News images of farmers dumping milk, depopulating animals, or plowing under vegetables, and of people lined up at food banks form indelible reminders of how deeply the novel coronavirus has affected producers and consumers in the United States.
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Explore This IssueJune/July 2020
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U.S. Secretary of Agriculture Sonny Perdue is trying to bridge that disconnect. On May 4, 2020, USDA released details of purchasing $470 million in surplus food during the fiscal quarter that ends on June 30 and distribute it to communities nationwide.
The purchases are part of the $4.89 billion in American-grown and produced agricultural products USDA will buy and distribute for the remainder of this fiscal year.
Included in that purchase is a $3 billion USDA pledge announced April 17 to buy farm products as part of the $19 billion Coronavirus Food Assistance Program (CFAP). USDA’s Agricultural Marketing Service (AMS) will procure $100 million per month each of fresh fruits and vegetables, dairy products, and meat products to provide a pre-approved box to food banks and other nonprofits through the Farmers to Families Food Box Program.
The remainder of CFAP consists of $16 billion in direct support to farmers and ranchers based on actual losses where prices and market supply chains have been affected. The money is aimed at assisting them with losses in demand and the short-term oversupply for the 2020 marketing year caused by COVID-19.
USDA says the program came about because the U.S. food industry has high inventories related to lesser demand from closed food service establishments, restaurants, and schools. In addition, prices producers typically receive have declined. At the same time, food banks, food pantries, and other organizations across the country are seeing unprecedented high demand.
“America’s farmers and ranchers have experienced a dislocated supply chain caused by the coronavirus,” Perdue says. “USDA is in the unique position to purchase these foods and deliver them to the hungry Americans who need it most.”
AMS will spend the new tranche of $470 million on a wide variety of fruits, vegetables, meat, dairy, and seafood products under Section 32 of the Agricultural Adjustment Act of 1935. The highest purchase amount, $120 million, will go to dairy products, followed by $50 million each to the potato and turkey industries. The foods will go to USDA’s nutrition assistance programs, including to food banks that serve as the nation’s food safety net.
While we have seen great disruptions in the supply chain in the past influenced by environmental issues, geopolitical factors, or safety concerns, we have never seen a situation where every point of the supply chain across the entire world has been impacted at once.—Cathy Burns, CEO, Produce Marketing Association
The purchases from the agriculture sector are being determined by industry requests, market analysis, and food bank needs. AMS will begin issuing solicitations in June and intends to start deliveries in July. More information is on the “Selling Food to USDA” page on the AMS website. Solicitations will be posted to the AMS Open Purchases Request website once it is available. USDA says it also will consider industry requests for future purchases using Section 32 funds.
Good Start, More Needed
These USDA programs are helpful to food service providers, but more is needed in almost every sector to ensure that the food industry as a whole will emerge from the COVID pandemic able to continue doing business.
Chicken. The purchase program certainly benefits chicken producers, rural America, and U.S. agriculture, says Tom Super, senior vice president of communications at the National Chicken Council in Washington, D.C. (USDA will buy up to $30 million in chicken products in this round of purchases.)
“But the real winners are financially-stressed families, food banks, disaster-relief operations, schools, and Americans needing food assistance, where these products are being distributed,” Super says. “The program also helps improve continuity in the supply chain by diverting some chicken products once destined for food service into other much-needed channels.”
Super says more federal help is needed, because chicken farmers were left out of the most recent federal COVID-19 assistance package. “Because of this, the National Chicken Council has been and will continue to advocate for federal funds in any next aid package for farmers who have experienced fewer flocks, reduced placements, or increased downtime due to COVID-19,” he says.
Potatoes. The National Potato Council in Washington, D.C., welcomed the $50 million in purchases for its industry, but also says more is needed. “Due to mandated shutdowns, the U.S. potato industry has been reeling from an oversupply of processing potatoes left over from the 2019 harvest,” says Kam Quarles, the organization’s CEO. “While we welcome the $50 million potato purchase, we see it as a partial down payment on the industry’s overall relief needs. More investments are needed to keep struggling family farms operational.”
Quarles says that with 60 percent of all potatoes grown in the United States destined for food service customers, the nationwide closure of restaurants, bars, schools, and entertainment venues dried up the potato supply chain. “We’ve calculated that the industry needs an additional $300 million in USDA potato purchases to help reduce the backlog and stabilize market prices, and we are working with Congress to see that this funding is included in the next economic relief bill,” he says.
Without USDA intervening on a more significant scale, Quarles says the industry will be faced with a 1.5 billion-pound oversupply of potatoes from the 2019 harvest, which would fill the U.S. Capitol 14 times over.
