In a news release, the Idaho Potato Commission (IPC) sent the following regarding the Coronavirus Food Assistance Program (CFAP):
Dominating the news this week has been the release and updates on the Coronavirus Food Assistance Program (CFAP) payments. This link has all the information about the program https://www.farmers.gov/cfap/specialty
Payments have been limited to $250,000 per person or entity. It is unlikely that there will be significant relief to our industry through this program. As such IPC, along with the NPC and other state potato organizations, has sent the USDA a letter highlighting our concerns. Here are the points we raise in that letter:
Unfortunately, the Coronavirus Food Assistance Program (CFAP) announced Wednesday does not meet the goal for our industry of a meaningful direct payment program. In the interest of ensuring it does provide value for our growers, we have the following questions and recommended enhancements to meet that goal.
• What factors were used to determine that potatoes are ineligible for Category 1 payments (the most meaningful category) under the CFAP? Several potato producing states had growers who suffered a significant price loss during the specified January-April time period, particularly if their primary market was food service. Specifically, in Idaho the carton price dropped from $19.00 to $11.00 (42%) and Washington state saw a drop from $17.50 to $13.00 (26%) based on USDA AMS data. Certain potatoes-for-processing experienced a 100% loss in value during that time period. As you have likely seen, the result was growers giving away their potato crop.
• It appears that USDA may have only considered fresh (retail) market data for potatoes to determine a 5% price loss rather than the processed (food service) side of the industry that operates largely on a contract basis. As we have discussed on multiple calls and communications with USDA, the food service (potatoes-for-processing) side of our business is 60% of the overall industry and is the portion most vulnerable to the pandemic. If the processing side of the industry including seed potatoes was not considered, then USDA did not review the most vulnerable and impacted sector and the program does not address it.
• For Categories 2 and 3 in the CFAP, why is the payment rate for potatoes so much lower than for other comparable commodities? As identified by USDA, sweet potatoes have a $0.18/lb payment rate under Category 2 and a payment rate of $0.04/lb under Category 3. Both rates are 400% larger than for potatoes ($.04/$.01 per lb respectively). In general, the cost of production and the market price for these two commodities are extremely comparable but the payment rates are grossly disconnected.
• The contract nature of the food service side of the potato business makes it highly unlikely that Category 2 can be utilized by our growers. Why is unusable product that leaves the farm treated so much differently than unusable product that remains on the farm?
Contract potato producers (those most vulnerable to this crisis due to the food service shutdown) have been told that a substantial portion (or all) of their crop will not be used. This product is unlikely to ever leave the farm, making it eligible only for Category 3. However, that payment rate is much lower than Category 2. This creates a huge disparity for these producers. The only difference appears to be in the transportation of the crop beyond the farm gate. However, transportation does not account for a 400% differential in payment between Category 2 and Category 3.
Given these examples, it appears that there are significant infirmities in the CFAP as announced yesterday. In anticipation that these errors were caused by the consideration of data that does not accurately reflect the crisis in the majority of the potato industry, we respectfully ask USDA to take the following urgent actions to provide relief to our family farmers:
1. Make potatoes eligible for Category 1 payments, subject to requirements of verifying economic losses in a manner consistent with the contract nature of that side of the potato industry.
2. Raise the payment levels for potatoes in Category 2 and Category 3 to levels that are consistent with the payment levels of other commodities and no less than $.04 per lb
Keep in mind all these payments and programs will be managed through the Farm Service Agency.
It is recommended that you reach out to your county agent ASAP to start this process. Producers can start applying beginning May 26 through August 28th, 2020. All forms are located at https://www.farmers.gov/cfap
