Will the Democrats’ HEROES stimulus bill rescue farmers?

As farmers and communities across the country continue to struggle to adapt to the new normal that is life amidst a global pandemic, Congress set the stage this week for the fourth round of federal aid to combat this crisis. And while previous aid packages have addressed some of the most urgent relief, our nation’s farming and rural communities have yet to receive much targeted assistance.

For example, we are still awaiting details on how the U.S. Department of Agriculture (USDA) plans to disburse nearly $16.5 billion to help compensate farmers for their losses resulting from the pandemic. And while some farmers have been able to secure help through some of the new SBA loan programs authorized by Congress, most farmers have been forced to drastically shift their operations as markets literally evaporated overnight with little support from the federal government.

Earlier last week, the House of Representatives unveiled yet another COVID relief package. The Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act largely builds from previous relief bills. The scope and scale of the bill, more than 1,800 pages and coming with a $3 trillion price tag, is daunting and reviews have been mixed with groups across the food and agriculture spectrum. Some of the bill’s bright spots include big boosts to nutrition benefits; increased support for PPE and worker protections (including farmworkers); increased funding for local food, beginning farmers and specialty crop growers; and improvements to SBA loan programs. The bill also includes an additional $16.5 billion in direct relief for farmers – including organic farmers and others who may be squeezed out of USDA’s new Coronavirus Food Assistance Program (CFAP).

And while these wins are important, the bill is far from perfect. Most disappointingly, the bill includes no solutions to address mounting farm debt and producers’ need for emergency capital to keep their farms afloat. The bill also omits specific targeting for local food and underserved producers in nutrition and direct payment programs – setting up much of the same fight these farmers have had for years trying to make programs that weren’t designed for them actually work for their operations.

In this post, we break down the House bill across key sustainable ag priority areas:

• Local food and nutrition
• Livestock and supply chains
• Essential worker premium pay
• Other provisions

Local food and nutrition

With the official unemployment rate approaching 15 percent, the number of food insecure individuals and families is growing, evidenced by long lines at food banks and emergency feeding sites across the country. Providing nutrition assistance to struggling individuals and families is one of the strongest elements of the HEROES Act, but as with previous relief bills, it fails to provide adequate direct payments for small and mid-sized farms, including those that supply local food systems.

However, the HEROES Act does contain some support for programs that serve farmers that sell locally including an increase of $50 million for the Local Agriculture Market Program (LAMP). This funding will help farmers, farmers market operators, and food systems organizations to develop new, alternative marketing projects to respond to the COVID-19 pandemic. The Act also includes a waiver of the matching funds requirements that are required to participate in LAMP. Unfortunately, this waiver only applies to emergency COVID response grants and not to current, pending or future Farmers Market and Local Promotion Program grants, Value Added Producer Grants (VAPG) or Regional Food Systems Partnership Program grants.

The Act also does not expand the eligible uses of the VAPG program beyond the current “emerging market” or “market expansion projects.” This limits the utility of VAPG which could have been enhanced to include “market rebuilding” projects, a flexibility that NSAC and our partners believe would provide farmers another valuable tool to respond to disrupted markets. Current VAPG grantees, and those that applied this Spring, continue to wait and wonder if they will be able to move forward with projects to expand or create new markets while they struggle to maintain and rebuild what they already have.

The Act also contains some assistance for specialty crop growers in the form of $100 million for specialty crop block grants “to assist State efforts to support the specialty crop sector for impacts related to the COVID–19 public health emergency.” NSAC is hopeful that states will choose to use these new resources to provide targeted support for producers selling into direct and local markets that are less likely to receive payments from USDA than larger, conventional retail oriented operations.

