{ "id": "R46347", "type": "CRS Report", "typeId": "REPORTS", "number": "R46347", "active": true, "source": "EveryCRSReport.com", "versions": [ { "source": "EveryCRSReport.com", "id": 624395, "date": "2020-05-08", "retrieved": "2020-05-19T13:44:09.703552", "title": "COVID-19, U.S. Agriculture, and USDA\u2019s Coronavirus Food Assistance Program (CFAP)", "summary": "As COVID-19 has spread throughout the United States, it has reduced domestic economic activity and disrupted domestic and international supply chains for goods and services, including food and agricultural products. These disruptions have produced an immediate and very strong demand shock on the U.S. food supply chain that has sent many commodity prices sharply lower. \nThe food supply chain refers to the path that raw agricultural commodities take from the farm where they are produced, through the food processing and distribution network to the consumer where they are used. Supply chain disruptions have been primarily due to two factors: widespread shutdowns of all but essential businesses; and uncertainty about the availability of labor for the food distribution network\u2014whether from illness, fear of illness, or immigration status. The food supply chain has been deemed essential; however, many institutional purchasers (including restaurants, hotels, schools, and entertainment venues) have been closed. According to the U.S. Department of Agriculture (USDA), U.S. consumers normally spend 54% of their food and drink dollars on away-from-home food purchases. Thus, prior to the COVID-19 pandemic a large share of U.S. food products traveling through the food supply chain was going to institutional buyers, often in bulk or vendor-ready form, for away-from-home consumption. In order to redirect this food product flow towards retail outlets and at-home consumption, much of this food would require processing into more consumer-usable forms, repackaging, and relabeling. This requires some level of retooling by food packagers and processors. In addition, several plants in the food processing industry, including meat processing plants, have experienced severe COVID infection outbreaks among workers and been forced to shut (at least temporarily).\nSeveral industry groups from the U.S. agricultural sector have released estimates of the economic damage experienced by producers and ranchers. Most of these early assessments are limited to evaluating the effect of the price decline on any unsold production of crops or livestock remaining under farmer\u2019s control, and the unexpected marketing costs of unsold products due to the shutdown of most institutional buying of agricultural products. Cumulatively, industry estimates of COVID-related losses approach $40 billion (this would represent over 10% of annual cash receipts). The effect on farm net income is expected to be similarly negative.\nIn response to the COVID-19 pandemic, Congress has passed and the President has signed four supplemental appropriations acts (P.L. 116-123, P.L. 116-127, P.L. 116-136, and P.L. 116-139) that have included both direct and indirect funding for the U.S. agricultural sector. On April 17, 2020, Secretary of Agriculture Sonny Perdue announced the Coronavirus Food Assistance Program (CFAP), valued at $19 billion, to provide immediate financial relief to farmers, ranchers, and consumers in response to the COVID-19 national emergency. According to Secretary Perdue, CFAP will include $16 billion in direct payments to producers that have been impacted by the sudden drop in commodity prices and the disruption in food supply chains that has occurred since the outbreak, and $3 billion in commodity purchases for distribution through food banks, faith-based organizations, and other nonprofit organizations. \nCFAP direct payments are intended to partially offset the loss of market revenue from the price decline, and the unexpected carry-cost of unsold commodities for producers and ranchers of products that have been negatively affected by COVID-19. USDA has released limited information on the specifics of how CFAP\u2019s direct payment program will be implemented. Many of the program specifics are expected to be delineated in an expedited rulemaking process. CFAP direct payments are expected to go out to producers by the end of May or early June.\nCFAP\u2019s commodity purchase and distribution program serves the dual roles of supporting commodity market prices by temporarily increasing demand, and of expanding the availability of food distribution to consumers that have lost their jobs or have limited resources. Expectations are that it will be operated differently than, and separate from, existing USDA commodity purchase programs such as Section 32 or Food and Nutrition Service (FNS) food distribution programs in two major ways. First, USDA plans to purchase about $100 million per month of fresh produce, $100 million per month of dairy products, and $100 million per month of meat products (chicken and pork). Second, the CFAP purchase program intends for vendors to deliver household-ready boxes\u2014potentially a diversified mix of the previously mentioned produce, meat and dairy products\u2014which are ready for more convenient and immediate distribution (\u201coff the truck and into the trunk\u201d) that is consistent with social distancing. Initial program delivery may be as early as May 15. The program is expected to operate through the end of 2020. Potential congressional concerns include how to channel assistance to industries affected by COVID-19, long-term effects of the pandemic, and the capacity of rural banks to help with recovery. Several issues related to CFAP and the U.S. agricultural sector in a post-COVID economy that could be of potential interest to Congress are presented at the end of this report.", "type": "CRS Report", "typeId": "REPORTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "https://www.crs.gov/Reports/R46347", "sha1": "1410d26af0a43ab874ab15f179aba2a7cc917066", "filename": "files/20200508_R46347_1410d26af0a43ab874ab15f179aba2a7cc917066.html", "images": { "/products/Getimages/?directory=R/html/R46347_files&id=/0.png": "files/20200508_R46347_images_5391d2cc253991d6e8d60c99edad3af21acdffad.png", "/products/Getimages/?directory=R/html/R46347_files&id=/1.png": "files/20200508_R46347_images_ca403968e0e15f0aad8af053887e13fe1be9dee8.png" } }, { "format": "PDF", "encoding": null, "url": "https://www.crs.gov/Reports/pdf/R46347", "sha1": "ee5ce9e1e86e5982614609194f88b7c26b141997", "filename": "files/20200508_R46347_ee5ce9e1e86e5982614609194f88b7c26b141997.pdf", "images": {} } ], "topics": [ { "source": "IBCList", "id": 4856, "name": "Nutrition Programs & Policies" }, { "source": "IBCList", "id": 4919, "name": "Farm Support" } ] } ], "topics": [ "Agricultural Policy", "Appropriations", "Economic Policy", "Industry and Trade" ] }