(AG Insider) Besides billions of dollars in cash payments to farmers, coronavirus relief will include purchases of “as much” milk and meat as possible for hunger relief, said Agriculture Secretary Sonny Perdue on Wednesday. President Trump says at least $16 billion will be spent on aid to agriculture.
The pandemic and accompanying economic slowdown are expected to wallop the sector. Stay-at-home orders and the near-shutdown of the food service industry “have led to marketing problems throughout food supply chains, with immediate and dramatic impacts across the country,” said the CARD think tank at Iowa State University. It estimated a “massive,” $6.3 billion impact on farmers in the nation’s No. 1 corn, hog, egg, and ethanol state.
U.S. net farm income could plummet by 19 percent, according to the Food and Agricultural Policy Research Institute. The National Cattlemen’s Beef Association said losses in the cattle industry would total $13.6 billion, with cow-calf ranchers hardest hit, with $3.7 billion in losses. Cow-calf operations — herds of cows that give birth to calves that are raised for slaughter — are the foundation of beef production. Hog farmers have appealed for $1 billion in USDA purchases of surplus pork; dairy farmers also say federal purchases are vital, including payments to farmers who agree to cut milk production by 10 percent.
“We want to have direct payments to farmers, but more importantly, we want to purchase as much of this milk and other protein products, hams and pork products, and move them to where they can be utilized by our food banks and possibly international humanitarian aid,” said Perdue on Fox Business.
Perdue’s outline of aid — cash payments to producers and purchases of excess commodities — is similar to the stopgap program created by the Trump administration to mitigate the impact of retaliatory tariffs on U.S. agriculture. The USDA has not announced how the coronavirus aid will be divided. Some $23 billion in trade war payments were sent to farmers and ranchers for 2018 and 2019 crops and livestock. A much smaller $2.6 billion was spent on purchases of specialty crops, nuts, meats, and dairy products.
The ratio of spending would be similar this time, Perdue told Nexstar, with $16 billion for farmers and $2 billion in purchases of food for donation. “We’re prepared to present to the president. We’d like to do that this week, today or tomorrow.” There will be “a two-prong attack,” he said, since an additional $14 billion will become available after June 30 to the USDA agency that bankrolls commodity and farm income support.
Some dairy farmers have been forced to dump milk because processing plants cannot handle the spring surge in production at the same time that restaurants and schools — key customers — are shut down. Livestock producers face similar disruptions. Usually, half of the food dollar is spent on food away from home, a category that includes restaurants and institutional meals. Now 90 cents of the food dollar is being spent at supermarkets. Food makers and distributors are scrambling to fix what Perdue called “a dislocation of demand.”
“It’s not only financially hurting, it’s also emotionally hurting,” he said, referring to milk dumping by dairy farmers.
USDA economists said the dramatic decline in dairy demand “has shocked milk processing channels. … The overwhelming imbalance between supply and demand has caused considerable handling problems.” Milk production is outrunning consumption by 10 percent, according to an industry estimate.
Pork processors are likely to slow production during April, May, and June, when the impacts of the pandemic are expected to be the most severe, said the USDA’s monthly Livestock, Dairy and Poultry Outlook. “Some postponed animal slaughter is likely to be rolled forward to succeeding quarters.” Still, pork production was forecast for 6.7 billion pounds during the spring, a 1 percent increase over production during the second quarter of 2019. Pork output in 2020 is forecast to be up 5 percent from last year.
The USDA also forecast increases in beef and poultry production this year, although the coronavirus pandemic should slow the rate of increase. Market prices for most agricultural commodities are down sharply due to the pandemic.