The CARES act breakdown for Agriculture
The Farm Bureau article linked below is the first breakdown I've seen of the CARES act (covid-19 relief) funding for agriculture as well as our initial reaction. There appears to be 2 areas affecting production Ag as quoted here from the article:
“..the Department of Agriculture received $9.5 billion, approximately 19% of the total food and agriculture provisions, to provide financial support to farmers and ranchers impacted by Coronavirus. The funding is allocated specifically for specialty crops, producers who supply local food systems and farmers’ markets, restaurants and schools, livestock producers, i.e., cattleman and women, and diary farmers.”
“...the Commodity Credit Corporation was replenished with $14 billion ...The CCC is the funding mechanism for agricultural programs such as Price Loss Coverage and Dairy Margin Coverage. The CCC bolsters commodity and income support programs, natural resources conservation programs, disaster assistance programs and most recently the Market Facilitation Program (MFP)...will allow USDA to develop new support programs to assist agricultural producers and potentially help agribusinesses such as ethanol plants”
Several observations:
USDA appears to have broad authority in determining who receives payments, how much those payments will be, the allocations within the larger buckets, and the mechanism of delivery.
Specialty crops, producers who supply local markets and farmers markets: Although a short list of specialty crops were eligible for MFP payments in recent years, to my knowledge many of these are whole new categories of direct-to-farmer eligibility, including presumably small farmers who market locally and via farmer’s markets, which require full construction of eligibility requirements, farmer application process, payment calculation, and payment execution.
Specialty Crops: This is a big bucket, which USDA defines as - Fruits and vegetables, tree nuts, dried fruits, horticulture, and nursery crops (including horticulture).
Also keep in mind USDA program eligibility typically is only available for acreage registered with FSA and has a “Farm” number with a production base on record. Over the last 20 - 30 years this has primarily been commodity row crops. Many small and "local" market producers may not have this or be up to date. Participation will also require demonstrating Highly Erodible Land and Wetlands compliance.
Agribusinesses such as ethanol plants: This is also a newly eligible group for direct support and could prove to be quite controversial.
I don't see this as having direct impact on farmland values and trading, however in as much that it supports commodity crops and markets, it could have a stabilizing effect on those crop markets, particularly in the Midwest and south, and thus provide some stability to land prices and stave off some farm bankruptcies.
Additionally, USDA appears to have a number of programs to create from whole cloth in a situation where time is of the essence. Possibly the MAP program will serve as a template. They'll be under a lot of pressure. Will be interesting to see how this develops.
Stay tuned!
https://www.fb.org/market-intel/whats-in-the-cares-act-for-food-and-agriculture
-Matt Harrod
