Latest federal stimulus package: What’s in it for farmers?
In December, Congress passed an omnibus bill that funds the federal government through Sept. 30, 2021 and provides $900 billion in stimulus to the economy in response to COVID-19. Though President Trump publicly criticized key provisions after Congress approved it, he did sign it.
Since passage of the CARES Act in March 2020, the dire situation in rural health care, growing food insecurity and instability in the farm economy has made clear the need for further federal relief. On several occasions, NFU publicly called for further stimulus legislation to help with the coronavirus response: in May, when the House first passed the HEROES Act; in July, to spur the Senate to action; in September during the NFU Virtual Fly-in; and in October when the House passed a revised version of the HEROES Act. The bill just passed spends significantly less than most previous proposals. Additional legislation will be needed to address serious budget gaps for state and local governments.
It is important to note that this bill includes both routine annual appropriations bills and the stimulus package. Congress punted the appropriations bills to the end of the year and tied the stimulus and the omnibus together to present lawmakers with a must-pass, 5,600-page package, despite concerns from members of both parties. This summary covers the stimulus parts of the bill, mostly those that affect agricultural producers, the food system and rural communities.
In addition to $600 per person direct payments, which scale down as an individual’s 2019 taxable income exceeds $75,000 and are phased out for anyone with income exceeding $99,000, there are many other broad provisions. A supplemental $300 per week of federal assistance for individuals receiving state unemployment benefits is extended through March 14. Flexible Savings Account balances may be rolled from the 2020 tax year into 2021, and 2021 balances can be rolled into 2022. Charitable giving maximum tax deductions are increased, and Child Tax Credit and earned income tax credit eligibility is made more flexible so that individuals with a lower taxable income for 2020 than in 2019 can still receive tax benefits that their previously higher income allowed.
Overall, $26 billion was provided to the ag committees to help with pandemic relief, which was split roughly equally between nutrition assistance and farm and rural relief. The farm-related provisions of the bill largely build upon the structure of the Coronavirus Food Assistance Program (CFAP) that was set forth by USDA as a result of the CARES Act. Direct financial assistance totaling nearly $11.2 billion will be made available to farmers in the form of $20 per acre payments if they produced “price trigger commodities” or “flat rate crops.” Both of these terms were established in the second round of CFAP. Payments will be made based on 2020 planted acres. These payments will be available to all producers of non-specialty crops, with the notable exception of dry peas, lentils and chickpeas.
Additional flexibility will be made available to farmers who grow specialty crops, have made use of existing government programs or have alternative marketing arrangements. Specialty crop growers who show losses due to the pandemic may include price differentiation factors that can arise from specialized varieties, local markets and organic production. When calculating losses in 2020 as compared to previous years, this bill allows crop insurance indemnities and USDA disaster payments from either 2018 or 2019 to be considered.
The bill allows USDA to make supplemental CFAP payments to cattle producers and specifically allows payments of no more than $1 billion to livestock and poultry contract growers who had revenue losses due to contract changes because of COVID-19. Ranchers who received payments for cattle claimed as inventory in the first round of CFAP will be eligible for an additional payment through this bill. Farmers and ranchers who have not yet received assistance through the first two rounds of CFAP will be eligible for an 80% reimbursement of losses due to euthanization or canceled orders for their livestock.
Outside of CFAP, USDA may extend the term of marketing loans by three months. For specialty crop farmers, farmers markets and value-added production facilities impacted by marketing disruptions, the bill provides $100 million to the Local Agriculture Market Program and a further $100 million to the Specialty Crop Block Grant Program to aid at the state level.
We’d like to note the inclusion of a revised version of the RAMP-UP Act, which was introduced in July with strong support from NFU and was one of our Virtual Fly-In asks. This bill provides $60 million to help small-scale meat and poultry processing facilities engage in interstate shipment of meat products. Grants will be available to these establishments to make necessary improvements to be federally inspected. This investment will help provide more marketing choices for farmers and ranchers, which should prove to be very helpful in today’s consolidated marketplace. Furthermore, the bill also includes language to establish a livestock dealer trust, which has long been an NFU priority and will help farmers and rancher receive payment if a dealer goes out of business.
For dairy, the bill makes some adjustments to the Dairy Margin Coverage program to allow for coverage increases if small- to mid-sized dairies have grown in the last seven years. It also will use $400 million to process donated fluid milk into dairy products for non-profit entities.
