On Friday, the administration announced details of the new $14-billion-dollar Coronavirus Food Assistance Program, or CFAP2, that will provide direct payments to farmers and ranchers to partially offset COVID-19-related losses for producers. American Farm Bureau Federation Chief Economist John Newton says the aid extends to new commodity categories…
A Market Intel analysis by the American Farm Bureau Federation details the CFAP2 provisions, which provides nearly $14 billion in relief to farmers and ranchers suffering losses or increased cost after April 15, stemming from the COVID-19 pandemic.
Of the $14 billion in CFAP2 support, USDA’s cost-benefit analysis estimates corn producers will receive $3.5 billion, or 25 percent of the total CFAP2 resources. Following corn, beef cattle producers are expected to receive $2.8 billion, or 20 percent of CFAP2 funding.
Dairy farmers are expected to receive $2 billion, or 14 percent of the available support. Hog producers are estimated to receive $1.7 billion or 12 percent of CFAP2. Soybean producers are estimated to receive $1.4 billion, or ten percent of the funds. Wheat, flat-rate crops, eggs and other commodities are expected to receive $2.5 billion, or 18 percent.
As recently as September 1, Ag Secretary Sonny Perdue said USDA was finishing up writing the rules for the second round of the Coronavirus Food Assistance Program. Late last week at a stop in Iowa, the secretary said the rules have been written and they’ll be announced this week.
The Bismarck Tribune says the first $16 billion in funding during the first round of the program was geared to the first quarter of 2020. The idea was to just get the aid out the door as quickly as possible to whoever needed it. Round two of the program will factor in more producer feedback to make it a program that works best for the people who truly need it. Farm Journal’s Ag Web Dot Com says payments in the second round will compensate producers for any losses they had from April 15 through the end of 2020.
The deadline for applying during the first round of CFAP is this Friday, September 11. He says round two payments will go to the same commodities they did in the first round. There won’t be any money for ethanol producers and other agricultural commodities seeking aid because of COVID-19. Perdue says he doesn’t have the necessary authority from Congress to make those particular payments.
The Department of Agriculture says farmers will earn more net farm income in 2020 due to federal relief programs. Net cash farm income is forecast to increase $4.9 billion to $115.2 billion.
In inflation-adjusted 2020 dollars, net farm income is forecast to increase $18.3 billion, and net cash farm income is forecast to increase $4 billion. If realized, both income measures would be above their historical average across 2000-2019 when adjusted for inflation. However, the increase is not because of better prices or markets. USDA says overall, farm cash receipts are forecast to decrease $12.3 billion to $358.3 billion in 2020.
Total animal receipts are expected to decline $14.3 billion, and total crop receipts are forecast to increase $2.0 billion from 2019 levels. USDA says direct government farm payments, including federal aid but not loans and insurance, are forecast at $37.2 billion, a $14.7 billion, or 65.7 percent increase. USDA says the expected increase is due to supplemental and ad hoc disaster assistance for COVID-19 relief.
The Creighton University Rural Mainstreet Index increased slightly in August from July’s weak index number. A monthly survey of bank CEOs in rural areas of a 10-state region that depends on agriculture and energy shows the August index is the sixth-straight month of a number below growth-neutral.
The August index showed a slight increase at 44.7, up from July’s 44.1. However, that number is still in a recessionary economic zone. It was still a significant increase from the record-low in April of 12.1. The index ranges from 0 to 100, with an index of 50 representing growth neutral.
“Farm commodity prices are down by 10.4 percent over the past 12 months,” says Dr. Ernie Goss, who oversees the Rural Mainstreet Index. “Despite the input of $32 billion in USDA farm support payments this year, only eight percent of bankers reported their area economy had improved compared to July, while 18 percent say economic conditions have gotten worse.”
Along those same lines, the farmland price index rose above growth neutral for only the second time in the last 81 months, with the August reading at 50.1, up from July’s 45.6. The August farm equipment-sales index dropped to 32.8 from 34.4 in July.
Congress won’t consider any coronavirus relief until September, and the streamlined package won’t likely include agriculture.
Senate Republicans indicate they plan to introduce a “skinny” bill next month, according to the Hagstrom Report. The Senate returns to session on September 8, and the House has scheduled to return for committee meetings on September 8, with the full House returning to session September 14.
The delay sets up speculation the general coronavirus aid may be included in spending bills Congress must pass by September 30, the end of the current fiscal year. Congress must also pass the spending bills to avoid a government shutdown. Many in agriculture agree more aid is needed for farmers and ranchers facing losses from the COVID-19 pandemic.
The failed HEALS Act in the Senate would have provided an additional $20 billion for agriculture. The CARES Act included $14 billion for agriculture, and the Coronavirus Food Assistance Program includes $16 billion for agriculture.
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