News Article –
Implementation of the SBA Paycheck Protection Program provides a textbook case for why dedicated funding for agriculture is needed
At the start of the COVID-19 pandemic, NASDA members jumped into action to support farmers and ranchers, all while knowing enough funding didn’t exist to completely avail them of the economic disaster coming. Months later, state department of agriculture leaders continue to manage an ever-changing crisis and implore that without specific funding dedicated maintaining a stable food supply chain, farming families and rural communities will be left in the dust.
In March, the prospect of Small Businesses Administration loans brought a ray of hope to producers who’d been forced to dump their milk and watch the fruits of their labor rot, unharvested. When clouded by uncertain terms and conditions and coupled with incredible demand, however, the opportunity for loans passed most farmers by in the early days of the program. “Agriculture, Forestry, Fishing and Hunting” received just 1.28% of the first round of $342 billion in loans issued.
Even as producers started to gain access to the loan program, SBA’s lack of guidance for agricultural businesses caused massive confusion over PPP loan eligibility and benefits. In one case, it took SBA over a month to clarify instructions for some business types – and even then the results were not favorable for producers. From particular corporate structures to unique cash flow challenges, agricultural businesses have several differences with their counterparts in other economic sectors. For example, temporary foreign workers aren’t counted in SBA’s calculation of payroll costs. Workers in the H2-A and H2-B program make up a large part of payroll costs for many agricultural businesses (upwards of 75% in some cases).
While other aid programs through the CARES act will supply direct aid payments to farmers, this only offers temporary relief to agricultural producers. Food and agriculture businesses have unique business models, structures, and needs – all understood by state departments of agriculture. We cannot expect every government agency to understand that. And the PPP case shows that if they don’t, agriculture can get left behind.