Temporary Closure of JBS Beef Packing Plant Causes Concerns
Today, JBS USA announced their beef production facility in Greeley, Colo., will close until April 24, to help fight the spread of COVID-19.
Following the announcement, National Cattlemen’s Beef Association (NCBA) CEO Colin Woodall released the following statement:
“NCBA is concerned about the closure of the JBS-owned beef packing plant in Greeley, Colo. The company reports the plant is closing for a two-week period after several employees fell ill. Beef producers mourn the loss of the two employees who died as a result of the virus and we empathize with plant workers who are being affected by the outbreak. We also support President Trump’s ongoing effort to keep America’s food supply chain operational.
“The closure of packing plants during this crisis will have an impact on cattle and beef prices. Plant closures or slow-downs have significant regional and national implications that will ripple through the marketplace at a time when cattle producers are already suffering from market uncertainty and economic hardship. Every member of the beef supply chain relies on processing plants operating daily to keep product moving. America’s cattlemen and cattlewomen are hopeful that any beef processing plants which have been slowed or closed as a result of the COVID-19 outbreak return to full operation as quickly as possible.
“Currently, there is no shortage of beef and consumers can continue to be confident about the safety and wholesomeness of the products they are purchasing during this crisis. There is no evidence that COVID-19 can be transmitted by food or food packaging. However, it is always important to follow good hygiene practices when handling or preparing foods.”
Released earlier this month, Kansas State University Department of Agricultural Economics’ report “Assessing Impact of Packing Plant Utilization on Livestock Prices,” echoes concerns about the impact packing plant closures will have on the industry.
“While the unprecedented response to the COVID-19 pandemic is evolving rapidly, the goal of this report is to provide big-picture guidance on how sensitive cattle and hog prices are to ‘regular’ operation of packing plants. Some major potential concerns as both the beef and pork industries drift closer to maximum packing capacity are labor availability and temporary plant closures or reduction in shifts. There is a big difference between maximum physical, or rated, capacity and operational capacity with labor often being the driving factor.”
To read the Assessing Impact of Packing Plant Utilization on Livestock Prices report, click here.
CCA will provide updates as more details about this situation become available.
USDA to Investigate Cattle Markets at Request of NCBA
Last Wednesday, CCA affiliate the National Cattlemen’s Beef Association called on President Donald Trump to order an investigation into irregularities in the cattle markets in the days and weeks following the outbreak of the COVID-19 pandemic.
In a letter to President Trump, NCBA President Marty Smith asked for the President’s “immediate attention in addressing the market volatility and damages experienced in the cattle production sectors of the U.S. beef supply chain.”
Specifically, Smith asked that the President direct USDA to expand its existing investigation into market activity after the Holcomb fire to include market volatility during the COVID-19 crisis with the aim of “identifying whether inappropriate influence occurred in the markets, and to provide our industry with recommendations on how we can update cattle markets to ensure they are equipped to function within today’s market realities.” Smith added that USDA should work closely with the Department of Justice should the investigation uncover any wrongdoing.
Additionally, NCBA requested that the President direct the Commodity Futures Trading Commission to study the influence of speculators on futures contracts “to determine whether the contracts remain a useful risk-management tool for cattle producers.”
Within hours of NCBA’s request, Secretary of Agriculture Sonny Perdue announced via Twitter that the “USDA’s Packers and Stockyards Division will be extending our oversight to determine the cause of divergence between box and live beef prices, beginning with the Holcomb Fire in KS last summer and now with COVID-19.”
Smith was quick to praise Secretary Perdue’s announcement, issuing a press release thanking “President Donald Trump and Agriculture Secretary Sonny Perdue for their quick response to NCBA’s request to expand the agency’s investigation into the cattle markets.”
CCA will keep you apprised of any developments in USDA’s investigation and any results or advisories resulting from the probe.
SBA Clarifies Eligibility of Paycheck Protection Program for Ag Producers
On Friday, April 3, CCA sent out an informational bulletin regarding loans available under the Small Business Administration’s (SBA) Paycheck Protection Program (PPP). Under the PPP, any small business with under 500 employees—including an agricultural producer—is eligible for a loan of up to $10 million. The program is retroactive to February 15, and loans are available through June 30 on a first-come, first-served basis. Loans are 100% forgivable so long as funds are used for approved expenses and employers do not terminate or cut the pay of employees.
In the days following that email, CCA heard from numerous ranchers concerned that they were not eligible for PPP loans because they have no employees (this was particularly concerning given SBA’s requirement that at least 75% of the loan must be applied to payroll costs).
SBA has since clarified that the PPP is available to sole proprietors, independent contractors and other self-employed individuals. The USDA has provided guidance for these individuals (including necessary documentation for finalizing an application) under the “Paycheck Protection Program” drop-down menu here.
While PPP loan funds are limited and are on a first-come, first-served basis, there are currently efforts underway in the Senate to infuse another $250 billion into the program, so interested CCA members are encouraged to continue exploring the option.
CCA has also heard from numerous ranchers concerned that they are not eligible for SBA’s Economic Injury Disaster Loan (EIDL) program. While there was clear Congressional intent in the Coronavirus Aid, Relief and Economic Security (CARES) Act that farmers and ranchers should be eligible for the EIDL program, as recently as last night the SBA’s EIDL online Eligible Entity Verification form still required businesses to certify that “Applicant is not an agricultural enterprise (e.g., farm), other than an aquaculture enterprise, agricultural cooperative, or nursery.”
