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Commentary: Analysis shows flow of agricultural aid payments

Issue Date: July 8, 2020
By John Newton
John Newton
An analyst says federal pandemic aid to specialty crops should increase, noting that farm groups have asked the USDA to allocate more resources for specialty crops.
Photo/Richard Green

The Coronavirus Aid, Relief, and Economic Security Act provided $9.5 billion in funding to the office of the U.S. Department of Agriculture secretary to craft a financial support package for producers impacted by COVID-19-driven supply, demand and revenue disruptions. The agricultural aid represented approximately 0.48% of a package totaling nearly $2 trillion.

Combining existing Commodity Credit Corporation funding of $6.5 billion with the $9.5 billion appropriated, the secretary created a $16 billion Coronavirus Food Assistance Program to provide direct payments to farmers and ranchers to partially offset COVID-19-related losses.

USDA data reveals that as of the end of June nearly one-third, or $4.85 billion, of the $16 billion in CFAP assistance had been paid to livestock, dairy, crop and specialty crop producers.

Of the CFAP payments made to agricultural producers through June, a majority of the assistance went to producers in the Midwest. Iowa led the nation with more than $500 million in CFAP support. Ten states had received $2.9 billion, or nearly 60% of total CFAP payments. Payments to California farmers and ranchers totaled $232.3 million.

Through the first four weeks of CFAP payments, livestock producers had received $2.4 billion, or more than 50% of total payments. Payments to livestock producers were the highest in the Midwest and across portions of the Southwest, where cattle feeding and hog operations are concentrated. Iowa led the nation in livestock payments at $251 million. In California, payments to livestock producers totaled $44.5 million.

Though the total CFAP payments are concentrated in the Midwest and Southwest, the average CFAP payment per application was highest in Western states, at $22,000 per application in Nevada followed by $21,000 per application in California. The average payment across the U.S. was $10,206.

Non-specialty crop producers had received $1.3 billion, or 26%, of the CFAP payments made through June. Payments to non-specialty crop producers, that is, corn, soybeans, cotton and wheat, were highest in the Midwest, with Iowa leading the nation at $231 million. Payments to non-specialty crop farmers in California totaled $3.3 million.

Although total CFAP crop payments were highest in the Midwest, the average payment per application was highest in several Southeastern states and Arizona. Mississippi had an average CFAP payment of $22,000 per application, followed by Arizona at $16,000. The average payment across the U.S. was $7,189 per application. Payments to non-specialty crop farmers in California averaged $7,000.

The CFAP payment report revealed that dairy producers received slightly more than $1 billion, or 22% of total direct payments. Payments to dairy producers align with the traditional milksheds, with Wisconsin the highest at $224 million, followed by California at $141 million.

Compared to livestock, non-specialty crop and specialty crop producers, the average CFAP payment of $59,250 per dairy producer application was significantly higher. CFAP payments per application for dairy producers were highest in Western states, where dairy operations tend to be the largest. New Mexico had an average CFAP payment of $250,000, followed by Nevada at $202,000 and Arizona at $202,000. In California, the average payment to dairy producers was $185,000.

At $113 million, CFAP payments made to specialty crop producers were significantly behind payments made to livestock and non-specialty crop producers. Given that the USDA CFAP cost-benefit analysis projected total specialty crop payments at $2.4 billion, payments are likely to accelerate in the coming weeks.

Another contributing factor is the exemption of many specialty crops from consideration under Category 1, which requires a 5% or more price decline. Comments on the Notice of Funding Availability, which USDA is reviewing now, could spur the department to allocate additional CFAP resources for specialty crops.

Payments to producers of specialty crops—fruits and vegetables—were the highest in California and Florida, followed by several Southwestern states. Total payments were highest in California, at $44 million, followed by Florida at $30 million.

Though total CFAP payments for specialty crops were highest in California and Florida, the average payment per application was highest in Arizona, at $170,000 per application. The average payment across the U.S. for specialty crops was $36,140. In California, specialty crop farmers received an average payment of $31,000.

Farmers and ranchers have until Aug. 28 to complete their CFAP applications. Through June, the distribution of payments followed closely the concentration of livestock, crop, dairy and specialty crop production. As expected, farm-level payments were the highest in areas with producers with larger production volumes.

The distribution of payments, total payments and payments per application will change in the coming months, as USDA receives and processes more CFAP applications. Future articles on the American Farm Bureau Market Intel blog will update this analysis each month until the CFAP application and payment process concludes.

(John Newton is chief economist for the American Farm Bureau Federation.)

Permission for use is granted, however, credit must be made to the California Farm Bureau Federation when reprinting this item.

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