Using Existing Programs to Confront the Impact of COVID-19

April 8, 2020

Using Existing Programs to Confront the Impact of COVID-19

Apr 8, 2020

Key Issues:COVID-19

While farmers are used to uncertainty, the COVID-19 pandemic represents yet another level of unpredictability during a time when the agriculture economy was already struggling. As NCGA works with lawmakers in Washington, D.C., on ways to mitigate the pandemic’s impact and help farmers recover, we are also looking to existing farm programs and risk management tools that help farmers continue to operate in uncertain times.


NCGA has been a leader in developing strong risk management tools, advocating for their inclusion in farm bill reauthorization legislation and working with federal agencies to ensure they function as intended. Although COVID-19 will continue to bring unique challenges, NCGA is prepared to meet them.


The Agriculture Risk Coverage (ARC) program and the Price Loss Coverage (PLC) program were authorized by the 2014 and 2018 Farm Bills. These programs provide the front line of defense for producers as prices or revenues fall. If corn prices stay at their current lows for the rest of the marketing year, then PLC will generate a corn payment for the 2019 crop. If prices increase, then no payment will be generated, a positive sign that corn prices are recovering, and the safety net’s PLC program is working exactly as intended. 


ARC payments are issued when the actual county crop revenue of the commodity is less than the guarantee. While the ARC program is unlikely to pay out for the 2019 crop year, producers in this program will be protected against revenue losses for their 2020 crop, particularly if low prices persist for an extended period of time or yields unexpectedly decline.


The Federal Crop Insurance Program is designed to provide additional protection for producers in the case of a more significant loss. Crop insurance will be key to managing the uncertainty created by COVID-19. If yields decline due to unexpected weather, or prices fall dramatically as a result of an economic downturn, then crop insurance support may kick in to manage the damage to producers.


Access to adequate cash flows is a key need for farmers, especially when prices are low, and the future is uncertain. The USDA Farm Service Agency (FSA) operates as a lender of last resort, providing a variety of programs and opportunities for producers that have limited resources available through traditional lending institutions.


As corn growers’ number one customer, we always strive to work closely with our livestock industry partners. Through the Coronavirus Aid, Relief, and Economic Security (CARES) Act, Congress provided $9.5 billion to USDA for agricultural coronavirus response, prioritizing relief for the livestock industry.


The federal Renewable Fuel Standard (RFS) keeps the closed transportation fuel market open to ethanol. The RFS requires that ethanol blending in gasoline standards be met to maintain market access for biofuels in the nation’s transportation fuel supply. Existing USDA authorities can also be used to help ethanol producers survive the damaging price and demand drop they are currently experiencing and come back online as the situation improves.


Despite the uncertainty brought about by COVID-19, international trade has continued to flow. With international trade driving 33 percent of a corn farmers’ income, the continuity of grain trade and transportation system operations will establish another degree of stability in the midst of uncertainty.


Click here for more helpful resources on COVID-19.