Posted 04/23/2020

Member Update: April 23, 2020

The North Dakota Stockmen’s Association (NDSA) is continuing to work on issues related to the ongoing COVID-19 pandemic.

Following is an update on important coronavirus-related topics:

Coronavirus Food Assistance Program

The agricultural assistance provided through the CARES Act has been coined the Coronavirus Food Assistance Program (CFAP). Last week, the very basic framework of the program was unveiled by the U.S. Department of Agriculture (USDA).

The plan involves $19 billion to support farmers and ranchers during the COVID-19 pandemic. The package includes $16 billion in direct payments for farmers and ranchers, funded using the $9.5 billion emergency program dollars secured in the CARES Act and $6.5 billion in Commodity Credit Corporation funding, and $3 billion in purchases of agricultural products, including meat, dairy and produce.

The direct assistance portion includes $9.6 billion for the livestock industry. Of that, $5.1 billion has been earmarked for the cattle industry.

Producers will receive a single payment determined using two calculations: 1) Price losses that occurred Jan. 1 through April 15, 2020. Producers will be compensated for 85 percent of their price loss during that period; and 2) The second part of the payment will be expected losses from April 15 through the next two quarters and will cover 30 percent of the expected losses.

USDA is finalizing the rule this week. It will then send it on to the Office of Management and Budget next week. The final rule is expected out sometime in early May.

In meetings and calls with Congressional and agency leaders this and last week, the NDSA expressed its appreciation for the support of the cattle industry through this and other programs, but asked questions, seeking clarity on the rollout of the program, and pointed some limitations that could impact North Dakota’s cattle industry.

Following are a few of the questions we have posed. Unfortunately, the answers are not yet available.

• What classes of cattle is USDA intending to pay on?

• How will USDA determine actual losses from Jan. 1 through April 15 for the 85 percent payment and the expected, or unrealized, losses after April 15 for the 30 percent payment?

• If a producer has sold feeder cattle, for example, on March 15, how will USDA be assessing the payment to him or her? Will 85 percent of the difference between the price he or she received on March 15 and the index price be paid? If so, is that the case on all classes of cattle from Jan. 1 to April 15?

• Sales/losses that take place after April 15, but before the program signup, will actually be realized losses; how will USDA calculate those – as actual or expected and as 85 percent or 30 percent payments?

• How is USDA intending to address the cow-calf industry? Will the expected loss be calculated on the diminished value of the cow/cowherd and/or the projected value of the 2020 calfcrop at the time of sale?

• USDA has proposed a payment limit of $125,000 per commodity. How does the agency view different cattle enterprises (feeder cattle and cows, for example)? Do those different enterprises qualify a producer for the $250,000 payment limit or $125,000?

• With the first U.S. case of COVID-19 confirmed on Jan. 22, what is USDA’s rationale for using Jan. 1 as its beginning date?

• What documentation will USDA be requiring to verify realized losses and unrealized losses? Sales receipts? Third-party-verified inventories? Balance sheets? Audits? Affidavits?

The NDSA has also pointed some scenarios in which North Dakota cattle producers could fall through the cracks and not be adequately covered through the CFAP. It has urged USDA to consider them as they finalize the program.

Here are a few:

• According to the analysis by Dr. Darrell Peel and his associates, the cow-calf sector will suffer the longest impact of the COVID-19 pandemic. Assuming that a North Dakota cow-calf producer sold his or her 2019 calves in fourth quarter 2019, he or she would only be eligible for expected losses for 2020. Assuming that that is quantified by only the sale of calves, the third quarter 2020 cutoff date, or Sept. 30, would leave most of them ineligible for any assistance, as practically no calves would be marketed that early. The majority of North Dakota calves are born from March 15 to May 1. The earliest most calves are marketed in our state is early to mid-October – outside the window discussed here.

• North Dakota feedlots and out-of-state feedlots often purchase North Dakota’s spring-born calves and feed them to finish, harvesting them sometime between May and August. (Sometimes, North Dakota producers retain ownership of their cattle, and those cattle have, of course, similar end dates.) These cattle will fall outside the 85 percent payment window. The result: significant losses on the feeder side. Many projections for these cattle are already exceeding $300-per-head losses in the feeding sector alone, based on the current boards.

