USDA Announces Coronavirus Food Program

On April 17, 2020, Agriculture Secretary Sonny Perdue announced that USDA will use the funding and authorities provided in the Coronavirus Aid, Relief, and Economic Security Act (CARES), the Families First Coronavirus Response Act (FFCRA), and other USDA existing authorities to fund the Coronavirus Food Assistance Program (CFAP). The program includes two major elements. Secretary Perdue provided the following details about the program aimed at assisting farmers and ranchers as they struggle from the effects of the pandemic:

$16 billion in direct payments for farmers and ranchers: funded using the $9.5 billion emergency program in the CARES Act and $6.5 billion in Credit Commodity Corporation (CCC) funding. The program will provide direct support based on actual losses for agricultural producers where prices and market supply chains have been impacted and will assist producers with additional adjustment and marketing costs resulting from lost demand and short-term oversupply for the 2020 marketing year caused by COVID-19.

• $9.6 billion for the livestock industry
• $5.1 billion for cattle
• $2.9 billion for dairy
• $1.6 billion for hogs
• $3.9 billion for row crop producers
• $2.1 billion for specialty crops producers
• $500 million for other crops

Producers will receive a single direct payment determined using two calculations:

• Price losses that occurred January 1-April 15, 2020. Producers will be compensated for 85% of price loss during that period.
  
• Second part of the payment will be expected losses from April 15 through the next two quarters and will cover 30% of expected losses.
  
• The payment limit is $125,000 per commodity with an overall limit of $250,000 per individual or entity. Qualified commodities must have experienced a 5% price decrease between January and April.
  
• USDA is expediting the rule making process for the direct payment program and expects to begin sign-up for the new program in early May and to get payments out to producers by the end of May or early June.

$3 billion in purchases of agriculture products: including meat, dairy and produce to support producers and provide food to those in need. USDA will partner with local food and regional distributors to deliver food to food banks, as well as community and faith-based organizations to provide food to those in need. USDA will begin with the procurement of an estimated $100 million per month in fresh fruits and vegetables, $100 million per month in a variety of dairy products, and $100 million per month in meat products. The distributors and wholesalers will then provide a pre-approved box of fresh produce, dairy, and meat products to be distributed by these partner organizations to those in need.

USDA will also utilize other available funding sources to purchase and distribute food to those in need:

• 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.
  
• 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.