We hope each of you and your families are well during these trying times. News is developing that certain states are planning to re-open parts of the economy. As certain parts of our economy begin a slow re-opening, other parts will take more time. In the packing sector of the cattle industry, plants are experiencing illness and a shortage of workers in some locations. Many have considerably slowed the speed of the harvest of live cattle causing back up in the supply chain. We have seen a disruption in our economy unlike any other time in our nation’s history. Unfortunately, the economic problems in ranching started long before the current COVID situation. Assistance in the form of direct payments to ranchers will be one small way the government can begin to help cattle producers recover from a period of multi-year losses. Many other solutions are needed soon to assist those who produce cattle with a larger share of the value in the beef supply chain.
We know most of our customers are seeking information about the relief package for cattle producers that was recently passed by Congress. The package consists of two parts. Part one will be based on price losses that occurred from January 1 to April 15, 2020. After measuring that loss (which must exceed a 5% price decline), payments will be made at a rate of 85% of the loss. Many of you have wondered, as have we, whether measurement of loss during that time period would have required cattle being sold in that time period to qualify. We hope that is not the case, but we cannot be certain until we see final rules. Part two of the package will be for economic losses that occur between April 15 October 15. These payments will be made at 30% of the expected market losses.
Our understanding is that the Office of Management and Budget are in the rulemaking process this week. After that process concludes, information will be provided to USDA and a signup process will begin. We are told to expect that in May, but timelines are uncertain.
Direct payments will be capped at $125,000 for each commodity and $250,000 for each individual or entity. There are still details of these definitions we would like to know.
Our advice now is to make certain that your inventory records are in order. It will be helpful to have inventory reports and pasture counts for the time period covered that include head count, class and weights of cattle on hand. Waiting until the signup period begins may put a burden on you to put together inventory reports in a timely manner.
We are continuing to seek information daily and we will provide any details as soon as we receive them.