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CARES Act and coronavirus questions answered

The legislation will impact nearly every citizen of the U.S. and most aspects of the U.S. economy in some shape or manner, including farm families, rural communities, and the U.S. agriculture industry.

Erin Ehnle Brown / Grand Vale Creative LLC
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On March 27, President Donald Trump signed the Coronavirus Aid, Relief and Economic Security (CARES) Act into law, following unanimous passage by both the U.S House and Senate. The CARES Act authorizes up to $2.2 trillion in aid and financial assistance to deal with the health and economic impacts from the COVID-19 virus pandemic in the United States. This is one of the largest and most comprehensive financial bills ever passed by Congress. The legislation will impact nearly every citizen of the U.S. and most aspects of the U.S. economy in some shape or manner, including farm families, rural communities, and the U.S. agriculture industry.

Overall, the CARES Act provides approximately $48.9 billion for United States Department of Agriculture programs. An important portion of this funding, $14 billion, is allocated as additional funding authority for the USDA Commodity Credit Corporation. The CCC funds were used to make the 2018 and 2019 Market Facilitation Program payments, as well as to fund other USDA programs. The aid package also authorizes an additional $9.5 billion emergency fund that is targeted toward dairy and livestock producers, fruit and vegetable growers, and fresh food markets.

The CARES Act provides $15.5 billion in additional funding for the of the USDA Supplemental Nutrition Assistance Program and an additional $8.8 billion for child nutrition programs.

The CARES Act also allocated $350 billion to the U.S. Small Business Administration for emergency loans to help small businesses keep employees working and to keep their businesses operating during these challenging times. The portion of the SBA relief package getting the most attention is the “Payment Protection Program” that provides 100% federally guaranteed loans to small businesses to assist with those efforts. It appears that many farm operations and ag related businesses will likely qualify for the PPP loans, especially those with monthly payroll payments and that have regular funds withdrawn for ownership and management payments. PPP loan applications are made through SBA approved banks and lending institutions.

The CARES Act also provides funding for SBA Economic Injury Disaster Loans (EIDL) for small businesses that incur financial hardship as a result of the coronavirus outbreak. As of this writing, there was a considerable uncertainty regarding the potential eligibility of farm-related businesses for these SBA loans. Loans through the EIDL program are made directly by SBA and do not require approval by a local bank or lender. For more information on the EIDL program or to make on-line EIDL applications, businesses should go to the SBA website at:


Here are answers to some common questions about the legislation and coronavirus and their effects on agriculture:

Does the added Commodity Credit Corporation funding in the new CARES Act automatically mean there will be a third round of Market Facilitation Program payments (or something similar) in 2020?

Not necessarily. The 2018 and 2019 MFP payments were related to lost income due to the trade war with China and other countries. It is not apparent if the coronavirus will necessarily impact the new trade agreement with China or ag trade with other countries. However, given the added funding provided to the U.S. Department of Agriculture and the CCC through the emergency legislation and the financial challenges facing farm operations, it is highly likely that some form of assistance similar to MFP will be made available to farmers and ranchers in the coming months. The aid package will likely look different than the 2018 and 2019 MFP payments, and the aid will likely involve more commodities, especially with the added USDA emergency fund that is targeted toward dairy and livestock producers and others.

What strategies can be utilized following the sharp price decline for unsold 2019 corn and soybeans that are still in storage on the farm?

Many farm operators have a considerable amount of unsold 2019 corn and soybeans in farm storage. Following the coronavirus outbreak in the U.S., there was an immediate sharp drop in local grain prices, resulting in cash corn prices to drop 70-80 cents per bushel in just a few weeks at many Midwest locations. In addition, many ethanol plants and other local grain markets are currently not accepting corn or only doing so on a limited basis. One strategy that farmers could utilize to get some temporary revenues from their unsold grain in storage is to utilize the CCC commodity loan program through local Farm Service Agency offices. The length of CCC commodity loans has been temporarily extended from 9 months to 12 months. Local CCC loan rates vary from county-to-county. Loan rates are generally slightly over $2 per bushel for corn and $6 per bushel for soybeans in many areas of the Midwest. The current interest rate in April on CCC grain loans is only 1.625 percent. Be aware that due to the coronavirus, most FSA transactions need to be completed via phone or email.

Will the decline in cash grain prices impact 2019 farm program payments ?

Any 2019 farm program payments for the PLC, ARC-CO and ARC-IC programs will be based on the final 2019 market year average prices for corn, soybeans and other crops. The 2019 market year average price for corn and soybeans is based on national average monthly farm-level prices from Sept. 1, 2019, through Aug. 31, 2020, which are weighted for the percentage of bushels sold in each month. The USDA 2019 market year average price projections as of March 1 were $3.80 per bushel for corn and $8.70 per bushel for soybeans; however, many analysts expect the final 2019 market year average prices to decline slightly in the coming months. Further declines in the market year average prices would potentially enhance the amount of 2019 ARC-CO and ARC-IC payments for producers that are already likely to qualify for payments, if they have not reached the maximum payment level. It could also make a few more counties potentially eligible for some 2019 corn and soybean ARC-CO payments. Corn and soybean PLC payments for 2019 still appear unlikely at this time, as do ARC-CO payments for corn in many counties.

Why is it important to communicate with your ag lender, farm management advisors and family partners during financial challenges that we are currently facing ?


View ag lenders, farm business management instructors, marketing advisors, and other consultants as informal partners in a farm business. Ag lenders and others can be a valuable resource in making management decisions and understanding some of the emergency financing tools that may be available. It is best to include all partners and family members that are part of the farm operation in the discussion process, so that all key players are “on the same page” regarding financial decisions and adjustments that may affect the farm business. The added financial difficulties being brought on by the coronavirus also adds a lot of personal stress for farm operators and their families. Families are encouraged to utilize the free resources that are available at the State and local level to assist in these situations.

Kent Thiesse is a farm management analyst and senior vice president at MinnStar Bank, Lake Crystal, Minn.

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