Surviving 2020: a Farmer’s Guide

Jayce Hafner
Apr 7, 2020 · 4 min read

By Sami Tellatin and Jayce Hafner — April 20th, 2020

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The deadly COVID-19 pandemic sent shockwaves through the U.S. agriculture system with labor shortages, supply chain breaks, and fluctuating prices. At FarmRaise, we help growers invest in their core assets: infrastructure, soil, water and energy systems, but COVID-19 has expanded our scope to address farmers’ immediate financial needs. As one Missouri row crop grower told us last week, “Right now, we need help getting through the year ahead.”

To that end, we’re developing an information toolbox to help farmers navigate this uncertain environment. We’ll update the toolbox regularly as new insights are available, and we welcome your suggestions/resources (send your tips to info@farmraise.us).

Last week, we surveyed the FarmRaise network, and our growers identified three areas of need: labor support, economic support given price fluctuations, and stability in the face of supply chain disruptions. We’ll share resources for each of these below. But first, an important update!

UPDATE, May 4th, 2020: Agriculture Businesses are now eligible to apply for Economic Injury Disaster Loans

Small ag businesses can apply for up to $2 million in loan assistance through the Small Business Administration application portal.

April 17th, 2020: Secretary Perdue Announces $16 Billion in direct payments to farmers through Coronavirus Food Assistance Program (CFAP)

Given this announcement, growers are wondering how to access this aid, who is eligible for it, how much funding they should expect to receive, and when they can expect to receive it. We’ll tackle these questions here

Who is eligible for the CFAP? Farmers and ranchers who make less than $900K per year, who derive at least 75% of their income from agriculture, and who faced at least a 5% loss due to COVID-19 between January — April 2020 should apply. Note: this program does not include aid for biofuel and ethanol producers.

How big will my check be? Farmers can receive up to $125,000 for every commodity they produce which suffered a loss with a cap of $250,000 per person or business entity.

When will my check arrive? Sec. Perdue is hopeful that the USDA will have eligible producer’s payments in the mail by the end of May.

How do I apply? How much paperwork is required? Short answer is: we don’t know yet because the USDA application hasn’t launched. We’ll post instructions on applying as soon as the application is live!

I have more questions on CFAP That’s great. Submit your questions to info@farmraise.us, and we’ll be in touch.

Labor Support Given Recent & Projected Shortages

Paycheck Protection Program: Overview

Securing farm labor is a major challenge during this time, and this is where the recently passed CARES Act can be useful to some growers. The Act includes a $349B funding opportunity called the Paycheck Protection Program which offers forgivable loans designed to help small business owners/operators keep their employees on the payroll throughout the coming months. These 1% interest rate loans can cover 2.5X costs of farm payroll costs, and do not require a personal guarantee or collateral (check out the US Chamber of Commerce’s quick guide for more details).These loans are forgivable if a portion of the loan is spent on eligible payments like farm payroll.

How to apply

  1. Determine if you’re eligible. To qualify, you must have fewer than 500 employees and meet the SBA’s definition of a small business for the ag industry sector in which you operate. Check your eligibility here.
  2. Estimate your loan amount: Your max loan can be determined through multiplying your monthly payroll costs by 2.5. Keep in mind that wages to foreign workers and wages to independent contractors will not be counted in your monthly payroll costs (independent contractors can apply for a loan on their own starting April 10th).
  3. Apply for the Paycheck Protection Program: complete this application and send it to your local bank that partners with the SBA for loan disbursement (find a local bank here).

Supply Chain Stability & Market Access

Financial Support

Specialty crop, livestock, and direct-to-market producers are especially hard hit in this category. Fortunately, Congress allocated $9.5B to support these growers through the CARES Act. The problem is, we don’t yet know how or when the money will be disbursed; instead we look to USDA guidance coming out in the next two weeks. We’re monitoring this situation closely and will keep you updated as applications and eligibility requirements are released. In the meantime, we encourage all direct-to-market producers to apply for the American Farmland Trust’s Farmer Relief Fund here for grants of up to $1000 for small-to-mid-sized growers (it’s a quick and simple application).

Tech

If you have marketing channel flexibility, consider trying out a “Direct to Market” app to reach customers. As Politico reports, sales of boxed, direct-to-consumer farm goods are skyrocketing as cautious customers opt to shelter in place rather than risk a trip to the grocery store. Check out these options (sourced from Farm Aid’s excellent COVID-19 Resource page) to get started:

Support During Commodity Price Fluctuations

Beef and corn growers experienced plummeting prices in the wake of COVID-19, while wheat and rice producers enjoyed a pricing surge. To address those hit the hardest, the Commodity Credit Corporation (CCC) just received a $14B injection from the CARES Act to support growers dealing with painful price fluctuations. Much like the $9.5B allocated to the USDA, details on how this funding will be disbursed is still being determined. That said, the CCC just announced reduced lending interest rates for April. Stay tuned for more updates in the coming days.

Looking for more financial options and help navigating the paperwork?The FarmRaise team provides a 1:1 consultation, researches available grants and loans specific to your operational goals, and offers regular office hours/paperwork support to help you navigate the application process for $15/consultation. Reach out to info@farmraise.us for more information.

FarmRaise

Your one-stop shop for farm funding

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