Agriculture in the time of COVID-19

COVID-19Agriculture in the time of COVID-19

Agriculture,  | Quick Take
Mar 25, 2020  | 2 min read | Print Article

The Senate response and stimulus bill appropriates $9.5 billion in emergency agricultural income subsidies for farming and ranching businesses affected by the coronavirus. The bill specifically includes assistance for “producers of specialty crops, producers that supply local food systems, including farmers markets, restaurants, and schools” as well as “livestock producers, including dairy producers.” Specialty crop producers includes a broad list of farmers raising fruits and vegetables. These types of producers tend to benefit less from traditional farm programs that favor commodity crop producers (corn, wheat, cotton, etc.) 

The bill also reimburses the Commodity Credit Corporation (CCC) for net realized losses by $14 billion. The CCC is the financing vehicle for most farm programs, including conservation, commodities, disaster, and some smaller nutrition programs and is limited to a $30 billion annual line of credit. This bill effectively resets USDA’s spending tab to $0.  Previous bill drafts included reimbursing the CCC as well as raising the borrowing limit from $30 billion to $50 billion. The Secretary of Agriculture may use the CCC for almost any activity that supports agricultural markets. The CCC was used by the Trump Administration to make nearly $28 billion in trade aid to producers affected by the Trump Administration’s trade war. By clearing the financial decks, it is nearly inevitable that USDA will make a third round of payments.  

Like the more than $5.0 billion in “emergency” farm income subsidies authorized in 2018 and 2019, how these funds will be distributed will ultimately depend on decisions by the Secretary. Whether he follows the intent of Congress or, as he did in distributing previous rounds, undermines Congress’s intent on payment limits and means testing, we’ll have to wait and see.