Coronavirus Bill Contains Billions for Farmers and Farm Programs

Posted on Tuesday, January 19th, 2021 by Guest Blogger

This blog is from the National Sustainable Agriculture Coalition (NSAC), of which CalCAN is a member. NSAC advocates for federal policy reform for the sustainability of food systems, natural resources, and rural communities. See the original post here. The third round of applications for the Coronavirus Food Assistance Program (CFAP-3) has not yet been announced, though funding has been allocated. Stay tuned for when the application period opens. 

The New Covid Bill

On December 28th, President Trump signed the Emergency Coronavirus Relief Act of 2020, averting a looming government shutdown. This $2.3 Trillion dollar, 5,500 page, package of funding and legislation combined a $900 billion Coronavirus response bill and a $1.4 Trillion annual appropriations bill for FY21 into a single, must-pass “omnibus.” The sheer scale of the bill and its timing – right in the middle of the holidays – means that many of its elements have not been widely reported. In this blog we will provide a general overview of the provisions in the Coronavirus response section of the bill relevant to sustainable agriculture and will cover the Appropriations spending levels in a subsequent blog.

From the earliest days of the pandemic, NSAC members have worked to meet the immediate needs of their communities and to make certain that any federal response to this crisis supported everyone in need – including farmers and the markets they serve. This began with work to determine the anticipated impact of coronavirus on farmers and designing a payment program that would compensate small and mid-sized farm operators fairly and submitting comments and amending payment list to improve the CFAP 1.0 program that left too many farmers behind. Subsequent work included standing in allyship with groups advocating for the safety of farm and food system workers and working with Members of Congress to introduce marker bills and provisions to create an effective revenue based payment program to support farmers that became part of the CFAP 2.0 program. Finally, NSAC members worked to make certain the next iteration of the CFAP program covered more farmers – including contract growers, made payments more fairly, and added substantial funding to support existing programs that help build local markets, support BIPOC producers, and help grow the next generation of farmers.

While no bill is perfect, this fourth coronavirus response bill (referred to as C4) contains a number of major improvements over the previous coronavirus package that lift up NSAC priorities and programs that could support more sustainable, equitable, and just food systems. Specifically, the bill contained nearly $26 Billion in support for agriculture to be split equally between Hunger and Nutrition and Farm and Food programs.

Hunger and Nutrition Assistance

The widespread increase of food insecurity as a result of the pandemic drew national attention to the inadequacy of the level of assistance provided to food insecure households through the Supplemental Nutrition Assistance Program (SNAP), country’s leading hunger and nutrition assistance program. Perhaps the most important food policy provision within the COVID relief package is one that boosts the SNAP maximum benefit by 15 percent for six months.

In addition to the maximum benefit increase, the package also includes $5 million in funding and new authorities related to expanding online access to SNAP. While USDA has authorized a majority of states to allow for SNAP online sales, access has been limited by costly technology and technical assistance barriers which has resulted in online SNAP predominantly being available through larger national retailers to the disadvantage of the direct market producers and small businesses. The $5 million for online SNAP includes explicit authority to utilize $1 million of the funds to support making SNAP online transactions accessible for direct market farmers and farmers markets.

The inclusion of funding to expand access to online SNAP for direct market farmers, farmers markets and small businesses, closely resembles the Expanding SNAP Options Act of 2020a bill introduced by Senator Dick Durbin (D-IL) that NSAC helped to develop and promote.

Farm and Food Programs

Photo courtesy of NSAC.

The bulk of the aid provided to farmers is expected to be delivered through a third version of the Coronavirus Food Assistance Program (CFAP 3.0) which will provide direct payments to farmers who have experienced losses due to the coronavirus pandemic. It is uncertain when this program will be implemented but due to the complexity of some of the new payment provisions – discussed below – it is certain to be done under the new Administration.

Congress approved $11.1785 billion for direct payments to farmers to  “prevent, prepare for, and respond to coronavirus by providing support to agricultural producers, growers, and processors” and further that payments should be made to producers and growers of “specialty crops, non-specialty crops, dairy, livestock, and poultry, producers that supply local food systems, including farmers markets, restaurants, and schools, and growers who produce livestock or poultry under a contract for another entity.” The specific inclusion of direct marketing farmers should ensure they are once again eligible to benefit from the CFAP program, a hard fought provision that made the CFAP 2.0 program work much better for many smaller, diversified farmers. Congress was more specific in the construction of this coronavirus relief bill than in previous bills and beyond the farmers specified, they included some required spending and placed some caps on other payments.

