In March, Congress authorized a $19 billion bailout for farms suffering losses because of the coronavirus pandemic, and left the Department of Agriculture to work out how the money would be spent. When the program was rolled out two months later, Agriculture Secretary Sonny Perdue said its $16 billion in direct payments would be a “lifeline” for farmers of “all sizes and all…production.”
But that’s not what happened, according to an NBC News analysis of the first nearly 700,000 payments, totaling $5.6 billion, obtained through a public records request. The Coronavirus Food Assistance Program, while greatly appreciated by many farmers who spoke to NBC News, has been marked by structural challenges. The preliminary data suggests it has favored large, industrialized farms over smaller, diversified ones, provides loopholes for corporate farms, and has sent sizable payments to foreign-owned operations. Ultimately, many struggling farmers remain ineligible for assistance, unable to access any of Congress’s funds.
The uneven distribution of funds is stark. The top one percent of recipients got more than 20 percent of the money, totaling $1.2 billion. The top 10 percent got over 60 percent of the pot, while the bottom 10 percent got just 0.26 percent. The top 10 percent of recipients got an average payment of almost $95,000, while the bottom 10 percent averaged around $300.
Image: Sonny Perdue (Jabin Botsford / The Washington Post via Getty Images)
“I’m sure the money helped those larger operations tremendously,” said Lonnie Sigler, an Alabama rancher and high school agriscience teacher. “But for a person like myself that sells once every six months, it’s hard to see how it can help you all that much.”
“It’s a constant struggle in U.S. agricultural policy,” said Joseph Janzen, a professor of agricultural economics at Kansas State University. “The tension between the mass of small farms and the little group of huge farms makes the idea of equality in farm payments incredibly complicated.”
Nearly 2,300 operations received more than $250,000, which was set as the payment limit for a single farm. But the rules gave corporate farms ways to get more money. For example, USDA allows farms to get up to $750,000 if there are three shareholders who each spent more than 400 hours working in the business. Experts also say there is also no real payment limit for farms structured as “general partnerships,” due to a longstanding loophole in farm subsidy policy. That’s presumably how Titan Swine, a hog farming partnership of 20-plus independent producers in northwest Iowa got over $2.5 million in taxpayer cash, and five other farms also got $1 million or more.
Related: Quick-fix programs to get billions to farmers, like the trade-war bailouts and PPP, have come with complications, critics say.
“The payment limitations are supposed to help make things more fair,” said Tyler Whitley, a program manager at the Rural Advancement Foundation International. “[It’s] so USDA can spread money to more farmers and a couple farms don’t suck in huge amounts.”
In a statement to NBC News, Titan Swine noted that they are comprised of “farm families involved in the day to day operation of the company.”
“Titan Swine was formed to group assets, knowledge, and economies of scale to better compete with large corporate farms in livestock ownership,” the company said in a statement.
It’s first come first served; the funds paid so far are just 80 percent of each farm’s maximum payment, and the rest will be released later if money remains. That’s not saying much for folks at the bottom. Almost 7,000 farms got less than $200, and nearly 200 got less than $20. The lowest payout was seven cents.
Sigler, the Alabama rancher, got about $2,000 from USDA, but he still stands to lose as much as $9,000 in 2020. He has lost $4,500 so far, and estimates that will double unless prices for calves recover later this year. He hasn’t sold any to date because prices have been so bad he would have been selling at a significant loss.
NBC News also found over a dozen examples of bailouts going to what appear to be foreign-owned farms, including a Swiss-owned farm in Texas, a Korean-owned farm in South Dakota and a series of Dutch-owned LLCs in Wisconsin. Together, their payments add up to over $3.6 million, an average payout above USDA’s payment cap.
NBC News identified these farms by cross-referencing data from Agricultural Foreign Investment Disclosures, obtained via a public records request last September. Some matches may be out of date, given that USDA’s most recent records are from 2017. However, there could also be more foreign recipients who applied under names that did not precisely match their foreign ownership disclosure to USDA.