Pork. Rachel Gantz, communications director at the National Pork Producers Council in Washington, D.C., says one-quarter of pork produced in the United States goes into the retail sector, where COVID-19-related closures at restaurants, schools, and food banks resulted in a backup in the pork supply chain. (USDA will buy $30 million of pork from producers this round, and pork producers will receive $1.6 million in direct payments from the CFAP.)
But Gantz says the relief falls short of what’s needed to sustain thousands of affected producers. “Our hog farmers are facing a significant financial and emotional crisis and are set to lose more than $5 billion collectively as the value of hogs has plummeted,” she says. “They also face significant costs associated with depopulation and disposal.”
The council is urging the U.S. Senate to adopt companion legislation that includes the livestock agriculture measures included in the Health and Economic Recovery Omnibus Emergency Solutions Act, also known as the HEROES Act. It passed in the U.S. House of Representatives on May 15, and the senate is slated to begin work on it in the coming weeks. The measures in the act include compensation for euthanized livestock that can’t be processed due to COVID-related packing plant capacity reductions, expanded direct payments, increased funding for animal health surveillance and laboratories tapped to perform COVID-19 testing during the human health emergency, and mental health assistance for farmers who face an unimaginable animal welfare crisis.
Unlike the USDA program, the HEROES Act does not mandate payment restrictions, ensuring that relief is extended to farmers who are most heavily invested in pork production, she says. “Pork producers are facing a significant financial crisis as a result of COVID-related plant shutdowns and slowdowns. Without prompt government assistance, many generational family farms will go bankrupt,” she says, adding that hog farming generates more than 500,000 jobs and $23 billion in personal income.
Dairy. The dairy industry, which will see $120 million in purchases from USDA under the most recent plan, faces similar challenges. In a recent statement, the National Milk Producers Federation (NMPF) in Arlington, Va., thanked the House for supporting critical measures for dairy farmers and their industry partners in the HEROES Act.
Dairy farmers have suffered significant losses because the collapse of food service markets has diminished demand. Losses have been high because of milk’s perishability, NMPF president and CEO Jim Mulhern said when the act was passed by the House. “The dairy industry continues to grapple with difficulty and uncertainty on a scale we have not seen in our lifetimes,” Mulhern said.
And while he also appreciated USDA’s direct assistance plan to farmers, he said current aid levels are not sufficient for milk producers and other agricultural sectors facing massive losses. “All that USDA can do to buy and quickly distribute dairy products to those in need will immediately help lift depressed markets,” he said, adding that USDA projects $8.2 billion in losses for dairy producers, placing them among the hardest-hit U.S. agricultural commodities.
Alan Bjerga, senior vice president of communications for NMPF, agrees that USDA purchases have been crucial to restoring some of the lost food service supply chain. But while supply chains are adjusting and the country is reopening, which has somewhat restored the markets and curtailed milk dumping, more help is needed.
“Even the aid already allocated, while welcome and robust, doesn’t make dairy whole,” he says. “It will, however, help some producers make it through the crisis who may not have made it through otherwise.”
USDA’s financial programs are ongoing throughout the end of its fiscal year in September, and Congress and the administration continue to consider additions to federal assistance to food producers.
But Cathy Burns, CEO of the Produce Marketing Association in Newark, Del., says food insecurity didn’t begin with the COVID-19 pandemic, and it won’t end with it. “The pandemic has amplified these challenges, and the USDA program is one effort to address the immediate need,” she says.
Burns says the word “unprecedented” has been used a lot over the past few months, and it really is the best way to describe the impact on the produce industry and many others. “While we have seen great disruptions in the supply chain in the past influenced by environmental issues, geopolitical factors, or safety concerns, we have never seen a situation where every point of the supply chain across the entire world has been impacted at once,” she says.
She says the aid packages are aimed at helping farmers continue to grow fresh fruits, vegetables, and flowers, but they also help farmers get products to consumers who need them.
The cost of COVID-19 has been enormous: Burns cited projections that net farm income will be down more than $20 billion in 2020, with different commodities feeling different levels of impact. The agriculture economy was originally expected to grow 2.8 percent this year, she says, but now is expected to drop 2.2 percent compared with 2019.
“When it comes to fresh produce, products that have higher utilization in food service, like lemons, are likely to suffer greater losses than avocados or bananas,” Burns says. “I believe we’ll be calculating food waste and the impact to the industry for some time to come.”
Valigra is a freelance writer based in Maine. Reach her at firstname.lastname@example.org.
How USDA Will Spend $470 Million
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