GFB News Magazine

Washington steps up to help farmers weather COVID-19 pandemic

Posted on May 31, 2020 8:00 PM

By Jeffrey Harvey

Optimism on the farm is low and stress is high. There’s no doubt farming requires a tremendous amount of optimism, faith and determination to pick up the pieces and try again. 

As Georgia Farm Bureau President Gerald Long often reminds staff, “With every challenge, there is an opportunity.” 

As difficult as it may seem, this pandemic is no exception. With the help of our elected officials and consumers, who buy our products, farmers will weather this storm. 

Agriculture is blessed to have strong supporters in Atlanta and Washington representing us. Farmers prefer good weather and fair prices, but in their absence, assistance is sometimes needed – especially in situations like this. 

Bipartisan efforts in Washington will soften the blow COVID-19 has dealt farmers and the entire American economy. Below is a summary of programs Congress and President Trump implemented.

CARES Act 

Congress passed the Phase 3 Coronavirus Aid, Relief & Economic Security (CARES) stimulus bill March 27. The $2.2 trillion emergency relief package expanded unemployment benefits, provided tax rebates and numerous tax-relief provisions to help individuals, families and businesses. The CARES Act also established and funded several important programs for farmers.

Paycheck Protection Program (PPP)

PPP is a newly established guaranteed loan program for small businesses with the goal of keeping their employees on the payroll. After much discussion with the Small Business Administration (SBA), farmers were deemed eligible to participate in the program. Other eligible businesses include nonprofits, veterans’ organizations, Tribal business concerns, sole proprietorships, self-employed individuals and independent contractors with 500 or less employees. 

PPP loans are capped at $10 million but can include up to eight weeks of the business’ average monthly payroll costs from the last year, plus an additional 25 percent for non-payroll costs.

The loan will be forgiven if:

• All employees are kept or quickly rehired & compensation levels are maintained for eight weeks.

• The funds are used for payroll and benefits, mortgage interest, rent or utilities.

Borrowers will owe money if:

• The loan amount is used for anything other than payroll costs, mortgage interest, rent & utilities payments over the 8 weeks after getting the loan.

• Not more than 25% of the forgiven loan amount may be for non-payroll costs.

• You will also owe money if you do not maintain your staff & payroll.

By April 15, the initial $349 billion in PPP funding was depleted. According to the SBA, of the 1,661,367 loans lenders approved from April 3 to April 15, 46,334 loans totaling $4.3 billion were approved for agriculture, forestry and fishing/hunting small businesses, accounting for 1.28% of total PPP loans.

Economic Injury Disaster Loans (EIDL) 

The EIDL program provides small businesses with working capital loans of up to $2 million to help overcome the temporary loss of revenue they are experiencing.  Under the CARES Act, business owners in all states, Washington, D.C., and U.S. territories are eligible to apply for an EIDL advance of up to $10,000. The loan advance will provide economic relief to businesses currently experiencing a temporary loss of revenue. Funds will be made available within three days of a successful application. This loan will not have to be repaid.

Phase 3.5

On April 23, Congress passed a supplemental funding bill referred to as Phase 3.5 that provided emergency funding of $484 billion. The bill provides an additional $310 billion in PPP funding of which $60 billion was allocated for small lenders and community-based financial institutions serving small businesses.

Farmers may apply for the PPP through any existing SBA 7(a) lenders or through any participating federally insured depository institution, federally insured credit union or Farm Credit System institution.

An additional $50 billion is provided for SBA’s Economic Injury Disaster Loan (EIDL) program and $10 billion for SBA’s Emergency Economic Injury Grant program.

This bill clarified that agricultural operations are eligible for both EIDL loans and the economic injury grants.

$600 million in funding was also earmarked for Community Health Centers and $225 million for rural health clinics.

Coronavirus Food Assistance Program (CFAP)

On April 17, the USDA announced plans to distribute CARES Act funds to farmers through direct payments and purchases of ag commodities.

Direct Payments

A total of $16 billion in direct payments has been allocated for producers of commodities

for which COVID-19 impacted prices by disrupting market supply chains, causing lost demand or short-term oversupply. 

Payments to producers will be based on actual losses. Allocations to each commodity are as follows:

• $9.6 billion for the livestock industry: $5.1 billion for cattle, $2.9 billion for dairy, $1.6 billion for hogs

• $3.9 billion for row crop producers                                                                        

• $2.1 billion for specialty crop producers

• $500 million for other crops                                                                       

Producers will receive a single payment determined using two calculations:

• 5% price losses that occurred January - April 15, 2020. Producers will be compensated for 85% of price loss during this period.

• Second part of the payment will be expected losses from April 15 through the next two quarters, covering 30% of expected losses.

The payment limit is $250,000 per person or entity for all commodities combined. Applicants that are corporations, limited liability companies or limited partnerships may qualify for additional payment limits where members actively provide personal labor or management. Producers must certify they meet the Adjusted Gross Income limitation of $900,000 unless at least 75% or more of their income comes from farming, ranching or forestry.

Sign-up for CFAP  payments began May 26 and ends Aug. 28. USDA expects to begin sending payments in June. Visit www.gfb.ag/CFAP to learn more details.                             

USDA Purchase & Distribution

The USDA will purchase $3 billion in fresh produce, dairy, and meat to assist farmers significantly impacted by the closure of restaurants, hotels and other food service entities. USDA will begin with the procurement of an estimated $100 million per month in fresh fruits/vegetables, $100 million per month in a variety of dairy products, and $100 million per month in meat products.

The distributors and wholesalers will then provide a pre-approved box of fresh produce, dairy and meat products to food banks, community and faith-based organizations, and other non-profits.

Jeffrey Harvey is the Georgia Farm Bureau Public Policy Department director. He may be reached at 478-474-8411 or jaharvey@gfb.org.