Direct Payments to Producers

Within the $11.1785 billion there are the following lines of dedicated funding:

  • $5 billion for row crop producers to receive a flat fee of $20 per acre. This is different from CFAP 2.0 where commodity row crop producers, including those growing barley, corn, sorghum, soybeans, sunflowers, upland cotton and wheat, were paid based on their previous years production (e.g. bushels grown in 2019) multiplied by a specific amount of money reflecting the loss of value for the commodity at the national level. Importantly, this provision will also cover small grains including alfalfa, amaranth grain, buckwheat, canola, extra long staple (ELS) cotton, crambe (colewort), einkorn, emmer, flax, guar, hemp, indigo, industrial rice, kenaf, khorasan, millet, mustard, oats, peanuts, quinoa, rapeseed, rice, sweet rice, wild rice, rye, safflower, sesame, spelt, sugar beets, sugarcane, teff, and triticale which were eligible for a CFAP 2.0 payment of $15 per acre. This will certainly benefit small grain producers and farmers with more diverse intercropping practices and rotations. There is a separate payment provision for users of extra-long staple cotton. The Secretary also has the authority to extend marketing loans for three months (to 12 months).
  • $3 billion for cattle, dairy, and contract growers. Farmers will again be eligible for a per head payment to account for the loss of value to their livestock based on the CFAP 2.0 formula with some modification.  However, in a major improvement to the previous CFAP 2.0 program, contract growers are now eligible to receive direct payments. Specifically, contract growers are eligible for up to $1 billion of this funding and payments of up to 80% of their revenue losses. There are also restrictions that ensure that funding cannot flow to dealers or packers. Unlike in previous versions of CFAP, farmers will now be eligible to receive payments for animals that were euthanized because there was no slaughter capacity to process them. Farmers can receive a payment of 80% of the animal’s fair market value plus the cost of depopulation (excluding any EQIP payments for this purpose).
  • $1.5 billion for the purchase of agricultural products and to provide grants and loans for farms and food businesses to respond to the coronavirus and protect workers. This provision is to support the purchase of agricultural products – including fresh produce, dairy, meat and seafood products – and to provide grants and loans to help small and mid-sized food processors, distributors, farmers market operators, farmers, and other organizations to respond to the coronavirus pandemic and provide workers with personal protective equipment. This section of funding is intended to support an additional round of commodity purchases for the Farmers to Families Food Box Program (FFFBP) and we have written previously on how small farmers were poorly served by previous rounds of the FFFBP. While this provision did not place any new restrictions on how the program could be structured or who could participate by supplying food items for the boxes to be distributed to families in need, it did contain an important requirement for USDA to conduct a study – within 30 days – to determine the shortcomings of the previous rounds of the FFFBP, including the degree to which local food purchases were made and whether access to the program was fair. However, it appears the current administration has no intention of conducting a meaningful review of past failures or to make this next round work better for smaller and direct marketing farmers because the Secretary is moving quickly to issue another round of contracts by January 19th, immediately before the new administration comes into office.

Perhaps even more troubling than the fact that the FFFBP will not help the small and mid-sized farmers who have excess product from the loss of their local, direct markets, is the fact that the current administration intends to spend the entire $1.5 billion allocated for the section on commodities leaving none to assist small and mid-sized farmers and food system operations to provide PPE for their employees or otherwise adapt their practices to improve the safety conditions for workers and customers. Spending all the funding on commodities is done with clear disregard for Congressional intent and it remains to be seen whether the new Congress or administration can undo or otherwise correct this action by the current administration. There may also be a legal challenge to the current FFFBP solicitation for bids as there is some question as to whether it meets federal contracting requirements because of which groups were invited to apply, potentially delaying the next round of FFFBP until it can be implemented by the new administration.

  • $300 million to support offshore aquaculture producers. The Fisheries Disaster Assistance program established under the previous coronavirus assistance bill receives an additional $300 million to support commercial fishing, aquaculture, sport fishing charter operations, and other fishing and processing businesses.
  • $200 million to support timber harvesting and hauling businesses. Those businesses  that experienced a loss greater than 10%  of their gross revenues from January 1 to December 1, 2020 due to the pandemic will be eligible for an unspecified payment.

Revenue Based Payments

Many farmers benefited from the sales commodity payment program of CFAP 2.0 which paid most specialty crop (i.e. fruits, vegetables, nuts) producers and producers of non-commodity livestock based on revenue they had lost due to the pandemic. This payment program closely follows provisions of the Local Farmer Act introduced by Congresswoman Alma Adams (D-NC-12) that was developed with the support of NSAC members. This new bill preserves the sales commodity program but adds a number of very important provisions to better support farmers who are eligible for revenue based payments.

New in the bill is a provision that will allow farmers to include income from payments they have received from insurance indemnities, Non-Insured Crop Disaster Assistance Program (NAP), Wildfire and Hurricane Indemnity Program Plus (WHIP+) as revenue when they calculate losses. This is intended to avoid penalizing farmers who lost a crop from having their income seem artificially low when calculating revenue loss for a sales commodity crop. Farmers may also use their 2018 sales, rather than their 2019 sales, when calculating a sales commodity payment. This provision was added to ensure that farmers who had dramatically lower sales in 2019 – perhaps those unable to plant a 2019 crop – would still be eligible to receive a payment under the program.