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Many of these issues are not new. It’s not easy to design a multi-billion dollar bailout in two months, so USDA’s program looks a lot like another recent bailout: $28 billion to help farmers through the U.S.-China trade war. The common criticisms of the Coronavirus Food Assistance Program were inherited from that earlier program’s framework, experts say.
“If USDA had had a little more time to craft this, maybe it would have shaped up differently,” said Mike Stranz, vice president of advocacy at the National Farmers Union. “But Congress was in a hurry, and that put USDA in a difficult position with this program, having to process, understand and evaluate all of the losses that farmers were feeling in this pandemic in just two months.”
USDA did not respond to requests for comment.
“When you have a program in response to some emergency, you want to get money out as soon as possible,” said Joseph Glauber, senior research fellow at the International Food Policy Research Institute and former chief economist at USDA. “But at the same time, people want accountability for those monies. They want to make sure it’s going to the right people and that somehow the amount of money going to people is commensurate with the amount of money lost, so you’re not overpaying some and underpaying others. To get all those things right is tough,” he added
The problems with the formula
When Congress wrote up this bailout, it included specific language to ensure funds went to “producers of specialty crops” and “producers that supply local food systems, including farmers markets, restaurants and schools.”
But advocates say these very farmers are among the most likely to be left out.
“We were really hopeful that the program … would take into account the specific needs of those smaller, newer businesses,” said Sanaz Arjomand, federal policy director for the National Young Farmers Coalition. “This program really doesn’t go where it needs to go for local and regional producers, the same ones called out in the legislative language.”
Take Haley Miyaoka, a 24-year-old who started a farm on the island of Oahu in Hawaii to grow about 20 different vegetables like peppers, cucumbers, eggplant and herbs for farmers markets and restaurants. She is the archetypal program recipient, per the C.A.R.E.S. Act language, but the USDA program wasn’t even on her radar. If she had applied, she would have had to apply crop by crop, likely with scarce returns.
Image: Haley Miyaoka (Ahiki Acres)
The process was far simpler for Brady Cooper, who grows soybeans, wheat and corn in Oklahoma. He knows the drill with USDA, having participated in past programs like the trade war bailout. He says he got nearly $5,000 from the Coronavirus Food Assistance Program, which pretty much covers his losses.
“It helped make us whole,” Cooper said.
Overall, much of the money has gone to the usual suspects, according to publicly available USDA data. The top five beneficiary states are Iowa, Nebraska, Minnesota, Wisconsin and Texas. Iowa tops the chart with nearly $700 million, and Nebraska is in next with nearly $500 million. Ultimately, three commodities — cattle, dairy and corn — got over 80 percent of the pot.
“I don’t see it as a situation where the Secretary really understands and supports the diversity of American agriculture,” said Sen. Debbie Stabenow, D.-Mich., ranking member of the Senate Committee on Agriculture, Nutrition, and Forestry, who helped negotiate the C.A.R.E.S. act language for agriculture.
“I just want it to be fair,” Stabenow added later. “They seem to weave in a lot of bias and favoritism for certain crops and regions. It just doesn’t make sense based on actual losses.”
To some degree, these payments reflect the demographics of American agriculture. Payments are unequal because production levels are unequal; large-scale family farms, with over $1 million in cash farm income, account for just three percent of farms and nearly 50 percent of agricultural production. California and Illinois aside, the top five beneficiary states are all among the top producers of agricultural products in the nation.
But critics contend there are also flaws in the formula that cause it to exclude less traditional operations, like local farm systems and niche fruits and vegetables. The formula is not based on lost income, but rather a rigid system of lost sales volumes, inventory and price declines from mid-January and mid-April. Commodities sold before Jan. 15 are not covered. Small farmers, who can’t afford to store large crop inventories after harvest, may find themselves frustrated, experts say.