Government payments are forecast to make up 39% of net farm income for 2020. While this stimulus financial assistance to farmers would be made in 2021, the payments are indicative of a longer-term problem for the farm economy: dependence on ad hoc programs.
The bill makes biofuels refineries eligible for direct support from USDA to recover from the financial impacts of the pandemic. The biofuels industry provides hundreds of thousands of jobs, primarily in rural communities, and is a key consumer of agricultural commodities. NFU has called for assistance for biofuels since the early days of the pandemic. The details of how this support will be structured will be determined and implemented by USDA.
The bill provides approximately $13 billion for nutrition assistance. Participants in the Supplemental Nutrition Assistance Program (SNAP) will receive a 15% increase in monthly SNAP benefits for six months. The bill will expand the SNAP online purchasing program, including by helping farmers’ markets and direct market farmers access it. Several provisions in the bill help fund and support food purchases and donations. Additionally, the Gus Schumacher Nutrition Incentive Program (GusNIP) will receive additional funding and flexibilities to support the purchase of fresh fruits and vegetables in low-income communities.
Small business funds
The suite of programs in the Small Business Administration, a few of which farmers are eligible for, has been renewed and enhanced. The Paycheck Protection Program (PPP) received additional funding and is extended through March 31, 2021. Loan applications and forgiveness provisions for PPP loans of less than $150,000 are simplified, and greater flexibility is allowed for setting coverage periods after the origination of a loan. The bill also clarifies that expenses incurred to arrive at PPP loan forgiveness will remain fully deductible for tax purposes.
One key change to the PPP program allows farmers and ranchers to qualify for a PPP loan based on 2019 gross revenue (up to $100,000). This added flexibility allows farmers who experienced net negative income in 2019 to be eligible to receive a PPP loan. To qualify for a loan under this provision, a farmer or rancher must be operating as sole proprietor, independent contractor or self-employed individual. In practice, the maximum loan amount under this provision is $20,833.
For those who have already received and used a PPP loan, there is a new “second draw” opportunity for certain small businesses and non-profits. Eligible entities would need to employ no more than 300 employees and must demonstrate at least a 25% revenue loss in the first, second or third quarter of 2020 compared to the same quarter in 2019 (applications submitted after Jan. 1, 2021 can use revenue from the fourth quarter of 2020). The maximum loan amount for second-draw PPP loans is $2 million.
The Economic Injury Disaster Loan (EIDL) emergency grants/advances received new funding, and the covered period now runs through Dec. 31, 2021. The bill repeals EIDL advance deduction, which required PPP borrowers to deduct the amount of their EIDL advance from their PPP forgiveness amount.
More than $7 billion in broadband funding has been included as part of the COVID-19 relief package. This includes broadband coverage mapping, interagency coordination and telehealth. It appropriates $65 million to the Federal Communications Commission (FCC) to create broadband data maps. Also appropriated is a sum of $250 million to the FCC for its COVID-19 Telehealth Program authorized under the CARES Act.
Other broadband items in this legislation include the establishment of two grant programs at the NTIA. The first, funded at $1 billion, is directed to tribal governments to be used not only for broadband deployment on tribal lands, but also telehealth, distance learning, broadband affordability and digital inclusion. The second is a $300 million broadband deployment program to support broadband infrastructure deployment to areas lacking broadband, especially rural areas.
The newly established Emergency Broadband Benefit Program at the FCC is based on the Emergency Broadband Connections Act and is appropriated $3.2 billion. Under the program, eligible households may receive a discount of up to $50, or up to $75 on Tribal lands, off the cost of internet service and a subsidy for low-cost devices such as computers and tablets.
Lastly, this legislation establishes an Office of Minority Broadband Initiatives at the NTIA to focus on broadband access and adoption at Historically Black colleges or universities, tribal colleges and universities and other minority-serving institutions, including the students, faculty and staff of such institutions and their surrounding communities. It also appropriates $285 million for a pilot program to award grants to these institutions, including to help students of these institutions afford broadband service.
Qualified providers of health care, services and support may receive Provider Relief Fund payments for health care-related expenses or lost revenue due to COVID-19 and this bill provides $3 billion to that effort. For mental health, an additional $10 million has also been allocated to the Farm and Ranch Stress Assistance Network (FRSAN) and $28 million is to be distributed through block grants to the states for farm stress programs.