Behind the scenes, members of Congress and lobbyists for interest groups have been vying for their say on how the money is spent. At least 170 organizations and companies have lobbied the Agriculture Department on matters concerning COVID-19, according to the Senate’s Lobbying Disclosure Act Database. In letters to Secretary of Agriculture Sonny Perdue, requests went beyond just the food supply chain; hay and straw sales are suffering due to racetrack closures, cotton and wool are down with the retail market, and decreased travel and gasoline demand reportedly helped put half of ethanol plants offline. Not everyone will be happy with Tuesday’s announcement; some commodities named as needing help — from catfish to craft beer, chicken to sod — are not eligible for direct payments in USDA’s initial list.
“Farmers, just like everybody else, are frustrated by watching markets disappear, watching the economy spiral,” Veronica Nigh, an economist at the American Farm Bureau Federation, said. “They’re aware USDA doesn’t have enough money at their discretion to make them whole.”
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The same thing happened during Trump’s trade war bailouts, which have since been subject to bipartisan criticism for benefitting foreign companies and were investigated by the U.S. Government Accountability Office. In a separate review, USDA’s inspector general found the program used a “reasonable methodology” that “was applied consistently across commodities.”
Still, most of the program’s funds found their way to the largest and most profitable farms, the Environmental Working Group found. Researchers have also calculated that corn and soybean producers disproportionately benefited in 2018, and that cotton and sorghum producers got payments that were substantially higher than the trade war’s actual price damage in 2019. And while payment rate formulas were public, an NBC News Investigation found that there was no ‘specific’ or ‘exact’ formula in determining which crops were deemed eligible for direct payments — why cranberries got subsidies, and wild blueberries did not, for example.
“One would think we could learn something from the trade war programs…” said Dr. Joseph Janzen, an agricultural economist at Kansas State University who conducted research on the 2019 bailout. “It was not necessarily equitable across commodities and regions. If we make policy using the same process, it seems likely that there will be issues of equity again.”
In a statement to NBC News, USDA said it has been transparent about how it formulated payment rates for the trade war bailout, noting it used a methodology often employed in World Trade Organization arbitrations.
“The fact of the matter is that USDA has provided necessary funding to help farmers who have been impacted by unjustified retaliatory tariffs,” a USDA spokesperson said in a statement. “While criticism is easy to come up with, we welcome constructive feedback from any member of Congress with recommendations as to how the program could be better administered.”
The coronavirus package may be even more logistically daunting than its trade war predecessors, experts say. USDA must continue to evaluate COVID-19-related losses for crops that aren’t even planted yet—and standardize their formula as much as possible across diverse goods like tangerines, hogs and hard red spring wheat, among other commodities covered in the initial list. Some beneficiaries—for example, farmers of more niche fruits and vegetables — may lack experience with USDA’s subsidy processes compared to their peers in wheat and corn. USDA may also face a moral hazard issue, where farmers may be incentivized to overreport losses, the Congressional Research Service noted.
USDA said it worked to build the program “from the ground up, evaluating impacts of COVID-19 throughout the agricultural and food sector.”
“[We] reviewed the resources we had available to do the best we can with what we have,” a USDA spokesperson wrote in a statement. “The topline numbers released are estimates based upon that process and clearly do not account for all the possible losses that have occurred. This is intended to be an inclusive program and more information will be provided in the rulemaking. As we implement and get applications, we will continue to evaluate impacts and work with Congress as more resources are needed.”
The Coronavirus Food Assistance Program is just a portion of the aid authorized by Congress so far. The Agriculture Department is also poised to spend billions on commodity purchases for households, food banks and nonprofits, for example — including a monthly $100 million to dairy, produce and meat, respectively.
An additional $14 billion from Congress would replenish the ransacked Commodity Credit Corporation — a Depression-era Agriculture Department institution with no staff and no physical presence but $30 billion yearly in borrowing power. The obscure financial institution grants the secretary of Agriculture broad spending powers, which Congress restricted in annual appropriations legislation from 2012 to 2017. The restriction didn’t make it into the 2018 version — allowing the Trump administration to use the purse to fund trade war bailouts. As a result of the trade war bailout, the Commodity Credit Corporation was running unusually low on funds when COVID-19 hit, with just $6 billion in reserves. Along with the Coronarivus Aid, Relief, and Economic Security (CARES) Act, it is now one of the funding sources for the Coronavirus Food Assistance Program.
More spending toward agriculture will come from the Small Business Administration, through Paycheck Protection Program (PPP) funds and Economic Injury Disaster Loans (EIDL). In the first PPP round, 1.3 percent of funds went to agriculture-related businesses. Data for the second round has not yet been released.
The Rural Advancement Foundation International-USA (RAFI), which runs a hotline for farmers, says farmers are flagging common challenges in accessing these new pots of money.