“If you’re a bigger operation with more resources, you can afford to hang onto your crop until you get a price you like,” said Whitley. “But in this farm economy, that’s not a realistic option for a lot of people. They are really living crop to crop, and that crop has to go right out the door.”
Because USDA makes calculations using wholesale prices, farmers who rely on higher-priced markets may be undercompensated. While a pound of Miyoaoka’s organic, sustainably farmed basil brings in $12 in Hawaiian farmers markets, USDA compensates a pound of basil at just $1.65.
“Smaller producers have definitely been hit hard by this and are seeing an inability to reach their customers in usual ways,” said Arjomand. “Some have resources to pivot, but others really don’t. Having a program that is equitably accessible to all folks and business models going forward is really important.”
‘What about me?’
The list of grievances continues, to the tune of over 1,500 comments sent in to the federal government. Many come from producers who are not eligible for funds at all. A New York peony farmer writes that he lost $50,000 after weddings and big events slowed. A Sonoma wine grapes producer has sold only 30 percent of her crop, as tasting rooms and restaurants are closed. A Florida beekeeper described $30,000 in losses, as fruit farmers plant and pollinate less. An oyster producer notes he has essentially no market without restaurants, and he has 50,000 oysters that will die soon if not sold.
The list goes on; maple syrup, mink, ethanol, crawfish, tobacco, chicken, hemp, honey, eggs, cotton, alfalfa and many more.
“We were getting voicemails and emails from farmers all around the country saying ‘What am I going to do? I’m going to lose everything if I don’t get something,'” said Michael Nepveux, an economist at the American Farm Bureau Federation.
“Our role was saying, ‘Don’t forget about these guys, and don’t forget about those guys,” Nepveux continued. “Just because USDA doesn’t collect price data on niche products like parsnips and passion fruit, doesn’t mean these farmers aren’t suffering.”
To receive payments, crops must show a price decline of more than five percent from mid-January and mid-April. Price drops after mid-April don’t count, which could pose a problem for late spring and summer crops.
It was a bummer for wheat farmers, for example, who saw short-lived high wheat prices in mid-April as Americans panic-bought flour and bread from grocery stores. So when the program rolled out, USDA only covered two of six wheat types: hard red spring (used for pizza and bagels) and durum (used for pasta). But Dave Milligan, the organization’s president, grows soft white wheat, the kind used in cakes. It’s not covered, and Milligan says the losses are weighing on his margins.
“We hope things will change in the future,” said Milligan. “We know they absolutely cannot serve everybody with this program because they had to roll it out so fast.”
But even within well-endowed sectors like livestock and dairy, some farmers and ranchers say USDA’s aid still hasn’t covered their wounds. That includes Titan Swine, the biggest single beneficiary of the program’s funds.
“Titan Swine suffered market losses due to the COVID 19 pandemic in the amount of around ~$6,000,000.00,” Titan Swine said in a statement to NBC News. “While the CFAP payment was helpful, it was a long ways from making our company close to whole. “
The company said it had to take the “unthinkable step” of euthanizing nearly 8,000 market animals due to the pandemic’s effect on processing facilities. USDA funds still may not be enough to overcome the overall financial burden on some members, friends and neighbors, Titan Swine added.
“We’re at a point in this country where the majority of food dollars that Americans spend go to food away from home,” said Nepveux. “I don’t know if there is any USDA program that could have absorbed all those losses.”
Industry estimates of coronavirus-related losses approached $40 billion as of May, according to the Congressional Research Service. Lawmakers, advocates, and Secretary Perdue have all stated additional funds will be needed. Already, direct agriculture aid has hit a record high under President Trump, with at least $50 billion in payments to farmers in 2019 and 2020.
“It seems like a never-ending cycle of ad hoc program after ad hoc program,” said Janzen. “And in the end I don’t know if anyone is really totally satisfied with the outcome.”