There is also a new provision permitting the Secretary to consider the additional value of products based on whether they are a specialized variety, sold in local markets, or produced using  farm practices, such as organic, that could make them more profitable and therefore eligible for greater payment rates. This will likely not help farmers who are eligible for payments based on lost revenue but may help increase the payments for row crops, livestock, dairy, or other crops. It will depend on how the new program is designed.

Who Else Can Benefit?

There is a general expansion of who may be eligible for payments under the direct payment provisions of this bill to account for larger coronavirus related supply chain disruptions. This includes producers of advanced biofuels, bio-diesel, cellulosic biofuel, conventional biofuels, and renewable fuels as well as dairy product processors, packagers, and merchandisers, and cotton processors. While the intent to provide support for other elements of the agricultural supply chain is laudable, there is great concern that because the bill lacks clear language on exactly how some of these payments are to be structured that processors, who may be better served by other business support programs, will instead compete against farmers for limited program funding. Again, the degree to which these provisions affect small and mid-sized, diversified producers will depend on the incoming administration.

Other Important Provisions

Beyond the direct payment support programs, there are several major increases in funding for existing programs that are intended to provide additional support for farmers and local market infrastructure. NSAC has long been a champion of these programs – through grassroots engagement, direct advocacy with Member offices, and appropriations efforts – and the record setting funding for these programs should prove vital to helping our farmers and food system onto better footing in the new year. These include:

  • Local Agriculture Market Program (LAMP): $100 million, a reduction in cost share to less than 10%, and the ability to use in-kind match
  • Farming Opportunities Training and Outreach (FOTO) Program: $75 million,  a reduction in cost share to less than 10%, the ability to use in-kind match, and the ability of the Secretary to waive maximum grant amounts
  • Gus Schumacher Nutrition Incentive Program (GusNIP): $75 million, a reduction in cost share to less than 10%, the ability to use in-kind match, and the ability of the Secretary to waive maximum grant amounts and provide additional support to ongoing grants
  • Specialty Crop Block Grants (SCBG): $100 million
  • Farmer Stress Programs: $28 million in funding to states (not to exceed $500,000 in any state) to initiate farmer stress support programs. This funding may be used by the states directly or to support extension services and nonprofit groups already providing services to farmers through the Farm and Ranch Stress Assistance Network (FRSAN).

There is considerable uncertainty about how these additional programs funds will be used. For some programs, the funding may be used to support new grants under new Requests for Proposals (RFPs) or through revisions to currently open  RFPs. It’s possible  funding may be used to fund grant applications that were unable to be funded in previous grant cycles or used to increase grant funding amounts previously awarded. Some funding may all be spent in the next year while other funding may be spread out  over several years to support ongoing work. Much will depend on the work of the incoming administration and will be detailed in future blogs and member updates as more information is available.

Very few small meat plants will be eligible for assistance under this bill. NSAC is disappointed to see this lack of support for small federally inspected meat plants and a lack of a more flexible support option for state and custom exempt plants. The bill would provide grants of up to $200,000 for state inspected and federally exempt processing plants to improve their facilities, equipment, and processing to help them move towards receiving a grant of federal inspection. Similar to the RAMP-UP bill, this provision would help a few  small plants affected by the pandemic but does nothing to support small plants that already have a grant of federal inspection and will therefore do little to improve slaughter capacity that can help farmers move their livestock and poultry into interstate markets. NSAC encourages Congress to act quickly and pass the Strengthening Local Processing Act to help address the slaughter bottleneck in small federally inspected, state inspected, and custom exempt plants. The bill also included a study to review the effectiveness of the Cooperative Interstate Shipment program, which NSAC will be tracking closely as we consider what regulatory framework works best for state and federally inspected small plants and what changes may be necessary in the future.

Finally, the new package also includes an additional $284 billion in small business loan funding and improvements to the Paycheck Protection Program (PPP) that may open it up to more farmers. Farmers are now eligible to use their gross income as reported on their Schedule F to calculate loan amounts, a change that will hopefully allow more farmers to utilize this forgivable loan program but will not help all farmers in need. Additionally, loan eligibility is now expanded to include 501(c)6 non-profit organizations which may help many NSAC members and other community-based organizations apply for much needed funding. SBA reopened PPP this week and farmers and others have until March 31, 2021 to apply. Additional information on the changes to PPP can be found here.

There are many additional provisions in the coronavirus relief bill that have direct and indirect impacts on farmers and food systems. NSAC will continue to advocate to make certain that every provision in the 5,500 page bill that can be made to work better for farmers, farmworkers, food system workers, and market operators does so and that the programs and funding authorized help us build a more sustainable, equitable, and just food system.

A blog detailing the additional agricultural appropriations provisions passed as part of this omnibus will follow.

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