• Many North Dakota producers still have their 2019-born feeder cattle. With the market in shambles, they have invested in significant feed resources and other inputs and have fed them until now. Based on the cutoff date, they will be entitled to 55 percent less than if they would have sold them by April 15. There is a dramatic payment difference between April 15 and April 16, for example.

• We have heard from many North Dakota cattle producers with fed cattle for sale who have been unable to obtain a single bid on their finished cattle ready for market for several weeks. These are not instances of low bids, they’re instances of no bids. Through no fault of their own, they have not shown a documented loss, because they have been unable to move the animals, even though they have tried. Under this proposal, they would be subject to a 55 percent payment reduction for those animals.

Hoeven roundtable discussion

NDSA Executive Vice President Julie Ellingson was grateful for the opportunity to be a panelist in a special roundtable discussion hosted yesterday by Sen. John Hoeven, who has championed cattle industry priorities throughout the COVID-19 crisis. Ellingson was able to share the NDSA’s list of questions and areas of concerns with the senator and other state ag leaders.

Hoeven talked about the CFAP, the replenishment of the Paycheck Protection Program, the new allowance for ag producers in the Economic Injury Disaster Loan Program, the USDA market pricing investigation and collaborative efforts with fellow lawmakers to get and keep processing plants open so as not to back up supply and cause further market disruptions. He also announced that the sheep industry is included in the CFAP.

Hoeven mentioned that CFAP payments could potentially be supplemented later with resources allocated as part of the Commodity Credit Corporation replenishment authorized in the CARES Act. The $14 billion will become available in July.

Senate passes $484 billion in interim economic stimulus package

Yesterday, the U.S. Senate passed $484 billion in new pandemic relief funds to bolster a tapped-out small business aid program, pay for coronavirus testing and help hospitals deluged by sick patients. The legislation, which the House could take up as early as Thursday, includes $320 billion for the Paycheck Protection Program, which is designed to help struggling small businesses keep their workers on the payroll. The program has already committed all of the $350 billion allocated when it was created just weeks ago.

The legislation also allows agricultural operations to qualify for the Economic Injury Disaster Loan Program (EIDL) and adds $50 billion to it. The program will advance up to $10,000 of economic relief to businesses that are currently experiencing difficulties. For more information about EIDL, visit https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/economic-injury-disaster-loan-emergency-advance#section-header-2.

Farm workers to be exempt from immigration ban

Politco is reporting that the president’s plan to suspend immigration into the United States will not apply to foreign farm workers. President Donald Trump tweeted this week that he will sign an executive order to temporarily ban immigration to try and stem the spread of coronavirus. The Department of Homeland Security is reportedly still working on the order.

More plant closures, shutdowns

Tyson Foods announced today that it will be indefinitely closing its Waterloo, Iowa, pork processing facility due to the combination of worker absenteeism, COVID-19 cases and community concerns. The plant has 2,800 employees and is Tyson’s largest pork plant, according to USA Today.

Yesterday, Tyson reported that its Dakota City, Neb., beef processing plant is not currently harvesting cattle, but its fabrication side is working. There was no definitive date given regarding the resumption of cattle harvest.

JBS also reported yesterday that its Souderton, Pa., beef processing plant is back up and running after a two-week shutdown.

Ag department guidance

Agriculture Commissioner Doug Goehring today issued guidance for ag-related businesses to ensure continuation of the food supply chain, while maintaining a healthy workforce. The guidance documents issued include best practices to protect against COVID-19 and recommendations for farmers markets; farm deliveries; dairies; processing, manufacturing, agribusiness and agricultural operations; and continuity of business plans. To view the guidance documents, visit www.nd.gov/ndda/covid-19.

Beef consumers remain loyal

Finally, some good news: According to checkoff-funded market research for the month of March, the majority of consumers say they plan to continue eating just as much or more beef in the future. Those who plan to eat more beef focus on beef’s great taste, the fact that they’re grilling more often and they consider beef their no. 1 protein choice. The number who say they plan to eat less beef has not changed and represents about 15 percent of the population. Though reasons for eating less beef vary, top reasons have to do with misconceptions that other meats are healthier or concerns that beef will negatively impact their long-term health.

Mental health resources

The coronavirus situation and a culmination of other factors have made this a stressful time for many farm and ranch families across North Dakota. Know that you are not alone. If you need someone to talk to, call a friend or a neighbor, our office or 211, a statewide 24-hour crisis intervention, health and human services information and referral line.