Industry Will Benefit from CFAP Payments
The Coronavirus Food Assistance Program announced on Tuesday by President Donald J. Trump the U.S. Department of Agriculture will play a key role in getting the American sheep industry back on track, starting with lamb feeders who were particularly hard hit by the recent crash in lamb prices.
And while the announcement was welcome news for many in the sheep and wool industries, even better news came late this week when Secretary of Agriculture Sonny Perdue acknowledged that additional support will be necessary.
“We don’t believe this amount of money is adequate frankly,” he said in an interview with Red River Farm Network. “I think Congress understands that, as well. They did appropriate and replenish $14 billion in the Commodity Credit Corporation, but that won’t be available until July. We chose to use the remaining balance in the CCC and funds from the CARES Act to begin a program more quickly. Then, we’ll look at the needs we’ve missed.”
For now, however, sheep producers are looking at payments of $33 per head for lambs and yearlings that were marketed between Jan. 15 and April 15 of this year. That number is $7 per head for lambs and yearlings in inventory on hand between April 15 and May 4.
Payments for wool producers will be based on inventory subject to price risk held as of Jan. 15. In other words, USDA wants to address unsold wool from 2019 shearing in this assistance package. The department estimates 25 percent of last year’s wool was still unsold as of this January.
“We welcome the announcement of the administration and look forward to helping with information dissemination on the application and payments,” said ASI President Benny Cox of Texas. “We will gear up the rest of the spring to keep the administration informed on our supply lines and market conditions with the goal of ensuring our products remain eligible for future assistance.”
It is clear that USDA aimed this first COVID-19 assistance package at the impacts on 2019 production and ASI will be pushing for future installments to pick up the impacts on the 2020 wool clip and lamb crop. Additionally, the updated payment limits and wool portion were advantageous to lamb feeders caught with expensive lambs in the wrecked Easter market and who have been storing lamb wool for many months.
The American Sheep Industry Association joined with its state affiliates and the National Lamb Feeders Association to plead the industry’s case as USDA was developing the parameters of the direct payment program. USDA will begin accepting applications for CFAP payments on May 26 through its Farm Service Agency offices all across the United States.
Growers Should Monitor MAL/LDP Rates
Wool producers are encouraged once again to take a look at the wool Marketing Assistance Loan and Loan Deficiency Program offered through their local Farm Service Agency office.
Rates for ungraded, grease wool changed dramatically this week, leading to the availability of a .30 cent per pound benefit. Rates are also favorable in some fine wool ranges, as well as for the coarsest of American wools. The American Sheep Industry Association has been working with the U.S. Department of Agriculture to see that rates adequately reflect the current wool market. That interaction – along with increased wool price reporting – has led to the most updated rate changes in years.
There is also and unshorn pelt LDP payment, which is 6.865 lbs. multiplied by the LDP rate (.30cents) and comes out to $2.0595 per head this week.
Additional changes are expected in the weeks and months to come, so the program is more reflective of the current market. Rates change each Tuesday and can be found on the ASI website, along with a link to FSA Fact Sheet at sheepusa.org/issues-governmentprograms-woolldp.
For those growers interested in a loan, the Market Assistance Loan program is available for up to a 12-month loan. The other available program is the Commodity Certificate Exchange. More information on all these programs can be found on the FSA Fact Sheet www.fsa.usda.gov/Assets/USDA-FSA-Public/usdafiles/FactSheets/2016/mal_ldp_2016.pdf.
The Farm Security and Rural Investment Act of 2002 provides 2020 crop year marketing assistance loans and loan deficiency payments for wool and mohair to eligible producers who produce and shear wool and mohair from live sheep and goats. The LDP program is also available to eligible producers of non-graded wool in the form of unshorn pelts for the 2020 crop years. The wool and mohair non-recourse marketing assistance loan and LDP program provides eligible producers with two forms of federal assistance. Eligible producers can either: 1. request a 12-month marketing assistance loan; or 2. agree to forgo the loan and request an LDP. The program helps stabilize America’s wool industry and ensures the well-being of agriculture in the United States.
ASI Deputy Director Rita Samuelson reminds producers that this program is designed to step in during market crashes and encourages those that haven’t sold the 2020 clip to go into their local FSA office and complete forms to prepare for the date they want to apply for LDP. This is also a good time to ask about program updates and specifics.
ASI Urges Caution on U.S.-U.K. Trade
The American Sheep Industry Association and its state affiliates submitted letters this week to members of the U.S. Senate Finance Committee and the U.S. House Ways and Means Committee to express industry concerns about allowing lamb from the United Kingdom to be imported into the United States.
“While it remains to be seen what the domestic subsidy structure will look like once the United Kingdom is no longer in the Common Agriculture Policy under the European Union, the current situation is that U.K. sheep producers are highly subsidized,” read the letters. “This has been confirmed by numerous articles on the topic in the lead up to the U.K.’s exit from the E.U., as has the fact that the U.K. views the U.S. as a potentially lucrative market for lamb and sheep meat exports.”
Articles from a variety of agriculture and business publications have added to ASI’s concerns that allowing lamb and sheep meat imports from the United Kingdom places that country’s producers at a competitive advantage compared to American sheep producers.
“While sheep producers in both the U.S. and U.K. face some of the same challenges – such as high land and labor costs – the U.S. remains unique. Domestically, producers contend with a tremendous loss due to predation – which is growing as attitudes shift away from existing management of predatory species – and must overcome challenges of the great distances between areas where lambs are raised, where they are fed and where they are finally processed.
