Washington Insider-- Wednesday

Push From Ag for Financial Support

Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.

CFAP Payments Clear $6.2 Billion

USDA has paid out $6.23 billion under the Coronavirus Food Assistance Program (CFAP) on 442,639 approved applications as of July 20. Livestock producers remain the largest recipients, with $3.15 billion in payments. That is broken down as $2.73 billion to cattle producers, $394.3 million to hog producers and $28.8 million to sheep producers.

Dairy producers have received $1.25 billion.

Non-specialty crop producers have received $1.64 billion, with $1.1 billion to corn producers, $314 million to soybean producers, $155 million to upland cotton growers, $19 million to HRS wheat producers, and $13.3 million to sorghum growers.

Payments totaling $186 million have gone out to specialty crop producers.

Growers in seven states have received $300 million or more, including Iowa at $652.1 million, Nebraska at $460.1 million, Minnesota at $399.7 million, Wisconsin at $374.1 million, and Texas at $331.7 million, California at $325.1 million, and South Dakota at $316.7 million.

Rural Electric Cooperatives Seeking Provision in COVID Aid Plan

Rural electric cooperatives want Congress to include a provision in the COVID-19 aid plan that would end a prepayment penalty on their Rural Utility Service loans.

National Rural Electric Cooperatives CEO Jim Matheson said in a call to reporters that members are urging Congress to include a bill that would allow co-ops that have borrowed money from the Treasury Department to get a reduced interest rate without paying a prepayment penalty.

Matheson said the Flexible Financing for Rural America Act has been introduced in the House by Reps. Tom O'Halleran, D-Ariz., and Vicky Hartzler, R-Mo., and in the Senate by Senate Agriculture Appropriations Subcommittee Chairman John Hoeven, R-N.D., and Sens. John Boozman, R-Ark., Tina Smith, D-Minn., and Kyrsten Sinema, D-Ariz.

Cooperatives have experienced a loss of income due to businesses closing or operating at a lower level during the pandemic and the lower interest rates would make it easier for them to continue to provide service and also rebuild infrastructure.


Washington Insider: Push From Ag for Financial Support

Roll Call is reporting this week that the National Pork Producers Council plans to campaign for a change in federal law that would authorize USDA to pay livestock and poultry farmers for healthy animals they euthanized because of the COVID-19 pandemic.

The trade association said Monday that it wants the provisions included in the Senate version of the next economic recovery bill with a goal of getting the language into a compromise version worked out between the Senate and the House by early August.

The council's request for aid is just one item on a wish list from agriculture for direct payments to farmers and ranchers to cover lost renewable fuel revenue as well as the “collapse in the demand for cotton, aid to meat processing plants to ensure production lines keep moving, and other items.”

Advocates for renewable fuels, pork and cotton relief put the COVID-19 damage at about $17.8 billion, a sum that includes at least some estimates of continuing cost in 2021, Roll Call said.

Farm and agriculture-related groups say the pandemic, coming after several years of flat or low prices and two years of retaliatory tariffs from trading partners, has left them battered.

Congress provided $9.5 billion in appropriated funds and $14 billion in borrowing authority for the Commodity Credit Corporation in March legislation. The USDA has set aside $16 billion for direct payments to farmers and ranchers and is spending $3 billion on a program for food distributors to buy meat, produce and dairy products.

The hog group said it backs legislation by Sen. James Inhofe, R-Okla., to give the department's Commodity Credit Corp. emergency authority to reimburse farmers whose cattle, hogs or poultry suddenly become surplus “due to significant supply chain interruption during an emergency period.”

That bill also would cover donations of meat to noncommercial interests, and ag processing plants could receive aid to ensure that meat and poultry lines keep moving during a national emergency. In addition, it would authorize $300 million for the Animal and Plant Health Inspection Service to address the COVID-19 issues.

The Renewable Fuels Association released a July report that the industry lost $3.4 billion in revenue from March through June because of COVID-19 economic disruptions that reduced driving and demand for transportation fuels. The association projected that losses could reach $7 billion in 2020 and $1.8 billion in 2021.

Ethanol's losses also reflect a blow to corn farmers who sell approximately 40% of U.S. crops for fuel production. The association study said the industry used 500 million fewer bushels of corn during the March through June period.

Cotton farmers, textile mills and the cotton merchandising sector also are looking for relief aid in the next economic recovery legislation, Roll Call said.

Sens. Thom Tillis, R-N.C., and Mark Warner, D-Va., wrote to Senate Majority Leader Mitch McConnell, R-Ky., and Minority Leader Charles Schumer, D-N.Y. Their request was joined by senators from cotton-growing states last week asking that the “cotton supply chain” receive financial help. Tillis and Warner said COVID-19 kept people at home and depressed demand for cotton up and down the supply line.

“Given the precipitous decline in retail demand, the loss of textile production and lower cotton prices that are expected to persist into 2021, the economic damage to the U.S. cotton industry is currently estimated to be at least $4.0 billion,” the letter said.

“We need help now to weather this unprecedented crisis,” National Pork Producers Council President Howard Roth said.

The Council earlier estimated that hog farmers euthanized an estimated 300,000 to 400,000 market-ready animals in the spring and another million young pigs may have been killed on farms because several slaughter plants closed temporarily as workers became ill with COVID-19 or tested positive for the virus.

The closures meant farmers were limited in their ability to market animals for slaughter. Steve Meyer, an economist with Kerns & Associates, who joined the council's officers and staff on a press call, said conditions have improved with the reopening of plants--but that the pace of processing remains slower because the facilities have spaced workers to meet social distancing requirements.

Meyer said about 2 million hogs are still waiting on farms to be moved to processing plants. Demand for pork is strong at the retail level, he said, and the food service market appears to be regaining ground as states reopened restaurants for sit-down service. However, Meyer said multistate surges in COVID-19 cases threaten to undo the progress.

So, we will see. Certainly, U.S. ag producers are widely believed to be on the front lines in the global trade fights – and they represent an important component of political support that may be increasingly up for grabs in the fall elections. However, the ag requests are large and face competition from many groups that also have important needs – as well as opposition from budget hawks. As a result, the ag requests likely will be quite controversial this year and certainly should be watched closely by producers as they are debated, Washington Insider believes.

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