UNITED IN ACTION: Market Stabilization Fund Proposed Along With Three Relief Programs

Originally printed in the March 2020 issue of Produce Business.  

In early March, no one saw the devastation that was about to over- take the fresh produce supply chain, let alone our world. Overnight, large parts of the industry were dried up – the supply chain stopped as restaurants closed, schools shut down, and local governments mandated “shelter in place” or “stay at home” orders for cities and entire states across the country. Despite this unprecedented challenge, members of the fresh produce supply chain have worked to keep the supply chain moving and keep Americans fed. We owe them a huge amount of gratitude for their service.

This has created many challenges for every industry. As a result of effects due to COVID-19, it is estimated that growers, shippers and wholesalers suffered losses of $5 billion in just the first few weeks of the emergency declaration. But it doesn’t stop there – the industry continues to experience an estimated $1 billion a week in lost sales. Thousands of people have lost their jobs due to the economic losses, and these factors coupled together could strain the industry for years to come.

But despite these huge economic impacts, the supply chain must continue – Americans still need to be fed. Federal action is needed to help the industry get back on its feet. On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act – otherwise known as the CARES Act. This $2 trillion piece of legislation aims to provide economic relief to many hurting industries, including the fresh fruit and vegetable industry. Lawmakers recognized the importance of the food supply chain and provided $9.5 billion to USDA to “prevent, prepare for, and respond to coronavirus by providing support for agricultural producers of specialty crops, producers that supply local food systems, including farmers markets, restaurants, and schools.”

In order to keep the supply chain moving and ensure a smooth road to recovery for the industry, United Fresh and industry stakeholders from across the country have developed a program that provides immediate assistance for “agricultural producers of specialty crops and producers that supply local food systems.” The proposal would create a $5 billion Produce Market Stabilization Fund at USDA and have three specific programs.

The three programs within the Market Stabilization Fund include the COVID-19 Stabilization Program for Growers, the COVID-19 Stabilization Program for PACA Licensed Produce Dealers, and the Fresh Produce Purchase and Distribution Program.

United Fresh and industry stakeholders from across the country have developed a $5 billion program that provides immediate assistance.

The first of the three, a stabilization program for growers of fresh produce, aims to provide relief to growers who suffered losses due to the effects of COVID-19. Growers must identify losses during a covered period of time (from March 2020 to June 2020), and there are specific economic losses that are covered. Those losses include “contracts and agreements cancelled or reduced for produce already planted during the covered period; paid or partially paid invoices for produce delivered during the covered period; unpaid or partially paid invoices for produce in transit during the covered period; demonstrated losses by growers with direct contracts with customers that were not fulfilled; and demonstrated losses by eligible entities with appropriate documentation or evidence consistent with standard businesses practices unique to particular fruits, vegetables, and tree nuts, as determined by USDA.”

Secondly, the COVID-19 Stabilization Program for PACA Licensed Produce Dealers, deals with companies engaged in selling or buying commercial quantities of produce commodities and are already regulated under the Perishable Agriculture Commodities Act. These companies, already required to be licensed, are governed by strict regulations under PACA. Since this program is already in place, the Stabilization Program for PACA Licensed Produce Dealers builds on that framework – it urges USDA’s Agricultural Marketing Service (AMS) to use the PACA licensee network to verify losses at the receiver/buyer level; and verify those losses with the dealer/shipper who is due repayment. Only PACA licensed companies trading commercial quantities of produce are eligible for this program, and the covered period is also from March 2020 to June 2020.

Finally, the last of the programs is the Fresh Produce Purchase and Distribution Program. With the COVID-19 crisis has come an immense need for the federal government to address our country’s food insecurity and nutrition shortfalls. And with an entire foodservice sector at a standstill, there lies an incredible opportunity to utilize the foodservice distribution chain to ensure America’s most vulnerable have access to fresh fruits and vegetables.

In the second and third COVID stimulus packages, large investments were made to nutrition programs. The proposal denotes that “This funding, coupled with existing USDA spending authority … should be used to prioritize nutrient-dense fresh fruits and vegetables in feeding programs.” Through various guidelines, the proposal requests additional commodity purchases for food banks, schools and other emergency feeding sites; increased funds for DoD Fresh, which provides fresh produce to schools; increasing WIC benefits for fruit and vegetables purchases; allow schools to use funding, and request additional funds, for the Fresh Fruit and Vegetable Program for emergency feeding meals; and utilize funds from child nutrition programs to “streamline eligibility requirements for emergency school feeding programs so that districts can better serve meals to all food insecure children and ensure access to nutrient-dense fruits and vegetables.”

All in all, it is clear that the produce industry has suffered in recent weeks, but even more clear is the need to provide assistance to an industry that is vital to our nation’s health. This program is the first step in providing immediate relief to those who feed our nation, a positive first step on a long road to recovery.