THIS WEEK’S COVID-19 UPDATES
As part of the Coronavirus Aid, Relief and Economic Security (CARES) Act, Congress approved the Paycheck Protection Program (PPP). The PPP is a guaranteed loan program administered by the U.S. Small Business Administration (SBA) and designed to support small businesses and help support their payroll during the COVID-19 crisis.
As the law was written, however, there was some question concerning eligibility of agricultural business and farmer eligibility under the program.
The USDA recently posted guidance on farmer and ag business eligibility here, confirming agricultural producers, farmers and ranchers with 500 or fewer employees whose principal place of residence is in the U.S. are eligible.
Attorneys with Michael Best provide some information. Historically, there has been a division between the USDA and SBA regarding labor, and agriculture has generally been excluded from participating in economic injury disaster loans (EIDL) programs. Now, however, agricultural enterprises, of any type – be they agricultural companies, farms, agricultural enterprises, cooperatives or sole proprietorships – may avail themselves of the financial assistance available through both the EIDL and PPP programs.
Find more information at the Michael Best COVID-19 Resource Center.
The 2020 National Holstein Convention, originally set for June 22-26, has been postponed for one year due to the national COVID-19 pandemic. The Pennsylvania Holstein Association will now host the convention, June 19-24, 2021, at the Lancaster Marriott.
Information regarding junior contests and activities, as well as the adult annual meeting proceedings, will be forthcoming. Those who made room reservations for the 2020 convention are reminded to cancel.
Contact the Pennsylvania Holstein Association at (814) 234-0364 for information. More information will also be available on the convention website and through social media channels as it becomes available.
The 2020 National Guernsey Convention, planned at Seven Springs, Pennsylvania, has also been postponed until 2021.
The organization’s leaders intend to conduct an annual meeting and director elections, and hope to carry out some additional events in a virtual space. Check the American Guernsey Association website for details.
Pennsylvania will host the 2021 convention, June 12-15, 2021.
The Cornell Farmworker Program and the Finger Lakes Community Health Clinic are hosting a webinar in Spanish for farm workers and farmers. The webinar, broadcast via Zoom, will be held on Monday, April 13, 6:30 p.m. (Eastern time). Advance registration is required.
Dr. Canario, medical director of Finger Lakes Community Health, will discuss the coronavirus, what it is, how to protect oneself and what one should do now. He will also respond to questions submitted in advance. Mary Jo Dudley, with the Cornell Farmworker Program, will moderate the session.
In the face of the COVID-19 crisis, consumer demand of fluid milk at retail stores surged, and some retailers struggled to keep shelves stocked to meet that demand. In some cases, retailers established purchasing restrictions on milk, frequently limiting customers to buy one or two gallons or half-gallons per shopping trip.
Those incidences of purchasing limits on fluid milk and other dairy products at a time when some dairy farmers are being asked to dump milk or cut production has drawn the ire of producers on social media. In addition to individuals posting store names to publicize those cases, some dairy organizations and others have been working to get retailers to remove purchasing limits.
- In California, Western United Dairies (WUD) contacted the Dairy Institute (DI) of California, a nonprofit trade association representing milk and dairy processors, raising awareness about the restrictions.
Working with the California Ag Council, DI and the California Department of Food and Agriculture, WUD is working to get products donated to those in need through the California Association of Food Banks.
- The American Dairy Association North East (ADA North East) is actively working with retailers in its six-state region to ensure a safe, abundant milk supply for consumers. The ADA North East retail team shifted from its traditional audit program that includes store visits to assess dairy case hygiene and conditions. In the past two weeks, the team helped stock more than 54,400 dairy products in stores throughout the region.
To ensure that stores were making milk available, the team contacted the major retail chains in the market area – representing about 1,400 stores – to confirm that their corporate offices have lifted the limitations on the amount of milk and dairy products shoppers can purchase.
- In Missouri, the Department of Agriculture and State Milk Board issued an open letter to grocery retailers, requesting they remove customer limits on milk purchases. It noted that milk processors and distributors have successfully diverted the milk supply from schools and restaurants to grocery stores and are delivering 100% of the orders being placed.
