Here is a small clip from the press release as it directly addresses farmers needs and concerns:
“CFAP will use the funding and authorities provided in the Coronavirus Aid, Relief, and Economic Security Act (CARES), the Families First Coronavirus Response Act (FFCRA), and other USDA existing authorities. The program includes two major elements to achieve these goals.
- Direct Support to Farmers and Ranchers: The program will provide $16 billion in direct support based on actual losses for agricultural producers where prices and market supply chains have been impacted and 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.
- 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 food service entities, to purchase $3 billion in fresh produce, dairy, and meat. We will begin with the procurement of an estimated $100 million per month in fresh fruits and vegetables, $100 million per month in a variety of dairy products, and $100 million per month in meat products. 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.
On top of these targeted programs USDA will utilize other available funding sources to purchase and distribute food to those in need.
- USDA has up to an additional $873.3 million available in Section 32 funding to purchase a variety of agricultural products for distribution to food banks. The use of these funds will be determined by industry requests, USDA agricultural market analysis, and food bank needs.
- The FFCRA and CARES Act provided an at least $850 million for food bank administrative costs and USDA food purchases, of which a minimum of $600 million will be designated for food purchases. The use of these funds will be determined by food bank need and product availability.”
Per a quick analysis from Andrew M. Novaković, PhD, with regard to direct price support, it would equate to roughly 73 cents per hundred weight of milk if they decide to allocate that money proportional to gross receipts in agriculture and milk respectively from 2019. He indicates that this is the preferred action moving forward from government leaders instead of reopening the DMC program. He also indicate that the purchase of dairy products to support those now food and income insecure would eliminate some excess supply in the market and hence “harden the price floor” we are currently operating at or “breath some life” back into prices. Essentially by removing some portion of the products that are currently in great excess due to destroyed demand (cheese and butter) the market could be freed up to encourage more purchasing at somewhat better prices.
There will be more detail to come on the development of this program and we will continue to post them here.