Perdue announces $19 billion farm aid package

Hours after President Donald Trump tweeted April 17 about the administration’s latest $19 billion farm aid package to help farmers and ranchers cope with the devastating effects of the COVID-19 virus,Secretary of Agriculture Sonny Perdue announced some of its details in a late-evening press call. He said there could be another $14 billion in aid to farmers coming in July.

The new aid program, called the Coronavirus Farm Assistance Program, will include $16 billion in direct payments to farmers. In addition, the U.S. Department of Agriculture announced that it is exercising authority to purchase and distribute, under the Families First Coronavirus Program, another  $3 billion of agricultural products to those in need.

In an April 20 statement, USDA provided more details, saying it “will partner with regional and local distributors, whose workforce has been significantly impacted by the closure of many restaurants, hotels, and other food service entities, to purchase $3 billion in fresh produce, dairy, and meat products. USDA’s Agricultural Marketing Service will procure an estimated $100 million per month in fresh fruits and vegetables, $100 million per month in a variety of dairy products and $100 million per month in meat products to provide a pre-approved box of fresh produce, dairy, and meat products to food banks and other non-profits serving Americans in need.”

In his opening remarks to the April 17 press call, Perdue noted that until the novel coronavirus hit, American adults consumed about half their calories outside the home. Food supply chains finely tuned for the previous mix of wholesale and retail outlets have struggled to re-adjust, with repercussions for farmers and ranchers.

Supply chain is a ‘logistical Rubik’s Cube’

At the April 17 press call, Perdue responded to one question about meat processing plants by noting that while it is not part of USDA’s role to get COVID-19 tests into meat plants, it has had conversations with other federal agencies. “We can’t have meat plants offline for too long,” he said. The USDA has previously said there is no evidence of the spread of COVID-19 being associated with food or food packaging.

To another question about meatpackers, Perdue responded that he couldn’t comment in the middle of an investigation. Last year, USDA set up a task force to examine meat supply chain issues after an August fire closed a Tyson meat packing plant near Holcomb, Kan., sending cattle prices plunging by $3 overnight. Ranchers and cattle producers have long complained that giant meatpackers exercise too much market control over cattle prices.

Meat processors have been especially affected by the shutdown of several important packing plants where the virus has broken out. A Smithfield pork producing plant in Sioux Falls, South Dakota, that provides between 4% and 5% of the nation’s pork shut down after 300 of its employees tested positive for the virus.

Kenneth Sullivan, president and CEO of Smithfield, said in a statement, “The closure of this facility, combined with a growing list of other protein plants that have shuttered across our industry, is pushing our country perilously close to the edge in terms of our meat supply. It is impossible to keep our grocery stores stocked if our plants are not running. These facility closures will also have severe, perhaps disastrous, repercussions for many in the supply chain, first and foremost our nation’s livestock farmers. These farmers have nowhere to send their animals.”

JBS USA, a unit of the world’s largest meat processor and one of the “big four” in the U.S., shut down a Souderton, Pennsylvania, beef plant and reduced production at a second facility in Greeley, Colorado, because of absenteeism among employees.

Besides the virus-induced closures, the meat supply chain has struggled to adjust to changing consumption patterns. Restaurants usually account for most of the steaks eaten by Americans, with grocery chains making up the rest. But with most restaurants closed or doing only take-out service, consumption of meat has shifted to home cooking. Americans cooking at home use more ground beef and fewer steaks, causing supply backups and local shortages in some places at the same time. Perdue said USDA’s Agricultural Marketing Service is coordinating with private suppliers to keep food moving, but called food supply chains a “logistical Rubik’s Cube.”

The National Cattlemen’s Beef Association applauded the latest farm aid plan, but said it is only a first step. NCBA President Marty Smith said, “We appreciate Agriculture Secretary Sonny Perdue’s announcement that the agency will soon distribute funding to the cattlemen and cattlewomen who desperately need help during this national emergency. We applaud USDA’s work to quickly craft a plan to distribute the funds to those who need it most and we look forward to learning more about that plan very soon. America’s cattle producers are facing unprecedented crisis after two market-disruptions in less than a year and this funding will provide the certainty needed to move forward with their work.”

A study released April 14 by NCBA estimated the cattle industry losses alone due to coronavirus market disruptions could amount to $13.6 billion, with cow-calf producers standing to lose up to $8.1 billion, the stocker/backgrounder sector losing $2.5 billion and feedlots another $3 billion.

David Murray can be reached at [email protected].