During a recent town hall meeting, agriculture leaders discussed the $16 billion available to Pennsylvania farmers in direct relief payments through the Coronavirus Food Assistance Program.
Participants included Pennsylvania Secretary of Agriculture Russell Redding, U.S. Senator Bob Casey, U.S. Congressman Glenn Thompson and Farm Service Agency Administrator Richard Fordyce. Here are some of the questions and comments from that conversation.
Question, Sec. Redding: USDA is accepting data and comments from industries that are not currently eligible for direct payments. Pennsylvania has a very diverse agriculture industry and several important sectors such as poultry and egg producers, the green and horticulture industries, and aquaculture are not currently eligible for assistance. What type of data should these groups be submitting and how quickly does USDA expect to make decisions to add commodities based on this data? What do the other folks who are important to agriculture need to do to make the case to the USDA in terms of data?
Answer, Fordyce: We work closely with the economist at USDA as they pull together data—price data, sales data— a of those things we need to demonstrate a five percent loss in value. Certainly disruption in delivery chains and market disruptions. That is how we came up with the initial list, knowing full well there are other commodities affected, but didn't have the data.
We rolled this program out as quickly as possible. That work, we felt, could be done after we rolled the program out.
We've had a lot of conversations with different sectors around what kind of data are we looking at.
We're looking for sales numbers. We're looking at, 'what was the value of the commodity prior to the effects of COVID-19 and after?'
I think we are going to see some data come in from organizations that represent commodities and from producers individually. It's just (getting) more of that supporting documentation.
We can work with the chief economist office to try to come up with what the impact is and certainly include it.
We fully expect to include a number of other commodities in the CFAP program once this data starts to come in.
We are glad to work with folks individually or organizations, to talk through what might be needed
I don't have a timeline for when those decisions will be made. I would say they will be ongoing. We may announce some fairly quickly, then others a little bt later, as we analyze the data.
Question, Sen. Casey: Could you provide an overview of how USDA is conducting outreach to farmers who previously have not had any engagement with an FSA office and aren't in the system already? What steps is USDA taking to quickly sign-up farmers for while simultaneously protecting the health and safety of farmers and USDA employees?
Answer, Fordyce: Three weeks prior to the secretary's announcement, we started to work with our external affairs department and our outreach within the agency to start mapping out what that outreach would be.
I think we're hitting the mark on outreach and external affairs. We've had a number of stakeholders interactions. From an outreach perspective, that is more directed at the producer level.
If you think about the categories: non-specialty crop, livestock, dairy, and the specialty crop, it's probably the specialty crop category where we're going to see more customers that we have not had a chance to interact with in the past.
There was a recent webinar with thousands of folks logged in simply to learn more about how to find an FSA office, what kind of information will be needed to apply. That was very well received. We continue daily and hourly to continue that outreach.
We stood up a call center and asked FSA employees to volunteer in staffing the center. On the first day, it received over 1,600 calls.
They are answering questions, directing folks to the proper office ad advising them on information they are going to need. We feel conformable in our external affairs and outreach approach to CFAP.
Currently our offices are open virtually.
Question, event facilitator and PDA Policy Director Natalie Krak: Will the CFAP direct payments, as well as the forgiven loan part of the Paycheck Protection Program count as taxable income?
Answer, Fordyce: The Paycheck Protection Program is through the Small Business Administration. I don't know how they will view that.
The CFAP payments are direct payments and will not be treated any differently that other direct payments, for example, Dairy Margin Coverage.
We don't as an agency offer tax advice, but it would be viewed as income.
Question, Krak: If my farm received an Economic Injury and Disaster Loan or Paycheck Protection Program loan are we still eligible for a CFAP direct payment, provided we meet the other eligibility.
Answer, Fordyce: Yes, absolutely. Those programs are separate. There is no linkage between those programs and the CFAP program.
Question, Krak: If my farm has outstanding FSA payments due (on an existing FSA loan), are we eligible for a CFAP direct payment?
Answer, Fordyce: Yes. We have tried to relax timelines and deadlines on the farm loan side of the house. We've also implemented what we call a "disaster set-aside," which is usually used when borrowers are impacted during a natural disaster. You will still receive your CFAP eligible payment.
Question, Krak: If How does CFAP interact with crop insurance?
Answer, Fordyce: Off the cuff, I would say it doesn't interact with crop insurance. We are looking at these different categories and making payments based on the effects of the COVID-19 pandemic. There really shouldn't be any interaction with crop insurance. You do not need crop insurance to participate.
Question, Sec. Redding: Can you speak to the program and what the parameters of participation are? Are there other things the USDA is looking at to help dairy? What would you say to dairy producers about the dairy programs the USDA and Congress is looking at.
Answer, Fordyce: We understand the hardships dairy operations are going through right now. The dairy category in the CFAP program was something we started to talk about from the beginning.
This program is a little different than DMC. We are asking producers to self-certify their actual first quarter production.
The Dairy Margin Coverage program is historical production. This should be representative of what a dairy farm is actually producing. That's the first quarter. And then we are factoring that production to make a projection on the impact into the second quarter.
Whatever category they are in, it is self-certification by the producer. It is subject to spot check. I know dairy farms keep really good records. They know what their production is, so that shouldn't be much of a challenge if folks are randomly called for a spot check.