The Act also includes $25 million to be provided to states to help cover costs of harvesting, processing, packaging, and transportation of commodities that would have gone to commercial food service (for which there is now decreased demand) as they are shifted to emergency feeding organizations. However, that provision is lacking in several critical elements including language to target or prioritize resources to small farmers and those selling into local food systems and the fact that the funds can only be used for harvesting, processing, packaging, and transportation, and not the purchasing of those farm products directly. A better approach could have been the inclusion of the Farmers Feeding Families – Coronavirus Response Act introduced by Representative Schrier (H.R. 6725) and Senator Casey (S. 3655) and endorsed by NSAC.

As mentioned previously, the HEROES Act dramatically enhances support for nutrition programs including a 15 percent increase in the maximum SNAP benefit level and an increase of  the minimum SNAP benefit to $30 per month. The bill also waives SNAP work requirements for two years and prevents the finalization or implementation of a number of regressive, pending rules proposed by the USDA that would result in millions losing access to critical nutrition support.

The bill contains a number of other provisions and resources related to nutrition and anti-hunger programs including increased funding to states for SNAP administration, permitting SNAP to be used to purchase hot food that is ready to eat, and flexibilities within SNAP-Ed that allows SNAP-Ed providers to help distribute meals for schools and food banks. The bill also provides an additional $1.1 billion for WIC and it increases the WIC Cash Value Voucher for fruits and vegetables from $9 for children and $11 for women per month to $35 per month for women and children. Finally the bill also contains an additional $150 million to help local food banks, and flexibilities that allows states to apply to USDA for waivers to the Seniors Farmers’ Market Program to allow for continued assistance to low-income seniors.

Livestock and supply chains

The HEROES Act provides payments to covered producers to mitigate the losses from depopulating flocks or herds that could not be slaughtered for consumption because of decreased processing capacity. The payments would reimburse 85 percent of the value of the loss for the first 30 days after the initial date of depopulation. After the first 30 days, the reimbursements would cover 10 percent of the loss for each 30-day period that follows. Packer-owned animals are specifically excluded from reimbursement payments.

On its surface, this provision could offer helpful funding to producers forced to depopulate healthy animals that would have otherwise generated money and provided meat for consumers, especially because the provision excluding packer-owned animals would mean money goes to the producers and not the large companies that dominate the livestock and poultry industry.

However, a “covered producer” eligible for reimbursement is defined as a “person or legal entity that assumed the production and market risks associated with the agricultural production of livestock and poultry.” Depending on how this language is interpreted, it could exclude contract growers, who grow animals that are owned by a company. During the duration of the animal’s time with the grower, the grower is assuming a risk because the animal’s well-being is dependent on the grower and if the company does not have a market for the animal, the grower does not make money. However, most contract growers are given the inputs necessary for the animal’s growth by the company and the animal is owned by the company, and it is logical that ownership of the animal equals ownership of the risks. Since this language could be interpreted in multiple ways, it is unclear how helpful it will be for growers forced to depopulate flocks or herds, if enacted.

The USDA Commodity Credit Corporation (CCC) emergency relief payments are also expanded to include processing plants. Unfortunately, there are no size limitations, and we have concerns that the funding will go directly toward the largest plants and leave out small and very small meat and poultry plants, as CCC funds have in the past.

Essential workers 

Employers throughout the food supply chain, including farmers and ranchers and small and very small meat and poultry plants, would be eligible for the HEROES Fund grants to pay workers an additional $13 per hour of premium pay, if awarded a grant. The Treasury Department would collect applications and award grants to employers to pay the premium pay amount, for up to $10,000 per essential employee. An essential employee includes farmworkers and processing plant workers.

The bill also prohibits employers from retaliating against workers who report or share their concerns about any safety hazards or use their own protective personal protective equipment.

The bill also gives the Centers for Disease Control (CDC), with the Occupational Safety and Health Administration (OSHA), authority to “investigate reports of work-related transmission of COVID-19 to health care and other workers and make recommendations on needed actions or guidance based on those reports and investigations.”

