Small farmers left behind in Trump administration's COVID-19 relief package

The uneven distribution of funds is stark. The top 10 percent got over 60 percent of the pot, while the bottom 10 percent got just 0.26 percent.
Image: Ahiki Acres
Ahiki Acres, an organic farm on Oahu, Hawaii, usually sells to restaurants and farmers markets. When those markets collapsed because of the coronavirus, the farm began selling its fruit and vegetables online.Haley Miyaoka

In March, Congress authorized a multibillion-dollar bailout for farms suffering losses because of the coronavirus pandemic and left the Agriculture Department to work out how the money would be spent. When the program was rolled out two months later, Agriculture Secretary Sonny Perdue said its $16 billion in direct payments would be a "lifeline" for farmers of "all sizes and all ... production."

But that's not what happened, according to an NBC News analysis of the first nearly 700,000 payments, totaling $5.6 billion, obtained through a public records request. The Coronavirus Food Assistance Program, while greatly appreciated by many farmers, has been marked by structural challenges. The preliminary data suggest that it has favored large, industrialized farms over smaller, diversified ones, provided loopholes for corporate farms and sent sizable payments to foreign-owned operations. Ultimately, many struggling farmers remain ineligible for assistance, unable to get access to any of Congress' funds.

The uneven distribution is stark. The top 1 percent of recipients got more than 20 percent of the money, totaling $1.2 billion. The top 10 percent got over 60 percent of the pot, while the bottom 10 percent got just 0.26 percent. The top 10 percent of recipients got average payments of almost $95,000, while the bottom 10 percent averaged around $300.

Agriculture Secretary Sonny Perdue arrives in the Roosevelt Room at the White House on May 23, 2019.Jabin Botsford / The Washington Post via Getty Images

"I'm sure the money helped those larger operations tremendously," said Lonnie Sigler, an Alabama rancher and high school agriscience teacher. "But for a person like myself that sells once every six months, it's hard to see how it can help you all that much."

Joseph Janzen, a professor of agricultural economics at Kansas State University, said: "It's a constant struggle in U.S. agricultural policy. The tension between the mass of small farms and the little group of huge farms makes the idea of equality in farm payments incredibly complicated."

Nearly 2,300 operations received more than $250,000, which was set as the payment limit for a single farm. But the rules gave corporate farms ways to get more money. For example, the Agriculture Department allows farms to get up to $750,000 if three shareholders each spent more than 400 hours working in the business. Experts also say there is no real payment limit for farms structured as "general partnerships," because of a long-standing loophole in farm subsidy policy. That's presumably how Titan Swine, a hog farming partnership of 20-plus independent producers in northwest Iowa, got over $2.5 million in taxpayer cash and five other farms got $1 million or more.

"The payment limitations are supposed to help make things more fair," said Tyler Whitley, a program manager for the Rural Advancement Foundation International. It's "so USDA can spread money to more farmers and a couple farms don't suck in huge amounts."

In a statement, Titan Swine said it's comprised of "farm families involved in the day to day operation of the company."

"Titan Swine was formed to group assets, knowledge, and economies of scale to better compete with large corporate farms in livestock ownership," the company said.

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It's first come, first served; the funds that have been paid so far are just 80 percent of each farm's maximum payment, and the rest will be released later if money remains. That's not saying much for folks at the bottom. Almost 7,000 farms got less than $200, and nearly 200 got less than $20. The lowest payout was 7 cents.

Sigler, the Alabama rancher, got about $2,000 from the Agriculture Department, but he still stands to lose as much as $9,000 in 2020. He has lost $4,500 so far and estimates that that will double unless prices for calves recover. He hasn't sold any because prices have been so bad that he would have been selling at a significant loss.

NBC News found over a dozen examples of bailouts that went to what appear to be foreign-owned farms, including a Swiss-owned farm in Texas, a Korean-owned farm in South Dakota and a series of Dutch-owned companies in Wisconsin. Their payments add up to over $3.6 million, an average payout above the Agriculture Department's payment cap.

NBC News identified the farms by cross-referencing data from Agricultural Foreign Investment Disclosures, obtained via a public records request in September 2019. Some matches may be out of date, given that the Agriculture Department's most recent records are from 2017. However, more foreign recipients could have applied under names that didn't precisely match their foreign ownership disclosures to the Agriculture Department.

Many of the issues aren't new. It's not easy to design a multibillion-dollar bailout in two months, so the Agriculture Department's program looks a lot like another recent bailout: $28 billion to help farmers through the U.S.-China trade war. The common criticisms of the Coronavirus Food Assistance Program were inherited from the earlier program's framework, experts say.

