The federal government could provide 40 percent of U.S. farm income this year, according to one analysis of the coronavirus relief funds. President Trump said at least $16 billion will be available “very quickly” for the farm sector.
Coupled with $23 billion in cash to producers since 2018 to mitigate the effects of the Sino-U.S. trade war, the coronavirus aid would mean $39 billion in stopgap payments to producers in three years. The payments would roughly double yearly taxpayer support of agriculture. Crop subsidies and crop insurance were forecast to average $14 billion a year under the 2018 farm law.
“We’re working very hard to make sure our food supply chain is sound and plentiful, but we all know that that begins with our farmers, cattlemen, ranchers, and producers,” said Trump on Friday afternoon. “So we’re going to be working with the small farmers, the big farmers, the cattlemen, the ranchers — all of the producers. We’re going to take care of them.
“And Secretary Perdue will be using all of the tools at his disposal to develop a program — and very quickly — of at least $16 billion to provide relief for farmers, ranchers, and producers impacted by the coronavirus.”
The figure cited by Trump is similar to what Agriculture Secretary Sonny Perdue indicated last week — $9.5 billion designated by Congress for producers impacted by the coronavirus and $6 billion available at present in “USDA’s bank,” the Commodity Credit Corp., which has broad power to support farm income. Lawmakers approved $14 billion in new funding for the CCC but it will not be available until a June 30 statement of CCC finances is delivered.
“That shows the stability the government wants [to] inject into the farming sector and the farm financing sector,” said Jackson Takach, chief economist for the Federal Agricultural Mortgage Corp., during a discussion of coronavirus relief. Federally chartered, Farmer Mac was created in 1988 to provide a secondary market for agricultural loans.
During a farmdoc Daily webinar, Takach said if USDA spends all of the money provided in the coronavirus package along with other farm supports, “that works out to be about 40 percent of what farm income was expected for 2020.” The government would be providing the largest share of farm income since the early 2000s. The USDA has forecast farm income of $96.7 billion this year.
“I think government support is going to continue,” said Takach, “not fully replacing lost income [but] get us all through to the resolution of the situation we’re in today.”
Cash payments to producers will be part of USDA’s relief plan as well as purchases of commodities to prevent gaps in the food supply, said Perdue last week. USDA official meet daily on the question of a coronavirus relief plan, he said. The USDA probably will need to write a regulation setting the mechanics of aid, as it did when it created a framework for trade war payments.
“There is no ‘one size fits all’ approach that will work for all segments of the U.S. agricultural economy,” said farm and agribusiness groups in a letter to Perdue last week. “It is our view that actions should be taken under the broad authority in the CCC Charter Act to help sustain our country’s farmers, ranchers and all agricultural producers.”
One of the groups signing the letter, the National Milk Producers Federation, has suggested a voluntary supply management program, which would pay dairy farmers who cut production 10 percent, as well as traditional steps, such as government purchases of cheese, butter and milk, to remove surpluses from the market and bolster prices.
To watch the farmdoc webinar, click here.