CCA and Other Groups Seek to Remove Payment Caps under Coronavirus Food Assistance Program
As reported in last week’s Legislative Bulletin, on April 17 President Trump and USDA Secretary Sonny Perdue announced the Coronavirus Food Assistance Program (CFAP), a $19 billion economic aid package for the nation’s farmers and ranchers impacted by the COVID-19 emergency. CFAP was announced to include $16 billion in direct payments to farmers and ranchers as compensation for economic losses suffered as a result of the COVID-19 crisis, as well as $3 billion in purchases of agricultural products which will be directed to food banks and other organizations working to feed those in need during the pandemic.
Of the $16 billion in direct relief payments, $5.1 billion have been earmarked for cattle producers—the largest share of relief payment for any commodity covered by the program.
USDA has not yet formally submitted program details to the Office of Management and Budget, and few additional details of the program have been released or finalized. That said, as previously reported in Legislative Bulletin, CCA can report on potential program details being discussed in DC thanks in part to a press release issued by Senator John Hoeven (R-ND), chairman of the Senate Agriculture Appropriations Committee.
According to Sen. Hoeven, USDA is contemplating a single payment that incorporates two calculations: (1) compensation for 85% of price losses incurred between January 1 and April 15, and (2) compensation for 30% of expected losses from April 15 through the next two quarters. A producer’s compensation for any given commodity will be capped at $125,000, and any producer’s overall compensation will be capped at $250,000.
Unfortunately, many California ranchers would be inadequately compensated by relief funds disbursed with such caps. Fortunately, as USDA has not finalized the details of the program, it remains possible for USDA to alter or remove these program caps—especially because there may be additional funding for relief payments available through the Commodity Credit Corporation, which Congress re-funded through the Coronavirus Aid, Relief and Economic Security (CARES) Act.
Last week, CCA joined our national affiliate the National Cattlemen’s Beef Association and 33 other affiliates in calling on USDA to remove these limitations on relief payments to beef producers.
Additionally, 28 senators—led by Sen. Dianne Feinstein (D-CA)—likewise asked the Administration to remove payment caps under CFAP, as did 126 Congressmen (led by Rep. Jimmy Panetta (D-CA20) and signed by 17 other California representatives).
Specific details of the CFAP are still forthcoming. USDA has not yet released—and CCA is not yet aware of—details regarding how specifically “price losses” may be calculated under the program. USDA hopes the program will be open for applications in early May and hopes to disburse payments in late May or early June. CCA will provide members with additional details about the direct payments as they become available.
Congress Approves Additional Funding for Paycheck Protection Program
On Friday, President Trump signed into law the Paycheck Protection Program and Health Care Enhancement Act, infusing the Paycheck Protection Program (PPP) with an additional $310 billion in funding. The PPP “went live” this morning at 7:30 a.m. and began once again processing applications.
The PPP—established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act signed into law on March 27 and administered by the Small Business Administration (SBA)—was initially funded at $349 billion. Those initial funds ran dry on April 16, at which time the SBA ceased accepting new PPP applications until operations resumed this morning.
Under the PPP, any small business with fewer than 500 employees is eligible for a loan of up to $10 million. Loans are 100% forgivable so long as funds are used for approved expenses and employers do not terminate or cut the pay of employees.
There will be high demand for the additional $310 billion in loan funding, and the funds are likely to be depleted quickly—so ranchers should file their applications without delay. Many experts suggest that the PPP needs at least $1 trillion in total funding—and Friday’s action still falls at least $341 billion short of that total.
The Paycheck Protection Program and Health Care Enhancement Act also infused SBA’s Economic Injury Disaster Loan (EIDL) program with an additional $50 billion in funding. Importantly, the Act mandated that the EIDL program be available to agricultural enterprises as defined in the Small Business Act (“businesses engaged in the production of food and fiber, ranching, and raising of livestock, aquaculture, and all other farming and agricultural related industries”).
While the CARES Act reflected Congressional intent to make the EIDL program available to farmers and ranchers, SBA did not previously open the program to agricultural producers, requiring EIDL applicants to certify that “Applicant is not an agricultural enterprise (e.g., farm), other than an aquaculture enterprise, agricultural cooperative, or nursery.” Under the legislation passed Friday, agricultural enterprises will now be eligible for EIDL funds.
For more information on the PPP, EIDL or other loans or financial assistance available to California ranchers, contact the CCA office.
READ THIS: How to apply for the PPP if you Don’t Have Employees
The Small Business Administration (SBA) has been clear that the Paycheck Protection Program (PPP) is available even to small businesses which do not have employees. Despite these assurances, CCA has received numerous calls and emails from ranchers concerned that they are not eligible for the program, or wondering how a sole proprietorship, a partnership or another enterprise lacking employees should file an application for the PPP.
In prior issues of Legislative Bulletin and email releases, CCA has pointed members to USDA’s COVID-19 FAQ webpage, which includes a “Paycheck Protection Program” drop-down menu with advice for businesses without employees.
Late Friday, the SBA and Department of the Treasury released a document titled “How to Calculate Maximum Loan Amounts—By Business Type.” The document details how numerous business types—including sole proprietorships and partnerships without employees—should go about calculating their maximum loan amounts and what documentation will be needed for their loan applications.
If the above resources do not answer your questions regarding applying for the PPP, CCA encourages you to contact your lending institution for further clarification.
Treasury Clarifies PPP Applications for Seasonal Employers
Today, the Department of the Treasury released an interim final rule on Additional Criterion for Seasonal Employers seeking PPP funds. Under the CARES Act, seasonal employers were to calculate their maximum loan eligibility by referencing their average monthly payroll payments for “the 12-week period beginning February 15, 2019, or…March 1, 2019, and ending June 30, 2019.” Under the interim final rule, however, seasonal employers may now “elect to determine its maximum loan amount as the average total monthly payments for payroll during any consecutive 12-week period between May 1, 2019 and September 15, 2019.” The rule change is particularly useful for businesses which were not in operation—or which were not fully operational—as of February 15. For more information—including an FAQ—see the interim final rule linked above.
Governor Newsom Mandates COVID-19 Sick Leave for Food Industry Employees
On April 16, Governor Gavin Newsom issued an Executive Order mandating that food industry employers provide two weeks’ worth of supplemental paid sick leave to employees who have contracted COVID-19 or been exposed to the virus. The Executive Order applies to employers with 500 or more employees, supplementing the federal Families First Coronavirus Response Act—signed into law March 18—which requires employers with fewer than 500 employees to provide two weeks’ worth of paid sick leave to employees impacted by COVID-19.
The order applies to employers and employees engaged in “agricultural operations” including “The raising, feeding and management of livestock.”
Full details regarding calculation of the paid sick leave benefit are available in the Governor’s executive order, here. Should you have any questions regarding the supplemental COVID-19 paid sick leave, please contact the CCA office.
Caltrans Authorizes Overweight Vehicles to Transport Essential Goods
On April 13, the California Department of Transportation (Caltrans) issued a news release announcing that it is issuing special permits authorizing overweight trucks to deliver emergency COVID-19 supplies. The permits increase the maximum allowable gross vehicle weight from 80,000 pounds to 88,000 pounds and are valid until further notice from the agency.
On April 17, in response to requests for clarification from CCA and other organizations, Caltrans clarified that livestock are among the “essential goods” for which the special permits would be issued.
For more information, see Caltrans’ news release.
USDA to Investigate Cattle Markets at Request of NCBA
On April 8, 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.