The two largest U.S. farm groups want lawmakers to nearly double the funding for “USDA’s bank,” the Depression-era vehicle for multibillion-dollar Trump tariff payments, and give Agriculture Secretary Sonny Perdue the power to help farmers and ranchers through the coronavirus outbreak. Commodity prices are down sharply and the head of the FAPRI think tank says farm income is likely to be “significantly lower” than expected due to economic disruptions caused by the virus.
Congressional leaders hope to pass a coronavirus package of more than $1 trillion as early as today. It would bolster the economy and provide money for healthcare. A package assembled by Senate Republicans failed in a test vote on Sunday evening. “And we’re back to square one,” said an irate Majority Leader Mitch McConnell. “The American people expect us to act.” Democratic Leader Chuck Schumer said negotiations would continue into the night.
Farm leaders called in general terms for Perdue to have the authority and funding to aid producers rather than proposing specific forms of assistance. For example, a top official said the American Farm Bureau Federation (AFBF), the largest farm group, supported “additional resources” for the USDA.
The National Cattlemen’s Beef Association (NCBA) said the Commodity Credit Corp., nicknamed USDA’s bank for its huge funds and broad power to support agriculture, should be allowed to spend up to $50 billion before having to ask Congress for more “and ensure that livestock producers will be eligible for assistance in this time of need.” The Credit Corp.’s borrowing limit now is $30 billion. Congress routinely replenishes bank’s funding each year.
North Dakota Sen. John Hoeven said the increase in Credit Corp.’s authority was part of the bill has was sidelined on Sunday, as well as power for USDA to use the bank to assist livestock producers.
During a teleconference, AFBF president Zippy Duvall said on Friday that farmers and ranchers may need another round of Trump tariff payments, officially the Market Facilitation Program, because of slow-running trade with China. “Trade has not picked up so we are approaching the time when we are starting to talk about having another MFP payment,” said Duvall. “We think we qualify for it.”
Exporters reported the sale of $170 million of U.S. grain to China — 756,000 tonnes of corn and 340,000 tonnes of wheat — on Friday, said the USDA. It was the first major sale to Chinese buyers since 110,000 tonnes of sorghum on March 4, which was the first large grain sale since the “phase one” Sino-U.S. agreement was signed on Jan. 15. Before the trade war, China was the No. 1 buyer of U.S. farm exports.
The Trump administration devised MFP as a stopgap method to mitigate the impact of trade war on U.S. agriculture. Some $26 billion in cash was sent to ranchers and farmers over two years. “NCBA has already been in contact with USDA leadership to ensure CCC funds can be disbursed appropriately and expeditiously through existing programs,” said the cattle group in a letter to congressional leaders.
Cattle futures prices fell 20 percent in the six weeks ending March 17, wrote Pat Westhoff, director of the FAPRI think tank, in the Columbia (Missouri) Daily Tribune. Corn futures dropped 11 percent and soybean futures 8 percent in that period. “Other factors played a role in those price declines but the Covid-19 outbreak was certainly one of the most important reasons.”
With economic recession a possibility, consumers will spend less, even on food, said Westhoff. Growers may benefit from lower oil prices, lower interest rates and crop subsidies, he said. “Still, it seems likely that net farm income in 2020 will prove to be significantly lower than previously projected.”
Eight senators from the U.S. Plains and Southwest proposed over the weekend that Perdue use the CCC “to make a one-time emergency payment to help beef cattle producers during this crisis.” The letter, spearheaded by Kansas Republican Jerry Moran, said a uniform rate could be paid for each head of cattle. “If structured properly, these emergency payments will inject capital into the beef industry without causing distortions in the market.”