures prices by about 15 percent since January, as ethanol plants purchase about 40 percent of the U.S. corn crop.

For now, the department is consulting with independent farm economists to size up the pandemic’s costs on commodity markets as officials try to figure out where cash is needed most.

Some analysts expect USDA will design a program similar to its trade relief payments since 2018. The department attempted to calculate the impact of retaliatory tariffs on specific commodity prices, and then reimbursed farmers based on the volume and variety of their production, or that of their county.

But determining financial damage specifically from the current economic shutdown could be trickier than calculating tariff effects, said Joseph Glauber, a senior research fellow at the International Food Policy Research Institute and former USDA chief economist.

“I am not sure how you would separate out price impacts from Covid versus other market factors,” Glauber told POLITICO. “My guess is that the distribution and amounts will look a lot like 2019.”

As with the trade bailout funds, the stimulus money could be distributed in multiple batches. That would allow Perdue to bolster reeling sectors that need money now while leaving room to adjust course as needed.

USDA could even use its additional spending power through the CCC to fund another round of trade aid itself, now that China has struggled to fulfill its promise to import eye-popping sums of U.S. farm goods as part of the “phase one” trade deal signed in January.

Doing so could allow officials to account for the financial impact of market factors beyond the coronavirus, like continued trade obstacles, and potentially reach other corners of agriculture in need of help.

For example, soybean futures prices haven’t fallen as steeply since January as other major crops like corn or cotton. But growers of the oilseed arguably were hit hardest by President Donald Trump’s trade war with Beijing, and they made out well under USDA’s trade relief program.

The department has not laid out a timeline for when it will announce details of the stimulus payments.

Liz Crampton contributed to this report.