As far as things in the future for dairy, from a USDA perspective, I think the Dairy Margin Coverage program – Congressman Thompson and Senator Casey led the charge in improving the program in the Farm Bill to what we have now. It's a great risk management tool for farmers to take a look at. It is a good program and the improvements Congress made to that are pretty big and worth a look at for the next sign up.
Answer, Sen. Casey: There is no question that our dairy farmers need more help, not simply moving on to other topics now. There are some who want to move to other issues and don't want to pass any more legislation. I think that's a mistake. One area we could address in the next bill— there's no certainty that there will be a bill in the Senate, by the way— we need to make sure we press forward on a range of issues. Some of those supports should be provided to dairy farmers. In the next bill, should include additional assistance for dairy producers that reflect the unique needs of each industry and further strengthens our connection between our families and farmers in need or additional support during this time. We are going to continue to work, in the Senate Commmittee on Agriculture, on ideas for dairy farmers and their families.
Any ideas that folks have, please get them to us because this is an opportunity in the next couple of days and weeks where we may have a Senate bill. This is the time for us to get ideas on the table and begin to push forward on negotiations.
The House already passed a new bill. I think the likelihood of the passing in the Senate is very low, but I hope some of provisions that are directly relevant to dairy farmers in that bill could be subject to some consideration in the Senate Bill.
Answer, Rep. Thompson: When it comes to dairy, we were really starting to see the light of at the end of the tunnel. We were seeing prices creep up. It wasn't a leap, it was a creep, but it was going in the right direction.
We restored 1% milk fat flavot back in our schools, so we put back both taste and nutrition for our kids, which was a real positive step for our children and for dairy farm families.
One of the questions I get asked a lot with CFAP is on dumped milk. On that side, USDA has clarified that it is produced milk in the first quarter, so weather milk was dumped by the processor or the processor instructed the producer to dump on the farm during that first quarter, that dumped milk is part of that production and therefore will help in the calculation of the price.
Another question I get frequently from dairy farmers is, what about the end of the year, November, December. Because of market conditions, the bottler or processor required a decrease in production. Unfortunately, that was not a part of this calculation because the decrease happened at the end of the year and milk was not produced.
In addition to a better appreciation for where our food comes from, I'm seeing a serious appreciation for whole milk and I think that speaks volumes and that is really positive for the future bounce bank we will get to the dairy industry— we will see the kind of momentum that we saw before.
I think over have the milk was consumed at restaurants before this. I think people were pushed away from restaurant tables and went back to the family kitchen table. anecdotally I can tell you, whole milk flies off the shelves. The red caps are really popular. Hopefully that means that our kids who were cheated out of whole milk in school over the last 10 years have gotten maybe their first introduction to it.
We will have additional legislation. I am hoping it focuses on economic recovery for agricultural. It's really been economic aide at this point. I'm hoping we can transition to economic recovery where we are focused on resiliency.
The next sign up for the Dairy Margin Coverage is in July. For those farmers who had the foresight to do that, I think it is going to pay significant dividends in addition to the CFAP. I think there are some projections that it will continue to trigger perhaps through the end of the year, as restaurants are slow to reopen and schools and universities get back into place.
The DMC is completely different from what we passed in the 2014 Farm Bill. It is I think, affordable, and it pays.
I'm still pushing the legislation, whole milk for healthy kids. I think most schools in Pennsylvania, I'm hoping, will be open in September. I think we are moving in that way. These kids deserve to have the best milk experience, or at least that as a option. That would be a good part of any economic recovery package.
China, Canada , Mexico- our trading partners, have negotiated some pretty tough trade agreements that have been good for America and good for American agriculture and we need to hold those trade partners accountable to make the purchases that they committed to as a part of those trade negotiations.
Question, Krak: The only CFAP loss category that could apply to apples is the price decline – our crop would not have spoiled as it is placed in cold storage and would not be left unharvested as there are no apples on the tree during the covered period – yet price is the only category that we did not qualify for.
Pennsylvania growers and growers in other parts of the country have experienced price declines and we should be given the opportunity to prove it and apply for those funds. The industry started from an already low price; down by nearly 150% over last year.
At a certain point it costs more money to pack the apples than they're selling for, and that's why I am hearing growers in some parts of the country talking about dumping apples on the ground to rot in order to make room for the new crop harvest in August.
It appears that USDA shifted its price reporting data in February and for the first time in the history of the monthly NASS reports they surveyed growers on the FOB price instead of the farmgate. FOB is the price after all the inputs at the packing house including washing, sorting, packing, and storage. It is substantially higher than the farmgate value. They put those Feb FOB prices in the same chart as the January farmgate without any footnote or adjustment, the average price nearly doubled from Jan to Feb. This is clearly not an apples to apples comparison and could be the reason apples were deemed ineligible.
Answer, Fordyce: We would encourage apple growers to contact us. That is an interesting component. Didn't know that. I know through the NOFA data process, we can walk with them through some of the data that we would need for consideration. We certainly would entertain the idea and would be very anxious to talk with them.
(There was a meeting with USDA and apple growers earlier in the week over the same concerns. Apple growers should submit their data while the USDA continues conversation on this issue.)
The USDA is accepting CFAP applications until August 28. Learn more about the program at https://www.farmers.gov/cfap.
The Pennsylvania Department of Agriculture is actively working with USDA FSA to answer additional questions from the Facebook Town Hall, and will provide answers upon availability.