HEROES Act Directs More Payments for Agriculture 

COVID-19 AnalysisHEROES Act Directs More Payments for Agriculture House bill provides unnecessary expansions to executive power.

Agriculture,  | Analysis
May 18, 2020  | 7 min read | Print Article

The $19 billion in aid for ag businesses announced by the USDA thus far, falls short of what lawmakers and agricultural special interests are calling on USDA to deploy. Even with an additional $14 billion of walking around money coming available in a month, once the CCC submits a report of its financial condition – which is expected in June, democrats in the House included more direct assistance in the Health and Economic Recovery Omnibus Emergency Solutions Act (HEROES Act) passed on the 15th. Below is a list of aid payments made available to farmers and ranchers in the bill ON TOP of the $19 billion in aid to be distributed soon. 

  • (Sec. 60102) Payments to livestock and poultry producers that killed their livestock but were unable to send them to slaughterhouses that were closed or had reduced capacity because of worker illness. Excludes livestock owned by the packing companies themselves. Such sums as necessary. 
  • (Sec. 60201) Payments to dairy producers when they donate their milk to an eligible distributor instead of dumping due to lack of buyersAlso additional payments to producers that were already donating through the Milk Donation Reimbursement Program (MDRP) = $500 million 
  • (Sec. 60202) Supplemental dairy margin coverage payments when the difference between the milk price and cost of feed (the margin) is less than a dollar amount selected by a dairy producer  
  • (Sec. 60204) A 15 percent discount for dairy producers when they select a 3-year signup for the Dairy Margin Coverage program 
  • (Sec. 60301) $100 million in for the Specialty Crop Block Grant program (I.e. fruits and vegetables) affected by the COVID-19 pandemic 
  • (Sec. 60302) A total of $50 million in grants for local agricultural markets affected by the COVID-19 pandemic 
  • (Sec. 60305) Directs USDA to use the CCC to send subsidy checks to ethanol plants and textile (cotton) manufacturers. Exempts any payment program from the rulemaking/public comment process. Such sums as necessary 
  • (Sec 60306) $16.5 billion in additional funding for USDA’s Coronavirus Food Assistance Program (CFAP) to make direct payments to agricultural producers. The CFAP final has not been released, thus the structure of the program is unknown. The HEROES Act makes changes anyway. 
    • For producers of commodities that ultimately ARE eligible for CFAP payments, the HEROES Act requires USDA ensure the payment covers the producer for 85% of their actual losses for the second quarter of 2020. If the CFAP payment falls short of this level, USDA is required to make a supplemental CFAP payment. 
    • For producers who ARE NOT eligible for a CFAP payment once the final rule is published, the HEROES Act requires USDA make a payment that compensates the producer for 85 percent of their first and second quarter losses. 
    • All payments must be adjusted (higher) for factors such as location, specialized variety, and “farming practices.” This is primarily an attempt to ensure checks cut for producers of certified organic crops and livestock are calculated on the price premium organic products typically capture. Though it may have other consequences for “’location” and “specialized varieties” depending on how this is implemented 
    • Agribusinesses with an adjusted gross income more than $900,000 are not eligible for payments unless at least 75 percent of their income is derived from farming, ranching, or forestry-related activities. Agribusinesses with an AGI this high are barred from receiving taxpayer subsidies under most Farm Bill authorized programs.  

The bill also permanently changes the Secretary of Agriculture’s ability to direct subsidies using the Commodity Credit Corporation Charter ActThis bill adds two sections to the enumerated powers under the charter act. First to authorize its use to aid in the removal and disposal of “surplus livestock and poultry due to significant supply chain interruption during an emergency period” and, secondly, to “Aid agricultural processing plants to ensure supply chain continuity during an emergency period.” These changes would allow the Secretary to use his discretionary authority, instead of waiting for Congress to appropriate the money, to make payments like the HEROES Act directs in Sections 60102 and 60305. 

 Both of these provisions are unnecessary expansions of Executive power. Congress has the ability to make emergency appropriations for these purposes, as it has in the HEROES Act. But permanently changing the CCC to allow the Secretary of Agriculture to make future payments, removes a degree of Congressional oversightThe second clause, is also an overly broad expansion that will not limit future subsidies to manufacturers of ethanol or cotton textile mills. Anything defined as an “agricultural processing plant” could be the beneficiary of future subsidies “to ensure supply chain continuity during an emergency. So certainly slaughterhouses, ethanol plants, and cotton mills, as well as the already highly subsidized and politically favored dairy processors and sugar cane and beet processors. Many agricultural lobbyists, and agriculture secretaries, have an expansive view of both Secretarial discretion in deploying the CCC and what constitutes “agriculture” – asking for COVID-19 funding for everything from Apples to Zinfandel. With no additional constraints, it’s not a long leap to other “processors” of agricultural commodities making their case for assistance: fruit and vegetable packing plants, industrial bakeries, candy manufacturers, the Campbell’s soup factory, toilet paper factories, breweries, wineries, edible marijuana manufacturers? It seems the sky’s the limit. 

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