"If USDA had had a little more time to craft this, maybe it would have shaped up differently," said Mike Stranz, vice president of advocacy for the National Farmers Union. "But Congress was in a hurry, and that put USDA in a difficult position with this program, having to process, understand and evaluate all of the losses that farmers were feeling in this pandemic in just two months."

In a statement, the Agriculture Department said it had to act fast to provide relief given uncertainty and market volatility.

"The $16 billion Coronavirus Food Assistance Program (CFAP) has provided critical support to our farmers and ranchers, maintained the integrity of our food supply chain, and ensured every American continues to receive and have access to the food they need," a department spokesperson said. "USDA acted quickly to assist America's farmers and ranchers — of all sizes and for all market outlets — as they faced the initial fallout of COVID-19."

Said Joseph Glauber, a senior research fellow at the International Food Policy Research Institute who is a former chief economist at the Agriculture Department: "When you have a program in response to some emergency, you want to get money out as soon as possible. But at the same time, people want accountability for those monies. They want to make sure it's going to the right people and that somehow the amount of money going to people is commensurate with the amount of money lost, so you're not overpaying some and underpaying others. To get all those things right is tough."

The problems with the formula

When Congress wrote up the bailout, it included specific language to ensure that funds went to "producers of specialty crops" and "producers that supply local food systems, including farmers markets, restaurants and schools."

But advocates say those very farmers are among the most likely to be left out.

"We were really hopeful that the program ... would take into account the specific needs of those smaller, newer businesses," said Sanaz Arjomand, federal policy director for the National Young Farmers Coalition. "This program really doesn't go where it needs to go for local and regional producers, the same ones called out in the legislative language."

Take Haley Miyaoka, 24, who started a farm on the island of Oahu in Hawaii to grow about 20 vegetables, like peppers, cucumbers, eggplant and herbs, for farmers markets and restaurants. She is the archetypal program recipient under the CARES Act language, but the Agriculture Department program wasn't even on her radar. If she had applied, she would have had to apply crop by crop, likely with scarce returns.

Haley Miyaoka started her organic farm, Ahiki Acres, with a mission of increasing Oahu's food security. Her normal markets, like restaurants and farmers markets, collapsed when the coronavirus hit, so she started selling fruit and vegetables online.Ahiki Acres

The process was far simpler for Brady Cooper, who grows soybeans, wheat and corn in Oklahoma. He knows the drill with the Agriculture Department, having participated in past programs, like the trade war bailout. He said he got nearly $5,000 from the Coronavirus Food Assistance Program, which pretty much covers his losses.

"It helped make us whole," Cooper said.

Overall, much of the money has gone to the usual suspects, according to publicly available Agriculture Department data. The top five beneficiary states are Iowa, Nebraska, Minnesota, Wisconsin and Texas. Iowa tops the chart, with nearly $700 million, and Nebraska is next, with nearly $500 million. Ultimately, three commodities — cattle, dairy and corn — got over 80 percent of the pot.

"I don't see it as a situation where the secretary really understands and supports the diversity of American agriculture," said Sen. Debbie Stabenow of Michigan, the ranking Democrat on the Committee on Agriculture, Nutrition and Forestry, who helped negotiate the CARES Act language for agriculture.

"I just want it to be fair," Stabenow said later. "They seem to weave in a lot of bias and favoritism for certain crops and regions. It just doesn't make sense based on actual losses."

To some degree, the payments reflect the demographics of U.S. agriculture. Payments are unequal because production levels are unequal; large-scale family farms, with over $1 million in cash farm income, account for just 3 percent of farms and nearly 50 percent of agricultural production. California and Illinois aside, the top five beneficiary states are all among the top producers of agricultural products.

"The program was designed to make sure farmers who are most impacted receive the most aid," the Agriculture Department said in a statement, saying large farms operate far more farmland and generate disproportionate production value. "COVID-19 impacts on these farmers was relatively greater, which means they received higher payments yet a smaller share of overall loss. USDA continues to do vast outreach to farmers and ranchers of all sizes and from all sectors of production agriculture to educate and promote CFAP sign up."

But critics contend that flaws in the formula cause it to exclude less traditional operations, like local farm systems and niche fruits and vegetables. The formula is based not on lost income but rather on a rigid system of lost sales volumes, inventory and price declines from mid-January and mid-April. Commodities sold before Jan. 15 aren't covered. Small farmers, who can't afford to store large crop inventories after harvest, may find themselves frustrated, experts say.

