Washington Insider-- Monday

Joblessness and COVID

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

FSA Sending Out Annual CRP Payments Totaling $1.68 Billion

Contract holders are receiving $1.68 billion in rental payments under the Conservation Reserve Program (CRP) for the 21.9 million acres enrolled in the program.

USDA said the enrollment total at the end of September was 21.9 million acres, with contracts on 5.35 million acres expiring as of September 30. With contracts on 3.4 million acres set to start October 1, that would put CRP enrollments at around 19.95 million acres.

There were also another 425,777 acres that were enrolled under continuous signup 53 that ended August 21. USDA data indicates that most of those contracts have a start date in Fiscal Year (FY) 2021 as the latest update indicated that just over 30,000 acres had a contract start in FY 2020.

That would put total CRP acres as FY 2021 starts at around 20.35 million acres.

Under the 2018 Farm Bill, the cap on CRP acres rose to 25 million for 2021, up from 24.5 million in 2020. Contracts on another 3 million acres are scheduled to expire as of September 30, 2021 with another 4 million acres to expire as of September 30, 2022.

This would suggest another general CRP signup could be in the offing for FY 2021.

USDA to Soon Start Compliance Reviews On CFAP 1

The Farm Service Agency (FSA) will soon start compliance reviews on applications submitted by producers for the Coronavirus Food Assistance Program 1 (CFAP 1).

The agency said in a notice to state and county offices that it will be working with the National Ag Statistics Service (NASS) to “randomly identify a statistically sound number of CFAP applications for review.”

The agency also said it was “aware” that some state and county offices have “questioned the validity of applicant certifications” on some CFAP 1 enrollment forms (Form AD-3114).

The agency said state and counties would be able to add any applications to the list of those selected by the national office that they believe should be reviewed for compliance. States and counties have until October 23 to submit applications for the spot checks beyond those randomly selected at the national level for spot checks.

FSA also conducted spot checks on the Market Facilitation Program (MFP), basing those reviews on specified percentages of MFP applications where payments were $100,000 or more and for those paid less than $100,000.


Washington Insider: Joblessness and COVID

The American economy is showing fresh signs of deceleration, the New York Times said this week. It is being hammered by layoffs, a surge in coronavirus cases and the lack of fresh aid from Washington.

The article cited the Labor Department's Thursday report that 886,000 people filed new claims for unemployment benefits last week, an increase of nearly 77,000 from the previous week. Adjusted for seasonal variations, the total was 898,000.

The rise follows the announcement of layoffs by major companies, including Disney and United Airlines, in recent weeks and a continuing impasse between Republicans and Democrats over another round of aid for the economy. A recent jump in coronavirus infections, principally in the Midwest and Western states, only added to the grim outlook.

“It's discouraging,” Ian Shepherdson, chief economist at Pantheon Macroeconomics said. “The labor market appears to be stalled, which underscores the need for new stimulus as quickly as possible.”

The economy had rebounded strongly in late spring and early summer as lockdowns eased in many parts of the country and employers brought back workers from furloughs. But those recalls have slowed, even as federal stimulus efforts have waned.

In past recessions, 800,000 new claims for state unemployment insurance in a week would have been considered extraordinary. But over the last 30 weeks, that figure has become a floor, not a ceiling. The latest numbers “point to a lot of churn in the labor market, and it appears the rate of firings has picked up,” said Michael Gapen, chief U.S. economist at Barclays.

More layoffs are expected as sectors like leisure and hospitality are increasingly affected. In some states, restaurants have been able to salvage some business by serving diners outside but that option likely will disappear in many areas as winter approaches.

“The course of the virus determines the course of the economy,” said Diane Swonk, chief economist at the accounting firm Grant Thornton. “You can't fully reopen with the contagion so high” and as federal aid is waning.

A federal program set to expire at the end of the year, Pandemic Emergency Unemployment Compensation, is seeing a surge in new applications. It provides 13 weeks of extended benefits after the end of regular state payments, which typically last 26 weeks.

In the week that ended Sept. 26, the most recent period with available data, nearly 2.8 million people were getting the extended benefits, a jump from fewer than two million the previous week, the Times said. That increase was roughly equal to the decline in the number collecting state benefits.

But managing and overseeing those benefits, which are administered by the states, isn't so easy, experts say. “The transition from regular state benefits to P.E.U.C. is not going smoothly,” said Heidi Shierholz, senior economist and director of policy at the Economic Policy Institute, a left-leaning research group.

The Times examined in greater detail the cases of several workers and their responses to the economic pressures they face in struggling industrial sectors — and especially the tactics some workers who are caught between an unforgiving job market and uncertain prospects for help from the government have been able to use.

However, in some places, recipients of state unemployment benefits haven't been notified of their eligibility for the federal extension and aging computer systems have slowed the processing of applications. Thus, for workers facing the end of regular benefits, the extended payment programs have proven to be a lifeline which now appears increasingly threatened.

The Times article — along with many others — looked toward the end of the federal supports with growing concern. If it is not extended by Congress, “we're going to see a disaster,” Shierholz said. “There will be a huge drop in living standards and an increase in poverty as well as downward pressure on economic growth.”

So, we will see. Almost every economic analysis in recent months has observed that central aspects of the economic outlook depend crucially on the degree to which the coronavirus is controlled — even as the outbreak is increasingly virulent in a growing number of states. The result is increasing concern as anti-virus efforts are increasingly facing political confrontations and election fights intensify — trends producers should watch closely as the season progresses, Washington Insider believes.

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