Agriculture Secretary Sonny Perdue has recently announced the USD19bn Coronavirul Food Assistance Program, of which USD2.7bn are targeted at the fruit and vegetable industries.

Of this amount, USD2.1bn will be direct payments and USD600m will be for produce purchases over the next six months. Industry leaders, who had estimated industry losses at more than USD5bn and deepening on March 23, said the aid was appreciated but not enough.

“From the moment that the foodservice channel was shut down, we’ve worked hard with our members and allied produce associations across the country to formulate a plan for the government to help those who have been hit the hardest,” Tom Stenzel, president and CEO of the United Fresh Produce Association, said in a news release.

“Working together with the co-chairs of the Specialty Crop Farm Bill Alliance – Florida Fruit and Vegetable Association, National Potato Council, and Western Growers – we have collectively developed specific proposals supported by the broad fruit and vegetable industry to outline our needs to USDA and the Administration.”

Details of the fruit and vegetable package, according to industry groups, are:

• USD2.1bn in payments to growers and grower-shippers of fresh produce for demonstrated losses caused by the COVID-19 pandemic, with a commitment to relieve the debts of PACA-licensed buyers for losses covered by government payments; and
• USD100m/month for the next six months in a new “Buy Fresh” program, funded through the Families First Coronavirus Response Act, in which the federal government will purchase fresh produce and pay for its delivery to food banks, curb-side school pick-up sites, and other non-profit institutions.

“Our coalition has begun to work immediately with USDA and our allied partners to ensure that these programs address the most urgent needs for the industry,” said Stenzel. “Also, we’ll continue our push with Congress to allocate the resources needed to support our industry.”

Industry leaders warned that the losses from the COVID-19 pandemic are massive and 60% of the annual U.S. potato sales of USD4bn involve foodservice, Kam Quarles, CEO of the National Potato Council, said in a statement.

“Potato growers appreciate Secretary Perdue’s rapid action intended to stabilize family farms whose survival is threatened due to the mandated foodservice shutdown. Today’s announcement is a down payment on those efforts that will require additional resources and flexibility to deliver the necessary relief for our great potato industry,” Quarles said.

Dave Puglia, CEO of Western Growers, said in the release that the relief package provides a “very limited and conditioned first injection” of USD2.7bn in financial assistance. “Clearly, far more will be needed with more reasonable limits.” Stenzel said the industry will lobby for more assistance: “We appreciate the steps taken today, but also must reinforce to Congress that the funds available to agriculture are simply inadequate to keep our industry strong into the future. The programs announced today will limit our ability to reach those who were most impacted by the tragic events around the COVID-19 pandemic,” Stenzel said in the release.

Using funding from the Coronavirus Aid, Relief, and Economic Security Act (CARES), the Families First Coronavirus Response Act (FFCRA), and other USDA existing authorities, the release said the program has two major elements:

1.  Direct Support to Farmers and Ranchers: The program will provide USD16bn in direct support based on actual losses for agricultural producers “where prices and market supply chains have been impacted.” According to the release, the program will assist producers with additional adjustment and marketing costs resulting from lost demand and short-term oversupply for the 2020 marketing year, caused by COVID-19.

While the USDA did not release how the direct payments would be allocated, Sen. John Hoeven, R-N.D., said in a news release that the USDA would provide USD16bn in direct payments to farmers and ranchers and that producers would receive a single payment, determined using two calculations:

• Price losses that occurred January 1-April 15, 2020. Producers will be compensated for 85% of price loss during that period;
• The second part of the payment will be expected losses from April 15 through the next two quarters, and will cover 30% of expected losses;
• The payment limit is USD125,000 per commodity with an overall limit of USD250,000 per individual or entity. Qualified commodities must have experienced a 5% price decrease between January and April;
• USDA is expediting the rulemaking process for the direct payment program and expects to begin sign-up for the new program in early May, so that payments go out to producers by the end of May or early June.

2. USDA Purchase and Distribution: USDA will partner with regional and local distributors, whose workforce has been significantly impacted by the closure of many restaurants, hotels, and other foodservice entities, to purchase USD3bn in fresh produce, dairy, and meat. The USDA will begin with the procurement of an estimated USD100m per month in fresh fruits and vegetables, including potatoes.

“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 serving Americans in need,” the release said.

Beyond the targeted programs, the release said USDA would utilize other available funding sources to purchase and distribute food to those in need. That funding includes:

• USDA has up to an additional USD873.3m available in Section 32 funding to purchase a variety of agricultural products for distribution to food banks.

The FFCRA and CARES Act provided at least USD850m for food bank administrative costs and USDA food purchases, of which a minimum of USD600m will be designated for food purchases.