The government has introduced a comprehensive plan to aid farmers during the ongoing COVID-19 crisis. However, concerns are arising that farmers will be left unable to access the aid. Many farmers selling locally have been overlooked by the government plan. Experts deem this a grave mistake, as the role of local farmers has become crucial in navigating the challenges of our new reality.

The Payout Program

The government plans to announce a payout program by the end of April, targeted towards aiding farmers who are struggling with the effects of the COVID pandemic. It is formally known as the Coronavirus Food Assistance Program (CFAP). This $19 billion program includes a variety of measures, ranging from direct payouts to farmers, to the purchase of large amounts of food to restock food banks in high-demand areas. The funds originate from the CARES Act, as well as additional USDA authorities.

Pandemic Affects

It is still too soon to say how the pandemic will affect farmers long-term, but experts estimate a total loss of around $20 billion by year’s end. This is atop pre-existing issues many farmers were already facing. In 2017, nearly 50% of all farmers were already reporting negative net income on their tax returns. This was mostly due to the effects of the “trade war” with China.

Distribution of Funds

As much as $16 billion will be distributed directly to farmers. Cattle, dairy and hog farmers will receive approximately half of the allotted amount, with the rest divided among row crops, specialty crops and miscellaneous crops. When scrutinizing the details, you’ll notice that the brunt of this aid is targeted mostly towards larger farmers with vast distribution networks. Small and localised farmers struggling to serve the communities they are based in, are being largely overlooked.

How Are Small Farmers Holding Up?

Small-scale farms will experience loss as well. An economic assessment by the National Sustainable Agriculture Coalition estimates that local and regional markets will suffer losses of up to $1.32 billion between March and May of 2020, as a result of COVID-19. These farmers deal mostly with local eateries, farmers markets and local shops. Since these businesses are largely shuttered, for the time being, the farmers are suffering as well.

Payment Per Commodity

The ways in which payments are distributed leave most of the aid to large-scale farmers already benefiting from Trump’s ballot plan, in regards to the trade war. Farmers and ranchers will be eligible for up to $125,000 per commodity, with an overall payment limit of $250,000 per person or entity. Farmers earning upwards of $900,000 in adjusted gross income, as well as those who make over a quarter of their income from off-farm sources, will be ineligible to receive aid. These payment limits are double the cap for traditional farm subsidies, likely meaning that large farms will take more than their fair share of the allotted $16 billion.

Monoculture

When the payments are made per commodity, it means that those who have a monoculture-based production will receive more help than those who grow multiple and diverse produce. Simply put, the large-scale operations benefit the most from this approach, rather than the small farms who supply your local farmer’s market.

The Remaining 3 Billion

The rest of the budget is set to provide food to the food banks who purchase directly from farmers. Their services are in higher demand now than ever, with more people relying on food banks in these troubling times. These funds also originate from a different source than the rest. The money for food banks will be supplemented by other available sources, including the Families First Coronavirus Response Act and Section 32: a permanent appropriation enabling the Secretary of Agriculture to purchase surplus of food.

 

Aid to America’s farmers is welcome, but the flaws in its distribution are impossible to ignore.

Author:Aaron Hunter

Date:May 4, 2020

Category:Finance, Local Agriculture

Tags:agriculture, corona virus

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