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Facing product surpluses as factories are forced to temporarily close down, agricultural producers are asking for federal assistance to purchase some of the excess commodities in an effort to keep farmers in business.

First reported in Reuters, multiple farming advocacy organizations, such as the National Pork Producers Council (NPPC) and the National Milk Producers Federation (NMPF), have published statements asking for the government to purchase excess goods as demand erodes during the coronavirus pandemic.  

“We remain committed to supplying Americans with high-quality U.S. pork, but face a dire situation that threatens the livelihoods of thousands of farm families,” wrote NPPC President Howard “A.V.” Roth. “We are taking on water fast. Immediate action is imperative, or a lot of hog farms will go under.”

With restaurants shuttered, economists Dr. Dermot Hayes and Dr. Steve Meyer estimate that pork farmers are projected to lose $37 per hog, amounting to $5 billion collectively for the remainder of 2020. 

Pork producers also face a particularly dire situation in terms of supply, mainly because they farm livestock. Whereas milk, fruit and vegetable farmers can simply move or throw out their unused harvest, pork farmers cannot simply “throw out” a pig. 

“The pork industry is based on a just-in-time inventory system. Hogs are backing up on farms with nowhere to go, leaving farmers with tragic choices to make,” Roth noted. 

Similarly, dairy farmers are facing a lack of demand for milk and milk products, having been forced to dump excess product as restaurant dining rooms close. The NMPF estimates that there is a 10 percent discrepancy where the supply of milk products outweighs demand. 

“The COVID-19 crisis has hit the dairy industry with a unique set of challenges that impact our dairy farmers and processors equally hard,” International Dairy Foods Association (IDFA) President and CEO Michael Dykes said in a statement. “As the impact deepens across our economy, the federal government must go above and beyond traditional programs and solutions to bring balance and certainty to the dairy industry.”

For both pork and dairy producers, the most tenable solution appears to be federal purchases. The NPPC asked for more than $1 billion in pork purchases by the U.S. Department of Agriculture (USDA), citing two benefits: pork farmers will be able to clear excess supply and sell products for equitable pay, and supplementing food banks across the country to provide food security for the growing number of unemployed Americans. 

Similarly, a joint proposal submitted to the USDA by the NMPF and IDFA outlines steps that can be taken to give dairy farmers economic stability and give excess product to food banks. 

The plan calls for the immediate purchase of “substantial volumes of dairy products” for food donation programs, stabilizing the dairy market and providing food supplies. 

The dairy plan includes projected food bank needs for 2020 for products like butter, cheese, milk and powdered milk. The total would be approximately 607 million units of dairy products, which could result in a $525 million payday for dairy producers. 

On the congressional side, there is support for these federal purchasing initiatives. Rep. Collin Peterson (D-Minn.), the House of Representatives Agriculture committee chairman, sent a letter to USDA Secretary Sonny Perdue urging the government to use the federal funding awarded to the agency in the CARES Act to support farmers. 

“The agricultural economy was already in a fragile state from several years of adverse weather conditions and our challenging trade situation.  Despite being an essential service, our ag producers and their supply chain partners are facing the total loss of some market segments and the inability to quickly change their marketing and processing capabilities to meet the new realities,” Peterson wrote

He also addressed growing national food insecurity, saying that federal purchases can “help ensure that the production that no longer has a foodservice market can be made available to help our nation’s foodbanks.”

Reuters notes that on Twitter, Perdue said that the USDA is working on establishing a program that can make direct payments to farmers and develop “procurement methods to help solidify the supply chain from producers to consumers.”

As for food security services, organizations like Feeding America reportedly proposed a voucher program to allow farmers and food banks to work together. 

“We are seeing literally tons of agricultural goods being discarded because of the shutdown of so much of the economy,” the letter said, according to Reuters. “Paradoxically, we are seeing a simultaneous surge in demand at a moment when many farmers are being told there is an oversupply of their product.”

Published on Apr 15, 2020