Dairy Does Well in COVID Relief Bill

Bob Gray, Northeast Dairy Farmers Cooperatives

Win, Win, Win!!! Dairy did very well in the COVID Relief Bill passed by Congress the evening of Dec. 21.

A lot of hard work went into the various efforts to get key provisions into the final package and I want to thank everyone for their help. It was clearly a team effort. I am going to highlight some of the important items for dairy that were in the final bill. However, I will start with a brief summary of the general provisions and move quickly into the agricultural related program funding as well as dairy specific wins that are extremely important.

The final 5,500-page COVID Relief Bill that was combined with the Omnibus Appropriations Bill passed the House of Representatives by a vote of 359 Yeas to 53 Nays and the Senate by a vote of 92 to 6. The $2.3 trillion package was a long time in the making as Congress haggled for weeks and weeks over the various provisions. As mentioned previously they dropped two controversial amendments – – one dealing with federal aid to state and local governments and the second one that provided liability protection for businesses and schools against coronavirus related lawsuits.

A very late holdup in the negotiations on federal reserve loans for certain government programs was resolved by a compromise agreement. Congress is now on its way out of town.

General Provisions in the $900 billion Stimulus Package include:

  • $325 billion to help small businesses of which $284 billion would go to the Paycheck Protection Program
  • $300 a week in unemployment benefits for those eligible through March
  • $600 in stimulus checks for each adult and each dependent who are eligible
  • $25 billion in rental assistance to help those who are in arrears on their rent
  • $10 billion to help in childcare
  • $82 billion for help in public schools
  • $22.4 billion to states for testing and tracing COVID-19 mitigation programs
  • $20 billion to procure and distribute COVID-19 vaccine
  • Airlines, banks and the Postal Service would get financial help as well

Two Big wins For Agriculture

The Paycheck Protection Program in the COVID bill specifies that forgiven Paycheck Protection Program (PPP) loans will not be included in taxable income. It also clarifies that deductions are allowed for expenses paid with proceeds of a forgiven PPP loan, effective as of the date of enactment of the CARES Act and applicable to subsequent PPP loans. The legislative language in Sec. 276 clarifies the tax treatment of Paycheck Protection Program loans.

The provision specifies that gross income does not include any amount that would otherwise arise from the forgiveness of a Paycheck Protection Program (PPP) loan. This provision also clarifies that deductions are allowed for otherwise deductible expenses paid with the proceeds of a PPP loan that is forgiven, and that the tax basis and other attributes of the borrower’s assets will not be reduced as a result of the loan forgiveness. The provision is effective as of the date of enactment of the CARES Act. The provision provides similar treatment for Second Draw PPP loans, effective for tax years ending after the date of enactment of the provision.

Another major win is funding for Customs and Border Patrol agriculture inspectors and canine teams – (Note: our two Beagles, Mia and Willow, are very happy!). The bill provides $635 million for the funding shortfall for the Ag Inspectors and Canine Teams

Dairy Provisions

Dairy Provisions included as part of the Agriculture Title in the COVID Relief Package include significant  funding levels. Overall, there is $13 billion earmarked for agriculture in the bill. Of this amount, $11.187 billion would be utilized to prevent, prepare for and respond to the coronavirus.

The Secretary of Agriculture has the authority to use a portion of these funds for a Coronavirus Food Assistance program (CFAP – 3) with direct payment to dairy farmers as well as other parts of the agriculture sector. The software and production history and all other information is in place at the county Farm Service Agency (FSA) offices to do this immediately. CFAP – 2 payments to dairy have run their course.

There is a dairy donation plan with $400 million for all dairy cooperatives and processors to work with food banks to donate products to those households that need food and can’t afford it. The Emergency Food Assistance Program (TEFAP) is to provide aid to food banks which could include 25% of dairy products.

The Dairy Margin Coverage Program production history is upgraded. If your DMC production history has increased since 2014, producers will be eligible for a “supplemental production history” if it was below five million pounds of annual production. This means that DMC payments could be increased based on the production history from 2014 to 2019 but not to exceed five million pounds.

The Farmers to Families Food Box Program makes $1.5 billion available to spend out of the $13 billion to fund food purchases. USDA has the option to keep this successful program going which so far has provided 100 million boxes to needy households.

The bill provides a 15% increase in additional monthly benefits to SNAP recipients with $6 billion  provided for the Women, Infants and Children (WIC) Program. There is $635 million for more broadband coverage in rural areas.

Regarded flavored milk in USDA program, this could be a big deal since the flavored milk option is put into law. As you know, last spring a District Court struck down USDA’S attempt to establish a regulation to have 1% low fat flavored milk offered in the school lunch line. This Court decision was part of a larger ruling on other changes in the school lunch program. USDA has since put out a new regulation and the recently passed legislation provides that 1% low fat flavored milk can be offered in the school lunch line as long as it is not inconsistent with the Dietary Guidelines Advisory Committee’s recommendations.

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