A large portion of the USDA’s coronavirus aid includes $16 billion in direct payments for farmers and ranchers. Combest, Sell and Associates managing partner Tom Sell says more details are needed for the calculations of the direct payments. “What we know right now is that payments are based on what a producer had in inventory from the 2019 crop as of January 1 and again, as of April 15. Then, measuring losses based on what the producer sold in the first quarter time frame and what they’re holding as of April 15,” says Sell. “It sounds complex and a little daunting. Will the USDA Farm Service Agency be able to deliver a program like that? This will create winners and losers.” Sell says agricultural policy hasn’t gone into that much detail before. “We’ve always said we’d pay counter cyclical payments based on national averages. A producer would do the best marketing possible and farmers wouldn’t be punished if they were above average. We pay on national average prices. This is a different level.” There is a payment limit of $125,000 per commodity with an overall limit of $250,000 per individual or entity. Sell says the hard payment limitation on commodities could prove challenging for the livestock industry. The USDA is putting the rule together this week and then, the agency will submit it to the Office of Management and Budget for approval.
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