U.S. cattle producers and Republican senators seeking financial relief through USDA

The last three years in agriculture have been trying times from a profitability perspective, and through the Commodity Credit Corporation (CCC) American producers have received financial assistance in the form of a direct payment for the past two years.

Many policy followers suggested that with 2020 being an election year and the Phase One deal with China off to such a slow start, that a Market Facilitation Program 3.0 payment was highly probable this year. COVID-19 has increased the urgency for a 2020 program in some sectors of agriculture, such as cattle, as live cattle future markets continue to plunge lower.

According to Jim Wiesemeyer of Pro Farmer, Not a question of if, but when Congress boosts CCC borrowing authority, [that will] signal relief ahead for ag sector. Farm-state lawmakers and others are signalling [that] discussions are underway to boost borrowing authority for USDA’s Commodity Credit Corporation to $50 billion, up $20 billion from its current $30 billion sending limit. If so, sources say that increase will likely come via a supplemental spending measure later this year, but in time for some type of ag sector relief, and maybe something other than another Market Facilitation Program. But the likely coming aid will be targeted for summer delivery.”

With a U.S. trillion dollar stimulus deal being debated in Congress, agriculture is looking to find some funding in that package – which could be MFP 3.0.

Many producers in Canada are just as concerned about mounting losses in the cattle sector. While boxed beef prices have increased, cattle futures have fallen – which has enabled historically large packer margins. RealAgriculture’s Shaun Haney believes that “If there is a direct payment of any kind to American cattle producers, this will heighten the pressure on Agriculture and Agri-Food Canada to break out of its AgriStability and business risk management (BRM) reformation backstop excuse and to actually consider direct compensation as well.”

This week Sen. Jerry Moran of Kansas and some of his senate colleagues addressed a letter to USDA Secretary Sonny Perdue stating, “We propose making this emergency payment to producers on a per head basis using a payment rate applied to the fair market value of the cattle as determined by the USDA Chief Economist.”

You can listen to Senator Jerry Moran’s comments regarding the letter with the AgriTalk free for all panel including RealAg’s Shaun Haney.

Cattle producers have not participated in the previous MFP programs, and there is a lack of support from NCBA on the programming according to Agri-Pulse.

There is some speculation as of Friday (March 20, 2020) that the U.S. government may structure a direct payment to cattle producers outside of the CCC funding to separate the trade war from this scenario, says Wiesemeyer on his Signal to Noise podcast.

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