CCA, NCBA and numerous other agricultural associations and Congresspeople are aware of the problem and are actively working to ensure that SBA opens up the EIDL program to farmers and ranchers. But recent reporting suggests that the EIDL program may be insufficiently funded to provide meaningful support to farmers and ranchers: while EIDL is supposed to provide small businesses “with working capital loans of up to $2 million,” the US Chamber of Commerce recently reported that maximum loans from the program appear to be in the $25,000-35,000 range, and numerous sources now report that initial loan disbursements under EIDL will be limited to a maximum of $15,000 per applicant.
There are loan options available outside of SBA to respond to the COVID-19 emergency, however. For instance, on April 3 Governor Newsom announced that $50 million had been designated for use by the California Infrastructure and Economic Development Bank to provide loan guarantees to small California businesses that do not qualify for federal loan funding.
Finally, in the days and weeks that followed the COVID-19 emergency declaration, many cities and counties implemented local loan guarantee programs for small businesses. CCA encourages members to reach out to local government regarding the availability of funding resources.
Should you require assistance in navigating available federal, state and local loan programs, please do not hesitate to reach out to the CCA office.
Legislature Begins COVID-19 Hearings This Week
When the California legislature voted on March 16 to break early for Spring recess in acknowledgement of the then-emerging COVID-19 crisis, they set today, April 13, as their return date. Since then, Assembly Speaker Anthony Rendon and Senate President pro Tempore Toni Atkins have further delayed the Legislature’s return date to May 4—though it remains to be seen whether the Capitol will indeed open on that date.
But while the Legislature may not open until next month, last week Atkins announced that the Senate’s COVID-19 oversight work will begin this week. Specifically, the newly created Special Budget Subcommittee on COVID-19 Response will meet Thursday at 2:00pm to review the state’s COVID-19 spending, including funds authorized by the Legislature before it recessed in March. The Department of Finance and the Legislative Analyst’s Office are scheduled to testify.
While some participants will physically appear in a hearing room at the Capitol, some Senators are expected to appear remotely in accordance with a new rule adopted by the Senate prior to its Spring recess. The Senate has asked that media and members of the public watch the hearing online in order to ensure social distancing (public testimony is to be emailed to the committee secretary at firstname.lastname@example.org).
Assembly Budget Subcommittee 6 will meet on Monday, April 20 to conduct its own oversight into COVID-19 spending.
Meanwhile, the Legislature is grappling with what the rest of the legislative session will look like once legislators return for a shortened session with enormous COVID-19 fallout to address. The budget—with a Constitutional deadline of June 15—will be the top priority for legislators, and both Governor Newsom and Assembly Budget Committee Chair Phil Ting have signaled that this year’s budget will be a bare-bones “workload” budget. Additionally, Senators and Assemblymembers are being asked to pare down their legislative proposals, focusing only on priority issues such as COVID-19, homelessness and wildfire.
For more information on what’s to come in the remainder of the legislative sessions, see the May edition of California Cattleman.
Assemblymen Announce California Farmworker COVID-19 Relief Package
On Wednesday, Assemblymen Robert Rivas (D-Hollister) and Eduardo Garcia (D-Coachella) announced a five-bill “California Farmworker COVID-19 Relief Package.”
The cornerstone of this package is AB 2915, the “Farmworker COVID-19 Health and Safety Act.” While the “gut-and-amend” language of the Farmworker COVID-19 Health and Safety Act was not in print as of press time (and thus many details of the proposal remain unclear), according to Assemblyman Rivas the bill will, among other things:
- Expand paid sick leave for farmworkers from 3 days to 2 weeks;
- Provide an additional $3 per hour in ‘hazard pay’ during the coronavirus emergency to compensate farmworkers for increased health and child care costs;
- Provide subsidies to counties, employers and others who provide childcare to the children of farmworkers;
- Codify guidance on COVID-19 protections (such as personal protective equipment) for farmworkers; and
- Provide temporary housing to farmworkers to allow for appropriate social distancing;
The package also includes AB 2956, which provides tax credits for agricultural employers to offset mandatory ag overtime expenses.
The package of bills also seeks to enhance telehealth and e-consult services for rural hospitals, streamline approvals for small-unit housing developments and expand electronic filing in the state’s trial courts, all to improve accessibility to farmworkers.
Details of this legislation will emerge as the Legislature returns to business in Sacramento. CCA is tracking these bills and will continue to keep you informed as more information is released about the proposed legislative package.
BLM Issues Guidance for Permit Administration During COVID-19
On April 2, the Bureau of Land Management (BLM) sent a document to all state directors and field staff outlining guidelines for permit administration during the COVID-19 emergency. (The US Forest Service issued similar guidance in late March; USFS’s guidance can be found here.)
In accordance with social distancing protocols, most BLM staff are currently working from home. Accordingly, permittees should plan to communicate with BLM staff via phone or email. If you need contact information for local BLM staff, please contact Kirk Wilbur in the CCA office.
Importantly, BLM’s guidance notes that “The BLM does not expect significant disruptions that would delay grazing turnout for the 2020 grazing season, in part because the BLM can utilize phone calls, postal services, and email for grazing permitting communications.”
You can view BLM’s full guidance document here.