For the Week Ending April 24, 2020
April 24, 2020
SENATORS URGE PRESIDENT TO REMOVE PAYMENT LIMITATIONS ON USDA RELIEF PACKAGE
Nearly 30 senators, led by Jerry Moran (R-Kan.) and Dianne Feinstein (D-Calif.), are urging President Trump to remove payment limitations for livestock, dairy and specialty crop producers in USDA’s recently announced COVID-19 relief package. The funding, announced late last week, includes $3 billion in planned agricultural product purchases and $1.6 billion in direct payments to hog farmers, including payment limitations of $125,000 per commodity and $250,000 per individual. “This limitation would severely restrict the program’s effectiveness for many family-owned farms and ranches across this nation,” the lawmakers wrote to Trump on Thursday. “The COVID-19 crisis has caused unprecedented damage to the livestock, dairy and specialty crop industries. Agricultural economists have estimated over $13 billion in harm to the cattle industry and $5 billion to the pork industry due to the pandemic….As such, these relief payments should aim to indemnify as much loss as possible without restrictive payment limitations,” the lawmakers wrote. A similar letter was sent by 126 House members, led by Reps. Jimmy Panetta (D-Calif.), Jim Costa (D-Calif.), Dan Newhouse (R-Wash.), Mike Simpson (R-Idaho), Roger Marshall (R-Kan.), Henry Cueller (D-Calif.), Xochitl Torres Small (D-N.M.) and Fred Upton (R-Mich.) The letters echo NPPC calls for equitable, direct payments to producers without eligibility requirements.
‘WE NEED HELP,’ U.S. HOG FARMERS TELL CONGRESS
U.S. pork producers are encountering significant and drastic consequences as a result of the COVID-19 pandemic, facing a collective $37 per head, or almost a $5 billion loss for the remainder of the year, according to Dr. Dermot Hayes, an economist with Iowa State University, and Dr. Steve Meyer, a pork industry economist with Kerns & Associates. Those estimates for an average producer loss for the remainder of the year were based on live hog futures from March 10-April 10. Suspension of pork packing plant operations and rising absenteeism due to COVID-19 have exacerbated an existing harvest facility capacity challenge due to a labor shortage in rural America. With limited harvest capacity, a surplus of pigs exists, causing hog values to plunge. Currently, the price of hogs has fallen close to zero, with losses reaching $70 per hog and without significant and immediate government aid, many generational family farms will go bankrupt. To highlight the critical situation, NPPC this week compiled audio interviews with various hog farmers, sharing their compelling stories and urgent needs. “It’s a perfect storm that has come together,” said Duane Stateler of Stateler Farmily Farms and an NPPC board member. “We’ve got to move product and move product now. You just can’t slow down the system.” He estimates the industry can withstand two or three weeks of an overall slowdown before reaching a critical level. “We’re approaching that right now. We need to move product in the biggest way, however we can do it,” he said. Brent Sandidge, a Missouri pork producer, outlined how pre-COVID, his 3,500 farrow-to-finish operation was anticipated to report a good profit. Now he’s anticipating a $2.5 million loss. “We’re eating through liquid assets pretty quick,” he said, noting employees still have to be paid and hogs have to be fed and cared for. “I don’t know how to do that for a very long period of time,” he added. The $37 per head average industry loss this year is on the conservative side, said Michigan hog farmer Bob Dykhuis, who is projecting future losses of $40 and $50 per head. “We need help,” he said. Other comments included the urgent need for China, which has a significant deficit of available pork as the country battles African swine fever, to remove its retaliatory tariffs on U.S. pork. The audio interviews were shared with all members of Congress. To listen to the interviews, click here.
NEW SBA FUNDING PACKAGE SIGNED INTO LAW
This week, Congress approved, and President Trump signed into law, a new funding package that replenishes several Small Business Administration (SBA) loans designed to help small businesses affected by COVID-19. The bill provides $310 billion in funds for the Payroll Protection Program (PPP) and $60 billion for the Emergency Insurance Disaster Loan (EIDL). The PPP has been an important lifeline for producers, and unfortunately agricultural enterprises (e.g. farms) were previously ineligible for EIDL. This latest package allows all agricultural enterprises to apply for both packages. Additionally, NPPC advocated for small and mid-sized hog farms of up to 1,500 employees to be eligible for the PPP, or to receive an exemption on the number of employees to ensure they qualified. NPPC is disappointed our request was not included and will continue to work with Congress to address the situation.
