Ag Puts Costs on COVID 19 Impact

Inside D.C.

Ag Puts Costs on COVID 19 Impact

With restaurants and bars shuttered, schools closed and with the disappearance of nearly all other non-home commercial food buying, pork producers project a nearly $5-billion hit from COVID 19; beef says all sectors will sustain a $13.6-billion gut punch, while dairy says milk demand is off 12-15%, making it the worst year since 2009.  The crop folks have yet to publicly put numbers on their pain.   Oh, and there are “kinks” in the supply chain making retail grocery deliveries problematic in some areas.

The University of Missouri’s Food & Agricultural Policy Research Institute (FAPRI) released this week the first of what inevitably will be a sea of impact analyses of how COVID 19 is wracking agriculture.  FAPRI says crop and livestock prices will tank by as much as 12% due to the pandemic, cutting projected farm income by $20 billion to $86 billion overall for 2020.  That’s 11% below USDA’s 2019 farm income estimate and nearly 20% lower than FAPRI’s earlier 2020 projection.  FAPRI’s bad news doesn’t factor recent packing plant closures or the effect of any government aid that’s forthcoming, and assumes a 2020 second half rebound in the economy overall.      

So much for the food chain dodging a bullet as the rest of the U.S. economy careens off a cliff during the worst global pandemic since 1918.

USDA is sitting on its new pot of cash, $23 billion to be spent to ease producer financial pain.  Agriculture Secretary Sonny Perdue said this week $2 billion will be spent to buy “surplus” commodities to stock foodbanks, faith-based feeding groups and such.  USDA has allocated about $15.5 billion for direct producer aid payments, above the checks producers will collect from their regular participation in USDA programs. There could be a minimal third tranche of Market Facilitation Program (MFP) payments as well, though Perdue’s reluctance to go there is well known.   

The mother of all bailout programs, the Small Business Administration’s (SBA) $351-billion Paycheck Protection Program (PPP), which effectively gives multi-million-dollar grants to small businesses to rehire or retain workers, tapped out this week leaving thousands of applications unprocessed and cash needs unfulfilled.   Replenishing this bailout program went partisan in a flash as House and Senate, Democrat and Republican priorities on how to spend another $250-350 billion went unresolved as Congress went on break, not to return until May 4 or so.

Sen. Kirsten Gillibrand (D, NY) wants the next monster federal aid bill — there will be another “economic stimulus package — to include per-producer forgiveness of up to $250,000 in direct farm operating, ownership or emergency loans.  She’s also pitching for dairy help and for ag labor assistance.  Rep. Ron Kind (D, WI) held a virtual press conference last week at which he pitched a five-step “Family Farm Rescue Plan.”  Kind’s plan is for USDA to immediately buy up surplus commodities, ensure farmers and ranchers are eligible for all federal small business relief programs – aggies fought to qualify for the PPP program – and use Commodity Credit Corp. (CCC) money to make grants to small and medium-sized producers.  Kind pitches for dairy by instructing USDA to reopen enrollment for the Dairy Margin Coverage (DMC) insurance program, and he wants immediate implementation of the U.S.-Mexico-Canada Agreement (USMCA).  These are just two congressional proposoals; there will be more.

It’s not all dire news.  While COVID 19 hotspots remain and will continue to evolve in the short term, the nation generally is deemed to have “peaked” and is on a downward path when it comes to new coronavirus cases, ICU admissions and deaths.  Seizing on this data, President Trump, swallowed his pride, rolling out this week a “cautious” three-phase plan to “open up America” again.  

Where he once declared he had “the power” as president to singlehandedly jump start the nation’s economy, Trump ultimately acknowledged a return to whatever “normal” will be is in the hands of the country’s governors. His plan gives the state chief executives “wide latitude,” his plan being the federal roadmap for what inevitably will be a very bumpy ride.  In classic Trump fashion, he speculated those least hard-hit areas of the country could “reopen” on or before May 1.

The notion of getting 50 politicians all on the same page, even regionally, is mind numbing, even in a non-election year.  However, given control of Congress and the White House are up for grabs come November, heavy politicking is inevitable no matter the economic pain it may cause.

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