Pennsylvania’s Center for Dairy Excellence will host another free conference call, April 14, 12:30-1:30 p.m. (Eastern time) to discuss questions and concerns related to COVID-19.
To participate, dial (978) 990-5000, then enter access code 553371# when prompted.
Dairy farmers are encouraged to submit coronavirus-related questions and concerns and share their direct experiences. A panel of industry representatives will provide updates on resources and support available at the state and national level.
Approximately 400 dairy farmers and industry professionals participated in an initial call, April 7.
To ensure as many questions can be addressed as possible, questions must be submitted in advance of the call. Text or call (717) 585-0766 to submit questions, or email Zach Myers. (firstname.lastname@example.org).
Visit the Center for Dairy Excellence website for other COVID-19 resources.
Family farm-based organizations in Iowa, Minnesota, Missouri and South Dakota sent a letter to Congress calling for strong oversight of the recently passed COVID-19 aid package to ensure the USDA disburses aid to people and rural communities, not global agribusiness firms.
In the letter, the Campaign for Family Farms and the Environment (CFFE) urged Congress to set up guardrails for the USDA regarding a total of $24 billion in aid designed to support farmers hurt by the enormous disruption in markets and supply chains caused by the COVID-19 outbreak. Specifically, CFFE called for no public money to go to new or expanding confined animal feeding operations (CAFOs).
As Congress considers a new stimulus package, the CFFE pointed to the urgent need to address structural failures in agricultural markets. The CFFE highlighted the need for a two-year suspension of loan payments, a halt on loans for new or expanding CAFOs, a moratorium on new agribusiness and food industry mergers, stronger fair market practices rules, enabling access to safety net programs for farms and small food businesses and mandatory country of origin labeling (COOL).
The CFFE is composed of the Missouri Rural Crisis Center, Iowa Citizens for Community Improvement, Dakota Rural Action, Land Stewardship Project, Food & Water Watch and the Institute for Agriculture and Trade Policy.
In response to COVID-19 concerns, some Midwest livestock auction markets have suspended regularly scheduled sales.
Equity Cooperative Livestock will suspend sales normally held on Mondays or Saturdays at its auction market in Marion, Wisconsin. Additionally, Wednesday private treaty sales are suspended. Timm Gildernick, Marion’s market manager, will be working with producers to help find trucking and alternative markets livestock can go during this temporary shutdown.
Equity will continue to operate and host sales at other markets, according to Equity Chief Operating Officer Tod Fleming. Equity is a federated cooperative with auction markets at 12 locations, serving producers in Illinois, Iowa, Michigan, Minnesota, South Dakota and Wisconsin.
Citing comments from potential buyers who say they will not participate in auctions due to COVID-19 safety concerns, the Lanesboro (Minnesota) and Decorah (Iowa) Sales Commission Inc., suspended sales at both locations. Decorah sales on April 6 and April 13, and Lanesboro sales on April 8 and April 10 have been suspended. The company anticipates the suspension will be short term. An update will be provided on April 13.
Members of a western Wisconsin cooperative are asking members to cut milk production and are offering a financial incentive for some producers to exit dairying.
In a letter to members, the board of Ellsworth Cooperative Creamery urged all producers to reduce the amount of milk being shipped by 7% by culling cows, drying cows early and reducing the feed ration.
The board also approved a program to encourage members to quit dairy farming by paying the equity in the cooperative for the years 2010 to 2019. The program is only for the first 100,000 pounds of milk per day of member milk. The cows must be sold by April 15, and members must provide proof of where the cows were sold and are not allowed to sell their cows to an existing member of the co-op. Any member participating in the program will not be allowed to ship back to the cooperative without board approval.
With locations in Ellsworth and Comstock, Wisconsin, Ellsworth Cooperative Creamery specializes in the production of cheese curds and artisan cheeses. The co-op has about 300 family farm patrons.
