As the U.S. Department of Agriculture finalizes another round of direct payments to aid commodity market fallout from the novel coronavirus pandemic – the Coronavirus Food Assistance Program (CFAP) – a new Government Accountability Office (GAO) report also shows wide disparities in payments from USDA’s distribution of the Market Facilitation Program (MFP) over the past three years.
Senate Agriculture Committee ranking member Debbie Stabenow (D., Mich.), who called for the GAO investigation, said the report confirms concerns about payments to farmers hurt by trade chaos. “In the last couple of years, this Administration threw the farm bill framework out the window and came back with direct government payments in the worst way,” she said.
In a call with media Monday afternoon, Stabenow said the payments fail to be based on trade impact or each farm's need but, rather, act more like favoritism than a rationale farm policy that supports farmers and ranchers equally across the country.
The GAO report found inequity among regions. Specifically, southern farmers benefitted significantly compared to other regions. Eight of the top nine states with the highest payments per acre were in the South. On average, southern farmers received higher payments than individual farmers in any other region. Georgia leads the nation with average payments of $42,545 per farmer, more than double the national average payment of $16,507 per farmer.
Stabenow said she was surprised to see Agriculture Secretary Sonny Perdue’s home state of Georgia being at the top of the recipient list. “If I was secretary, I would feel very uncomfortable [with] that being the case,” she said.
Another wide disparity comes in the unfairness among crops. Stabenow said the “South hit the jackpot” when it comes to payments per farm, even if USDA continues to point out that the overall payments were higher in Midwest states, as there are also more individual farms in the Midwest.
USDA set payment rates for certain crops like cotton, which is primarily grown in the South, that far exceeded payment rates for others. GAO found that cotton farmers received payments that equaled 40% of their expected value. A separate study from Kansas State University economists earlier this year found that cotton payments were 33 times more than the estimated trade damage to cotton. Less than 10% of payments went to farms who produce specialty crops, dairy or hogs. Most specialty crop producers were not even eligible for direct assistance.
The report also notes that large farms benefitted over smaller farms. For the 2019 program, USDA doubled the maximum payment farmers could receive from $125,000 to $250,000 per person, which directed more dollars to the largest farms. As a result of the change, an additional $519 million went to the top 1.3% of payment recipients. GAO also found that the top 25 farms received an average of $1.5 million per farm, which means that each farm claimed an average of eight separate payments of the $250,000 limit. This compares to the average farmer receiving $16,544.
Gary Wertish, president of the Minnesota Farmers Union, said MFP “sets a bad precedent for future farm policy” and is a “deeply flawed program that created more problems.” He said USDA designed MFP to help farmers hurt by trade, but by increasing the payment limits to larger farms, it was instead only riddled with inequities.
“As farmers, we want markets back and certainty. We don’t want to relay on government payments,” Wertish stated.
Stabenow has been critical of the trade payments and said the GAO report also raises red flags on how USDA currently uses its authority under the Commodity Credit Corp. (CCC) to make payments to farmers. In addition, farm bill program payments come out of the CCC fund in October for the traditional Average Revenue Coverage or Price Loss Coverage safety nets to support commodity producers.
She said one of the flaws in the failed coronavirus aid package in the Senate last week was the open-ended $20 billion increase and help for agriculture with a blank check for USDA to boost the $30 billion in CCC funds.
The Coronavirus Aid, Recovery & Economic Security (CARES) Act designated $9.5 billion to be used for specialty crops, dairy, livestock and local farmers. However, Stabenow said only $594 million were designated for specialty crop growers, another $4.8 billion for livestock producers and zero for local foods.
Stabenow said Congress gave USDA direction on how to spend the money initially authorized in the CARES Act, and USDA chose to ignore it. “We would be foolish to do it again, and I don’t intend to do it again,” she said of giving USDA a blank check.
Whatever these direct government support programs are called – whether MFP or CFAP – “we have to be focused on those farms that need the most help, given the chaos,” Stabenow said.
USDA was set to release details of a second round of CFAP shortly after Labor Day to help cover additional quarterly losses, with the remaining funds not allocated under the first round of CFAP. Stabenow said it does not appear that USDA is “working as partners of good faith, which is a concern to me” when trying to direct assistance to the farms who need it most.