Last week, with sweeping majorities in the U.S. Senate and House of Representatives, the Coronavirus Aid, Relief and Economic Security Act (CARES) was passed in response to COVID-19 and the toll it has taken on the U.S. economy. President Trump signed the bill over the weekend, making it ready for implementation. With $2 Trillion worth of funding dedicated to offsetting the impact of the pandemic for families and companies, what does this mean for our farmers?
To begin with, direct payments of up to $1,200 for individuals who make less than $75,000 a year and up to $2,400 for couples who make less than $150,000 a year will be made to the majority of US adults – farmers and the general population alike. An additional $500 will be added per child in each household. The calculations for this will be based on 2018 & 2019 tax returns and information from Social Security Administration.
A variety of business tax provisions pertinent to farming operations have also been made available. This includes a 50% refundable payroll tax credit on wages paid up to $10,000 during the crisis but is limited to firms experiencing a decrease in gross receipts of 50% or more compared to last year – something unlikely for most farms. Likely more relevant to agriculture is a provision in the bill that allows firms to take net operating losses (NOLs) earned in 2018, 2019 or 2020 and carry those back five years. Importantly, the bill modifies loss limitations for farms.
Included in CARES was $49 billion in aid specific to food and agriculture. $9.5 billion in funding, or 19% of the total agricultural provisions, has been allocated to the U.S. Department of Agriculture. This funding will be used in preparation and response to financially support farmers impacted by COVID-19 -particularly for specialty crops, producers who supply local food systems and farmers markets, restaurants and schools, livestock producers and dairy farmers.
$14 billion in funding, equivalent to 29% of total agricultural provisions, has been allocated to replenish the Commodity Credit Corporation (CCC). The CCC bolsters commodity and income support programs as well as natural resource conservation programs and disaster assistance programs. Most recently the CCC has been used to fund the Market Facilitation Program (MFP), which had paid $12 billion in 2018 and set aside $16 billion for 2019. A third tranche of MFP payments had been discussed before the pandemic this winter making replenishment of the CCC critical.
The majority of Federal money spent on food and agriculture goes to nutrition programs – a pattern that is played out under the CARES Act. Anticipating increased demand for food assistance in the wake of the economic turmoil of COVID-19, the Act provides up to $15.8 billion for supplemental spending under the SNAP program and an additional $8.8 billion to school breakfast and lunch programs. Collectively these two funding streams will account for just over half of CARES food and agricultural related spending.
The remaining $916 million in funds, or 2% of total agricultural provisions, is dedicated to enhancing staff and services in the U.S. Department of Agriculture. This includes $100 million for USDA’s ReConnect Pilot which furnishes loans and grant to provided funds for the costs of construction, improvement or acquisition of facilities and equipment needed to provide broadband service in eligible rural areas. It also includes $25 million for distance learning and telemedicine programs, $185 million to support rural hospitals that are deemed critical and telehealth, and $20.5 million to support and additional $1billion of lending through USDA’s Rural Development.
The N.C. Soybean Producers Association appreciates the hard work of the Administration and Congress on this piece of legislation and keeping agriculture in mind through the process. While this continues to be an evolving situation, we look forward to working with the N.C. ag community to ensure farmers emerge from this challenging time more competitive than ever.