"If you're a bigger operation with more resources, you can afford to hang onto your crop until you get a price you like," Whitley said. "But in this farm economy, that's not a realistic option for a lot of people. They are really living crop to crop, and that crop has to go right out the door."

Because the Agriculture Department makes calculations using wholesale prices, farmers who rely on higher-priced markets may be undercompensated. While a pound of Miyaoka's organic, sustainably farmed basil brings in $12 in Hawaiian farmers markets, the Agriculture Department compensates a pound of basil at just $1.65.

"Smaller producers have definitely been hit hard by this and are seeing an inability to reach their customers in usual ways," Arjomand said. "Some have resources to pivot, but others really don't. Having a program that is equitably accessible to all folks and business models going forward is really important."

'What about me?'

The list of grievances continues, to the tune of over 1,500 comments sent in to the federal government. Many come from producers who aren't eligible for funds at all. A New York peony farmer writes that he lost $50,000 after weddings and big events slowed. A Sonoma, California, wine grapes producer has sold only 30 percent of her crop as tasting rooms and restaurants are closed. A Florida beekeeper described $30,000 in losses as fruit farmers plant and pollinate less. An oyster producer said that he has essentially no market without restaurants and that he has 50,000 oysters that will die soon if they aren't sold.

The list goes on: maple syrup, mink, ethanol, crawfish, tobacco, chicken, hemp, honey, eggs, cotton, alfalfa and many more.

"We were getting voicemails and emails from farmers all around the country saying: 'What am I going to do? I'm going to lose everything if I don't get something,'" said Michael Nepveux, an economist at the American Farm Bureau Federation.

"Our role was saying, 'Don't forget about these guys, and don't forget about those guys,'" Nepveux said. "Just because USDA doesn't collect price data on niche products like parsnips and passion fruit doesn't mean these farmers aren't suffering."

For farmers to receive payments, their crops must show price declines of more than 5 percent from mid-January and mid-April. Price drops after mid-April don't count, which could pose a problem for late spring and summer crops.

It was a bummer for wheat farmers, for example, who briefly experienced high wheat prices in mid-April as Americans panic-bought flour and bread. So when the program rolled out, the Agriculture Department covered only two of six wheat types: hard red spring (used for pizza and bagels) and durum (used for pasta). But Dave Milligan, the organization's president, grows soft white wheat, the kind used in cakes. It's not covered, and Milligan said the losses are weighing on his margins.

"We hope things will change in the future," Milligan said. "We know they absolutely cannot serve everybody with this program, because they had to roll it out so fast."

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In the Agriculture Department statement, a spokesperson said the department wanted to be sure that it could cover COVID-19 effects in all production agriculture sectors focusing on only the first quarter and a small part of the second quarter, given uncertainty and volatile market conditions.

The Agriculture Department also said that the program includes 89 specialty crops and that additional specialty crops will be added in the coming weeks. It said it has conducted targeted outreach to specialty crop producers, including fruit and vegetable growers, to ensure that producers are knowledgeable about the program and are clear on how to apply. It also said it structured the program so leftover money could be used to offset coronavirus market effects in the rest of 2020 and into 2021 if it's available.

But even within well-endowed sectors like livestock and dairy, some farmers and ranchers say the Agriculture Department's aid still hasn't covered their wounds. That includes Titan Swine, the Iowa hog farming partnership, which has been the biggest single beneficiary of the program's funds.

"Titan Swine suffered market losses due to the COVID 19 pandemic in the amount of around ~$6,000,000.00," Titan Swine said in a statement. "While the CFAP payment was helpful, it was a long ways from making our company close to whole. "

The company said it had to take the "unthinkable step" of euthanizing nearly 8,000 market animals because of the pandemic's effect on processing facilities. Agriculture Department funds still may not be enough to overcome the financial burden on some members, friends and neighbors, it said..

Nepveux said: "We're at a point in this country where the majority of food dollars that Americans spend go to food away from home. I don't know if there is any USDA program that could have absorbed all those losses."

Industry estimates of coronavirus-related losses approached $40 billion as of May, according to the Congressional Research Service. Lawmakers, advocates and Perdue, the agriculture secretary, have all said more money will be needed. Already, direct agriculture aid has hit a record high under President Donald Trump, with at least $50 billion in payments to farmers in 2019 and 2020.

"It seems like a never-ending cycle of ad hoc program after ad hoc program," said Janzen, of Kansas State University. "And in the end, I don't know if anyone is really totally satisfied with the outcome."