Agriculture began 2020 in the 8th year of a down farm economy. After several years of low commodity prices, trade uncertainty, and severe weather, many were hoping this year would be better. But COVID-19 hit, markets started to tumble, hopes for recovery evaporated, and farm businesses were hit extremely hard. While we are seeing recovery in some sectors, there is much uncertainty about the future.
The economic losses across the U.S. agriculture sector are broad‐based, directly impacting farmers and their supply chain partners – from input providers to end users. Producers have witnessed their markets shrink overnight or even disappear, while supply chains have been stretched to the limit in response to the pandemic. The widespread closures at the retail level have impacted consumer demand and purchasing patterns in ways that the industry has never experienced. The disruptions and logistical challenges in the supply chain added unprecedented costs and risks in the marketing system. USDA’s World Agricultural Supply and Demand Estimates suggest that the decline in commodity value alone for 2019, 2020 and 2021 production is nearly $60 billion. This does not include all of agriculture’s losses, which would be billions more.
Bipartisan efforts in Congress have delivered critical resources and support to individuals and American businesses impacted by the ongoing economic crisis, including funding to USDA to craft relief programs for agriculture, critical tax credits and innovative Small Business Administration grant and loan programs. Despite these efforts, farmers and the agricultural supply chain continue to endure significant hardships that will require further Congressional action.
For more information about impacts on agriculture, see AFBF’s Market Intel: https://www.fb.org/market-intel.
Farm Bureau has identified ongoing economic pressures across the supply chain, including funding requirements, numerous technical corrections and issues not addressed in the CARES Act and other legislation. Farm Bureau requests support for the following:
- Relief funding for agricultural producers including additional relief for continued impacts to producers as a result of COVID-19, and inclusion of commodities/sectors not previously included in the CFAP program; replenishment of the Commodity Credit Corporation; additional resources for the USDA Secretary to respond to industry needs.
- Support for livestock producers including aid to poultry producers.
- Legal Protections, specifically the inclusion of targeted, limited liability reforms that protect small businesses against abuses of the legal system. These provisions would protect farmers who are doing their best to protect their workforce during the crisis from unjustified litigation.
- Additional support for rural healthcare, including through Community Health Care Centers, which provide an affordable health care option for rural Americans.
- Changes to the Paycheck Protection Program, many of which are identified below under the Small Business Administration heading.
- Help with Ag Labor and Agricultural Safety including additional funding to offset costs of providing additional housing for farm workers to comply with new COVID-related requirements; and funding to offset the costs of personal protective equipment.
In addition to the issues identified previously, Farm Bureau asks for support for the following:
Small Business Administration Programs
- S. 3918/H.7175, the Paycheck Protection for Producers Act, which addresses one of the major hurdles for sole proprietors who file a Schedule F by allowing farmers to use their 2019 Schedule F gross income (up to $100,000) when calculating their PPP loan rather than 2019 net income. Farmers who received a PPP loan using their 2019 net income could recalculate their loan award using 2019 gross income if it would result in a larger loan amount.
- S. 3612, the Small Business Expense Protection Act of 2020, would clarify that payroll, rent, mortgage interest and utilities paid for with forgiven Paycheck Protection Program loan funds will be deductible business expenses.
- S. 4117, the Paycheck Protection Program Small Business Forgiveness Act, which would allow PPP loans of less than $150,000 to be forgiven upon the borrower’s completion of a simple, one-page forgiveness document.
- Solutions that would: qualify H-2A workers as employees under the PPP, and permit any wages paid be eligible for loan forgiveness; allow all business-related rental payments and personal protective equipment (as well as costs to modify worker housing and transportation) to be eligible for loan forgiveness; allow income from farm equipment trades, sales of bred livestock, rental income and commodity wages to count toward loan availability; and allow expenses paid with PPP loan funds to be eligible for a business income tax deduction.
- H.R. 6821, Small Business Expense Protection Act of 2020, and S 3612, Small Business Expense Protection Act of 2020. These bills address tax deductibility of Paycheck Protection Program (PPP) expenses with a goal of changing IRS rules to allow farmers to claim a tax deduction for expenses incurred while operating their businesses using loans they received from the PPP.
- H.R. 6776, the JOBS Credit Act of 2020, which would provide expanded credit percentages for qualified wages, increases eligible wages, and allows employers to claim both the Employee Retention Tax Credit and use the PPP.
- Net Operating Losses – The CARES Act changed net operating loss (NOL) rules in an effort to put more cash in the pockets of struggling businesses, providing a five-year carryback for losses earned in 2018, 2019, and 2020 (for pass through businesses such as sole-proprietors, partnerships and S-corps), similar to the rules for NOL for farmers prior to the Tax Cuts and Jobs Act of 2017. The CARES Act also suspended the 80 percent of taxable income limitation on carrying forward losses. Farm Bureau is seeking legislation to extend NOL changes.
- S. 3797, the Small Packer Overtime and Holiday Fee Relief COVID-19 Act, which would alleviate overtime inspection pay for small and medium-sized meat packers. The bill would help alleviate pressure on small and medium-sized packing plants who have seen an increased demand for their services as larger-scale meatpacking facilities have closed or reduced capacity due to worker outbreaks of COVID-19.
- H.R. 7490, the RAMP-UP Act, would establish a program to make facility upgrade and planning grants to existing meat and poultry processors to help them move to Federal Inspection and be able to sell their products across state lines. The grants will be capped at $100,000 per facility. The legislation will also require USDA to work with States and report on ways to improve the existing Cooperative Interstate Shipment program.
- H.R. 7425, the DIRECT Act, would allow State Inspected meat to be sold across state lines, but only through e-commerce, allowing small producers and processors more options to directly market to consumers. The legislation allows new flexibilities without compromising food safety recall ability, or jeopardizing trade market access through equivalency agreements.
Other ag-related legislation:
- H.R. 6956, The Farming Support to States Act, which would provide $1 billion for food and agriculture aid to states. USDA would allocate funds to all states and territories, with substantial funding targeted to states based on their contributions to regional and national food systems.
- H.R. 7679, which would raise the Commodity Credit Corporation’s (CCC) borrowing authority to $68 billion and index it to inflation. By increasing CCC borrowing authority, USDA would have greater flexibility to maintain farm bill programs that support U.S. agricultural producers and stabilize domestic agricultural markets.