News Article

Financial Relief, No Solution to Labor Demand

By Jan Hogewoning | Thu, 03/26/2020 - 09:25

Last night, the US senate passed a US$ 2 trillion relief package to combat the economic impact of COVID-19. The package incudes various programs to address the pandemic. For farmers in specific, it promises up to US$23.5 billion in farm aid. This contains US$9.5 billion in emergency funds for agriculture, including specialty growers of fruits and vegetables. This group is particularly relevant given the expected disruption in harvesting as labor supply from Mexico is being cut down.

The remaining US$14 billion would be allocated in the form of new borrowing authority for the US Agriculture Department’s Commodity Credit Corporation. This is a Depression era entity which has been used for farm bailouts by the Trump Administration in the last two years. The bill does not specify how these funds will be allocated and over what time scale. This is important as harvests are approaching, particularly for vegetables and fruit growers in the California Central Valley. While the US Department of Agriculture will have more capacity to spend, there is still no clear solution that would fill up the expected gap in labor capacity needed to take the food out of the ground.

The relief package would also provide US$150 billion to local and state governments. In addition, US$367 billion has been allocated for small businesses to undertake actions such as deferring loan payment. The bill will also provide better borrowing conditions for small businesses. For now, it is unclear how this could help farmers, as it concerns a wide pool of different sectors. The bill still needs to pass the US House, where according to House Speaker Nancy Pelosi, it is unlikely to pass unanimously. Farmers will have more clarity as the Agricultural Department sets a plan for the distribution of funds. The corn, wheat, soybean and cattle industries, major US industries, may receive priority.

In the meantime, the H-2A guest worker program for Mexican and other agricultural guest workers remains open to those who are still allowed into the country on a returning visa.


The data used in this article was sourced from:  
Wall Street Journal, CBS, Bloomberg News, Farm Bureau
Jan Hogewoning Jan Hogewoning Journalist and Industry Analyst