“As seen from the discussion in the U.K. press, the opportunities for U.K. lamb in the United States are readily recognized. This potential becomes more evident as the U.K. faces future barriers to entry into its traditional export markets in the European Economic Area. Should the final ‘Brexit’ agreement not allow preferential treatment for U.K. lamb exports to the EEA, upwards of a third of their production will need to find a new market. Respective tariff rates for U.K. lamb and sheep meat into the E.U. markets under a no-deal Brexit could range from 28 to 76 percent, depending on the sheep meat product exported.
“U.S. lamb producers are struggling under the weight of imported lamb and sheep meat, primarily from Australia and New Zealand. Over the past five years, imports from these countries have accounted for on average 164 percent of commercial lamb and sheep meat production in the United States. Currently, this is exacerbated by the strong U.S. dollar, particularly in relation to the Australian dollar. The scope of this import situation presents a tremendous challenge to U.S. sheep producers.
“The U.S. is the most open market in the world for lamb, and among the highest valued. There is not a market opportunity in the world for U.S. sheep producers that can offset the loss of our domestic market. Even with reciprocal trade in lamb and sheep meat with the U.K., that is not likely to be a lucrative market for American lamb, especially as New Zealand lamb has decades of presence in that market.
“We understand supporting trade initiatives like the U.S.-U.K. negotiations for their potential benefit to both economies, but absolutely believe unrestricted trade in lamb and sheep meat from the U.K. would greatly jeopardize the domestic production of lamb, the livelihood of America’s 100,000 sheep farmers and ranchers, and the rural communities that depend on them.”
ASI SheepCast: CFAP Program and Lamb Trade
This week’s ASI SheepCast takes a look at the Coronavirus Food Assistance Program and direct assistance for sheep and wool producers unveiled on Tuesday by President Donald J. Trump, and talks a little about the concerns of the American sheep industry as negotiations formally begin with the United Kingdom on a potential free trade agreement.
Click Here to listen to the podcast.
USDA Program Offers $1 Billion in Loan Guarantees
U.S. Secretary of Agriculture Sonny Perdue announced on Thursday that the department is making available up to $1 billion in loan guarantees to help rural businesses meet their working capital needs during the coronavirus pandemic. Additionally, agricultural producers that are not eligible for USDA Farm Service Agency loans may receive funding under USDA Business & Industry (B&I) CARES Act Program provisions included in the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
“Under the leadership of President Trump, USDA is committed to being a strong partner to rural businesses and agricultural producers and being a strong supporter of all aspects of the rural economy,” Sec. Perdue said. “Ensuring more rural agricultural producers are able to gain access to much-needed capital in these unprecedented times is a cornerstone of that commitment.”
In addition to expanding eligibility to certain agricultural producers, the changes Sec. Perdue announced allow USDA to:
- Provide 90 percent guarantees on B&I CARES Act Program loans;
- Set the application and guarantee fee at two percent of the loan;
- Accept appraisals completed within two years of the loan application date;
- Not require discounting of collateral for working capital loans, and
- Extend the maximum term for working capital loans to 10 years.
B&I CARES Act Program loans must be used as working capital to prevent, prepare for or respond to the effects of the coronavirus pandemic. The loans may be used only to support rural businesses, including agricultural producers, that were in operation on Feb. 15, 2020.
USDA intends to consider applications in the order they are received. However, the department may assign priority points to projects if the demand for funds exceeds availability.
Eligible applicants may contact their local USDA Rural Development State Office in the state where the project is located.
USDA is developing application guides for lenders and borrowers on the B&I CARES Act Program. The agency also will host two webinars to provide an overview of program requirements.
To register for the webinar on Wednesday, May 27, at 3:30 p.m. eastern time, visit globalmeet.webcasts.com/starthere.jsp?ei=1322642&tp_key=7a700acddd.
To register for the webinar on Wednesday, June 3, at 2 p.m. eastern time, visit globalmeetwebinar.webcasts.com/starthere.jsp?ei=1324161&tp_key=6067315417.
Australian Market Falls Once Again
After showing small signs of recovery at the previous week’s auctions, the Australian wool market suffered further losses this week. The national offering fell by 2,270 bales to 21,101 bales. Due to the small number of bales on offer, Sydney and Fremantle again only required one-day sales, Fremantle selling on Tuesday and Sydney selling on Wednesday.
Melbourne opened proceedings on the first day and in early trade showed signs of further improvement. The price rises could not be maintained in all microns, with only the individual Micron Price Guides of 17.0 and 19.5 to 21.0 micron posting increases for the day. The rises in these MPGs was enough to push the AWEX Eastern Market Indicator marginally higher as it gained 1 cent.
Fremantle, selling later in the day, did not enjoy the same increases. The Fremantle MPGs fell across the board, with losses of 18 to 44 cents recorded. The softer tone evident in Fremantle toward the end of the first day, was realized in the Eastern centers when sales resumed on day two. The falls in the MPGs were between 8 and 64 cents, with the losses in Sydney the most substantial of between 44 and 64 cents. On the back of the losses in the Sydney and Melbourne MPGs, the EMI dropped by 25 cents. The EMI recorded an overall loss of 24 cents for the series, closing at 1,155 Australian cents.
The crossbred offering was limited. What was available attracted strong competition, as a result all crossbred MPGs remained unchanged for the series. The lack of movement in the crossbred MPGs prevented a larger fall in the EMI. The oddments were also in short supply and attracted good support, pushing prices higher. This was reflected in the three merino carding indicators which added an average of 28 cents for the series. These gains also prevented a larger fall in the EMI.
BLM Hiring Wild Horse Bureau Chief
The Bureau of Land Management is recruiting for a division chief of the wild horse and burro program and looking for qualified candidates for the Reno, Nev., based position.
This position will provide leadership of the division, oversee BLM policy, budget and implementation of both on-range and off-range management of wild horses and burros nationwide.
Click Here for the job announcement.
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