NPPC URGES SBA TO REMOVE LENDING PROGRAM RESTRICTION
U.S. pork producers, in dire straits as a result of the COVID-19 pandemic, are being denied access the Small Business Administration’s (SBA) Payroll Protection Program (PPP) due to restrictive language preventing many pork producers from being eligible. Specifically, PPP eligibility is determined by a positive farm profit in the calendar year 2019, or last 12 months. For many U.S. pork producers, 2019 was not profitable as they bore the brunt of trade retaliation in China and Mexico, among two of our largest export markets. Using SBA’s restrictive language, an estimated one-quarter of the U.S. hog industry is automatically disqualified from applying to the program. “Hog farmers were at the tip of the trade retaliation spear in 2018 and 2019, losing $20 off the price of every hog,” said NPPC President Howard “A.V” Roth, a pork producer from Wauzeka, Wisconsin. “In 2020, they were forecast to make a $10 profit on every hog, until the COVID-19 crisis hit. The virus has decimated our industry and for SBA to unfairly punish pork producers and deny them access to this program is adding insult to injury.” NPPC urges SBA to expeditiously remove this arbitrary restriction and allow U.S. hog farmers to access this vital program. A copy of NPPC’s press release is available here.
LAWMAKER URGES VICE PRESIDENT TO CREATE ‘ROBUST FEDERAL RESPONSE’ TO PORK PRODUCER CHALLENGES
Citing the significant challenges facing U.S. pork producers during the COVID-19 pandemic, House Agriculture Committee Chairman Collin Peterson (D-Minn.) is urging Vice President Mike Pence, who chairs the White House Coronavirus Task Force, to coordinate a “robust federal response to address this dire situation.” In a letter to Pence on Thursday, the lawmaker outlined actions the task force should take, including coordination between all involved federal, state and local governments to provide urgent assistance to impacted farmers; providing flexibility to use all available state and federal processing capacity to minimize supply chain disruption; providing access to adequate COVID-19 testing for plant workers and communities; and providing sufficient personal protective equipment for all plant workers and federal meat inspectors. “Without fast action and clear coordination, this situation will only get worse, not just for pork producers but for other livestock and poultry producers as well,” Peterson said. A copy of the letter is available here.
ADDITIONAL PPP SUPPLIES FOR AGRICULTURE WORKERS AVAILABLE
During the past few weeks, NPPC, as part of the Supply Chain Stabilization Task Force, had been working with the Department of Homeland Security and Federal Emergency Management Agency to prioritize the needs of the food and agriculture sector for access to available personal protection equipment (PPE), disinfectants and sanitation supplies. This week, the task force secured significant quantities of PPE for food and agriculture workers. The task force identified these distributors that have, or soon will have, significant quantities of PPE available, including non-medical-grade facemasks. These distributors are prepared to receive requests from entities within the food and agriculture sector that have an immediate need for PPE that cannot be satisfied through their existing distributors.
WTO COUNTRIES PLEDGE TO NOT RESTRICT EXPORTS
The United States, the European Union, China and other members of the World Trade Organization representing more than 60 percent of world agriculture exports pledged Wednesday to not impose export restrictions on food and agricultural products as a result of COVID-19. “As members take measures to address the pandemic, it is imperative that these measures do not adversely affect trade in agriculture and agri-food products, which would ultimately have negative impacts on the food security, nutrition and health of members and their populations,” the countries explained in a joint statement. The countries also agreed to exercise restraint in establishing domestic food stocks of agricultural products that are traditionally exported. U.S. pork producers have typically exported one-quarter of production to Canada, Mexico, Japan, China and other top markets. However, COVID-19 stay at home orders, closures of restaurants, outdoor markets and food vendors, combined with labor issues around the world, are slowing down exports.
NEW WOTUS RULE FINALIZED
On Tuesday, the administration published its Navigable Waters Protection rule in the Federal Register, kicking off a 60-day period before it goes into effect on June 22. The new rule, supported by NPPC, replaced the unlawful 2015 Waters of the U.S. (WOTUS) rule, which gave EPA broad jurisdiction over U.S. waters to include other water bodies, upstream waters and intermittent and ephemeral streams. Most importantly, it also covered lands adjacent to waters such as farm fields. NPPC opposed the 2015 WOTUS rule because it was overly broad and had significant technical flaws, including the process that EPA used to develop the rule, which violated basic due process and long-standing procedural protections. A copy of the Federal Register notice is here.