USDA’s Covid Food Assistance Program has allocated $16 billion in funds for direct payments to farmers to help with the fallout from COVID-19.
There are two sources of funds: the Coronavirus Aid Relief and Economic Security Act and the Commodity Credit Corporation Charter Act. Both are meant to help farmers cope with market disruptions. To be eligible for direct payments, farmers have to have incurred a 5% or greater reduction in commodity prices due to COVID-19. Sheep and wool producers qualify. Goat producers do not.
The American Sheep Industry Association has predicted a direct farm loss of $125 million due to reduced consumer demand and a decline in slaughter lamb prices. COVID-19 has had a significant effect on lamb prices (especially heavy lambs), since approximately 50% of lamb is sold into food service and restaurants have been closed for several months now. COVID-19 also first hit at the peak demand period for lamb (Easter and Passover). It’s not known what effect COVID-19 will have on lamb prices during the second peak demand period: the Muslim Festival of the Sacrifice (Eid al-Adha) at the end of July. Global wool prices are 25% below year-ago levels. Pelt prices have been in the tank for over a year. China is the main buyer of both and isn’t buying.
Unlike cattle and swine producers, sheep producers are only eligible to receive payments for animals under 2 years of age (lambs and yearlings). For lambs and yearlings sold between Jan. 15 and April 15, producers can receive a payment of $33 per head. For lambs and yearlings in inventory between April 16 and May 14, producers can receive a payment of $7 per head. Payment is based on the highest inventory during this period.
Wool payments are more confusing. The most producers can get paid on is 50% of their 2019 production that has not been sold or priced and is still in inventory. Payment rates vary (clean/raw, graded/ungraded).
At this time, goat producers are not eligible for any direct payments from CFAP because goat prices have not declined 5% or more due to COVID-19. Thus far, the market has held strong, as very little goat meat is sold into food service and a lot is processed “off the grid.” Of the federally inspected goat slaughter, most of it occurs in smaller plants and almost all the meat is sold into ethnic markets, which are less affected by COVID-19.
If there is another round of direct payments and it is determined that the goat market has been adversely affected by COVID-19, goat producers will likely be eligible. Meanwhile, they should enjoy the good prices they’re receiving for their animals.
Eligible sheep and wool producers are encouraged to apply for these direct payments from USDA. Applications for payments can be submitted to local Farm Service Agency offices by phone, mail or online.
Additional information and applications are available at farmers.gov/CFAP
The application period is May 26-Aug. 28.