Texas A&M Veterinary Medical Diagnostic Laboratory (TVMDL) viral sampling kits – usually used on pigs, cows and chickens – are being repurposed into more than 2,000 COVID-19 tests for humans and sent to hospitals across the state. The sampling kits were being assembled from lab supplies already in stock at the lab.
The kits consist of a swab, a vial with transport media to preserve the sample in the vial and a bag. The kit components are approved by the FDA and the U.S. Centers for Disease Control and Prevention for use in sampling humans for the COVID-19 virus.
Agricultural contracts – including agreements for production agriculture, contract growers and custom feeding – often include a provision called “force majeure” to cover unforeseeable circumstances that prevent a party from fulfilling its contractual obligations. As COVID-19 brings the world economy to a crawl, businesses and individuals should review their contract language to see whether a force majeure provision is triggered, according to Brianna J. Schroeder, with the firm of Janzen Ag Law, Indianapolis, Indiana.
Writing on the Janzen Ag Blog (Read: COVID19 & Force Majeure in Agricultural Contracts), Schroeder notes some contracts give examples like a work strike, acts of God or war. New governmental regulations could qualify too. The key is that the parties cannot have reasonably foreseen the event. The event must be beyond the control of the contractual parties. Often the contract includes requirements that a party give notice to the other parties if it intends to trigger or rely on the force majeure provision.
Does the COVID-19 outbreak qualify as a force majeure event that excuses a party’s noncompliance with contractual provisions? It depends, Schroder writes. Courts do not uniformly apply these provisions in the same way – instead, courts look at the specific language and the parties’ intent at the time they signed the contract.
Agricultural businesses are heavily dependent on contracts which may be impacted by the disease itself, the resulting governmental shutdowns, or by other interruptions to the supply chain. A force majeure provision might provide either party with a way to avoid penalties for failing to perform – but it depends on the specific language used in the contract.
Contact your attorney for legal advice on whether your contracts may be affected by the COVID-19 outbreak and resulting economic impacts. Every contract is different, so each answer may be different, Schroeder concludes.
One of the provisions of the Coronavirus Aid, Relief, Economic Security Act (CARES) is the Paycheck Protection Program (PPP), designed to provide a direct incentive for small businesses to keep their workers on the payroll. This program is for any small business with less than 500 employees, including agricultural-related businesses affected by the coronavirus/COVID-19. (See analysis by the American Farm Bureau Federation here.)
Beginning April 3, you can apply through any existing U.S. Small Business Administration (SBA) 7(a) lender or through any federally insured depository institution, federally insured credit union, and participating Farm Credit System institution. Consult with your local lender as to whether it is participating in the program. The PPP will be available through June 30, 2020.
A PPP loan will cover 2.5 times the average monthly payroll costs, measured over the 12 months preceding the loan origination date, plus an additional 25% for non-payroll costs. Payroll costs include salaries, commissions and tips; employee benefits (including health insurance premiums and retirement benefits); state and local taxes; and compensation to sole proprietors or independent contractors. Non-payroll costs include interest on mortgage obligations incurred before Feb. 15, 2020, rent under lease agreements in force before Feb. 15, 2020, and utilities for which service began before Feb. 15, 2020.
The U.S. Small Business Administration will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest or utilities.
The Families First Coronavirus Response Act (FFCRA) is designed to help the U.S. combat the workplace effects of COVID-19. It contains two major components:
1. The Emergency Paid Sick Leave Act
2. The Family and Medical Leave Expansion Act
The FFCRA is designed to help the U.S. combat the workplace effects of COVID-19 by reimbursing private employers that have fewer than 500 employees with tax credits for the cost of providing employees with paid leave taken for specified reasons related to COVID-19. The law enables employers to keep their workers on their payrolls, while at the same time ensuring that workers are not forced to choose between their paychecks and the public health measures needed to combat the virus.
Eligible employers can receive a credit in the full amount of the qualified sick leave and family leave wages paid for between April 1, 2020, and Dec. 31, 2020.
Other Progressive Publishing articles related to COVID-19
- Progressive Dairy
- Email Dave Natzke