Other agriculture provisions

Direct Payments – Perhaps of greatest interest to many farmers looking at rapidly eroding balance sheets are the direct payments that would be made to farmers who have incurred losses due to markets disrupted by COVID-19. The HEROES Act takes a similar approach to the previous CARES Act and provides an additional $16.5 billion in direct payment support for farmers but importantly, the HEROES funding is available to farmers that incurred losses in the second quarter of the year, rather than being weighted to first quarter losses as in the CARES Act. The expanded window of eligible losses will help farmers that had not yet harvested their crops and recorded a loss and those that already invested in seed and supplies to plant later in the Spring but must rethink their plans – particularly those producers in the northern parts of the country.

Another significant improvement in the HEROES Act is a requirement that USDA account for different price factors when asking farmers to demonstrate their losses. This is intended to help farmers that receive premium prices – based on their location, the markets they sell into, and specific production practices, like growing organic – which is a major priority for NSAC members.

Unfortunately, the HEROES Act does not contain any provisions to build guardrails into future payment programs to ensure that aid is targeted to those with greatest need. Many small and mid-sized farms, limited resource farms, and farms operated by farmers of color are not well served by existing crop insurance or revenue programs designed for commodity growers and were left out of past Market Facilitation Program payments. These same farmers are often not well connected to USDA offices that would help them learn about upcoming payment programs or help them to apply successfully. The Coronavirus Food Assistance Program (CFAP) that USDA developed out of the CARES Act is still undergoing review at OMB and while we do not know all the details, we are concerned that it won’t do enough to support these farmers that USDA overlooks too frequently. The HEROES Act is a missed opportunity to anticipate and correct the deficiencies we anticipate in the CFAP program.

Beginning and Underserved Farmers – And while the bill does not include specific targeting or set-asides of funding for beginning and underserved farmers, it would significantly boost funding for the Farming Opportunities Training and Outreach (FOTO) Program, with a specific focus on outreach to socially disadvantaged farmers related to COVID assistance. The bill also provides support to states to better respond to farm stress and support mental health resources for farmers and ranchers through an additional $28 million for the Farm and Ranch Stress Assistance Network. While these are important programs that deserve additional funding, more targeted relief is needed that provides direct compensation and debt forgiveness to beginning and underserved farmers struggling to stay afloat.

Small Business Loans – The bill also provided $10 billion in additional loan funding for SBA’s Economic Injury Disaster Assistance (EIDL) loan program, which was recently made available to farmers, and makes several changes to SBA’s Paycheck Protection Program (PPP). While PPP has not worked well for most farms (due primarily to its limitations and strict focus on payroll which is typically not a huge expense for most farms), the improvements in the bill will open the program up to more non-profit organizations who work with farmers – including farmers market associations. The bill would extend the application window from June 30 to December 30, 2020, expand the period covered by the loan from 8 to 24 weeks, expand eligibility for non-profits; and would prioritize businesses with fewer than 10 employees, non-profit organizations, and Community Development Financial Institutions (CDFIs).

Conservation – The HEROES Act also dramatically expands FSA’s Soil Health and Income Protection Pilot Program (SHIPP). The current program is restricted to 50,000 acres in 5 prairie pothole states, while the new provision would expand the program to 5 million acres nationwide, with a payment rate of $70/acre. While this is a huge influx of new conservation dollars, we do have some concerns that this program will compete with other existing conservation programs. We are also concerned that these new SHIPP contracts will be restricted to 3 years, while many other conservation contracts last 5 years or longer.

What comes next

The HEROES Act will likely be passed by the House and then it is up to the Senate to draft their response. While the timeline for the draft is uncertain – likely to take 2-3 weeks before the Senate bill is introduced – NSAC will be focusing on the upper chamber to help legislators support the best parts of the HEROES Act and correct the deficiencies outlined in the preceding sections. Perhaps even more importantly, NSAC will continue to urge lawmakers to move beyond emergency response and into a new mode where direct payment programs and investment in existing USDA programs don’t double down on our current food and farm systems but instead move us towards greater sustainability, equity, and access in a food system we all hope to create.

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