Ag industry officials welcome USDA COVID-19 relief program

Ag industry officials in South Dakota are welcoming a recently announced United States Department of Agriculture relief program that will send billions of dollars to assist farmers, ranchers and consumers affected by the COVID-19 pandemic.

The program includes $16 billion in direct payments to farmers and ranchers. The money for the payments comes from $9.5 billion included in the Coronavirus Aid, Relief and Economic Security (CARES) Act and $6.5 billion from the Credit Commodity Corporation. According to a press release from Sen. John Hoeven (R-N.D.), the livestock industry, which has been hit hard by market changes and meat packing disruption due to plant shutdowns, will get $9.6 billion. Of that, the cattle industry will see $5.1 billion, followed by $2.9 billion for the dairy industry and $1.6 billion for the hog industry.

Tom Peterson, executive director of South Dakota Dairy Producers, said his organization would be watching for more details about how the $2.9 billion allotted to dairy farmers will be distributed.

“With the direct assistance potentially to farmers, and specifically to dairy, there are real limited details about how that will be modeled for distribution. One thing that we have heard is that there may be an element that puts a little higher percentage on losses the first part of the year, and much reduced in the later months,” Peterson said. “And the greatest losses look to be ahead.”

Peterson said dairy farmers, like other producers, are suffering from a loss of customers when it comes to the widespread closure of entities like schools and restaurants.

“Retail had an uptick at the onset of the pandemic, but it’s flattened a bit now. Food service and school and government purchases appear to be very depressed,” Peterson said.

Peterson said roughly 60 percent of butter produced goes toward restaurants and food services, as well as about 50 percent of cheese.

“It’s a huge driving impact,” Peterson said.

Glenn Muller, executive director of the South Dakota Pork Producers, said his group will continue to watch as this and other potential relief programs are rolled out, but he said it should help offset some losses in many agriculture industries, including pork.

“Our position is that we just need some type of compensation for our producers. It’s not going to make them whole by any means, but it will allow some of them to maintain their operations on the farm,” Muller said. “(But) if this situation continues long term, some will have to exit the business, but that’s a last resort.”

The pork industry has been hit as hard as anyone in recent weeks, but producers will continue to strive to keep their product on the shelves, he said.

“We appreciate the increase in demand right now and want to make sure consumers are aware that pork products that have been inspected by state and federal officials are fully safe,” Muller said. “And we need to maintain that protein consumption. We’ll do as much as we can to minimize the interruption in our food chain.”

Row crop producers will receive $3.9 billion and speciality crop producers will receive $2.1 billion through the relief program.

Lisa Richardson, executive director for South Dakota Corn Growers, said the relief package is a positive for industries that are reeling from an uncertain situation, especially the livestock industry.

“Our livestock industry is hurting. We have an oversupply of dairy, beef, pork, so this is nothing but positive. This was the first shot and was addressing the groups that are hurting the most,” Richardson said.

She said one provision lacking from the relief program is assistance for the ethanol industry. She said South Dakota farmers usually produce about 800 million bushels of corn, 450 million bushels of which goes toward ethanol production. Most of the state’s ethanol plants have been either operating at reduced capacity or are idling for the time being, and she hopes that future potential relief efforts will include provisions to address that as well.

“Some (plants) are idling completely, and others are scaled back. And liquid fuel consumption is at a 20-year low,” Richardson said.

She said the corn industry is deeply connected to other areas of agriculture, and the relief program should do some good to the sectors that are feeling hardest hit at the moment.

“Our hog industry and our cow and calf guys, there is no one that is not feeling pain, so we applaud this program,” Richardson said.

Jerry Schmitz, executive director for the South Dakota Soybean Association, said soybean producers are facing the same issues related to other commodities, and the relief program should help lessen the impact of the pandemic and an already volatile market on family farms in the state.

“I think that’s the big concern - keeping the family farmers, which is still about 97 percent of all farms in South Dakota, on the farm,” Schmitz said. “We (already) had concerns before the virus. We were looking at a number of bankruptcies just due to the economic situation we were in.”

The pork industry has suffered numerous setbacks in recent months, including the closing of the Smithfield processing plant in Sioux Falls due to the COVID-19 outbreak. Schmitz said hogs are the main consumer of soy in South Dakota.

The payments to producers should help ease some of the worry, but nothing can replace healthy markets and a steady income.

“It’s certainly not going to be a replacement for lost income, and we don’t want that. We just want folks to have the opportunity to produce food,” Schmitz said.

Another $500 million would go toward other crops, which United States Secretary of Agriculture Sonny Perdue said could include horticulture, the sheep or goat industries or other sectors.

An additional $3 billion will be used to purchase produce, dairy and meat and distribute the products to people in need. The USDA will work with food service distributors, who have seen a downturn due to the closure of in-person eating establishments, to provide pre-approved boxes of food to food banks, community and faith-based organizations and other non-profits.

Sen. John Thune, a member of the Senate Agriculture Committee said he hoped the program would alleviate some uncertainty from the volatility caused by the COVID-19 outbreak.

“The agriculture community has faced one hurdle after another these last few years,” Thune said in a press release. “As if bad weather, multiple trade disputes and poor commodity prices weren’t bad enough, farmers and ranchers are now dealing with the effects of a global pandemic, too. This critical relief funding won’t fix everything they have been dealing with, but I hope it creates some greater certainty in these uncertain times.”

Farmers and ranchers play a crucial role in maintaining the country’s food supply, he said, and this is one way to support them when they need it most, he said.

“The coronavirus crisis has underscored the important role agriculture producers play in our day-to-day lives. For example, fully-stocked grocery shelves are no longer taken for granted. So while it can’t be said enough, on behalf of a grateful nation, I want to say ‘thank you’ to our nation’s farming and ranching community. The American people have learned that heroes truly come in unlikely forms these days.”