Pandemic Relief and the Potato Industry
Although the National Potato Council’s office in Washington, D.C. has been closed for four weeks due to the pandemic, the work has never stopped. The last two weeks have been some of the most intense that I can remember in two decades in this business.
When this crisis began, the federal and state governments effectively shut our nation’s commerce down. Nowhere was this mandate more powerfully felt than in the food service sector. Almost overnight, hotels, sporting events, schools across the United States were shuttered. With 60 percent of the potato industry serving food service customers, the impact was immediate and staggering.
Suddenly, processed potato products destined for food service had nowhere to be sent. As those supplies backed up and storage became scarce, it caused potato processing facilities to slow or halt their operations. Without those lines running at normal capacity, the potatoes that typically move out of storage weren’t required, causing those storage potatoes to be stretched for longer than normal. That has resulted in growers being advised that the 2020 crop will not be required at the size indicated just a couple of months ago.
Each segment of this logjam holds negative impacts for the network that makes up the potato supply chain. Seed growers, input suppliers, transportation providers, farm workers, etc. are all caught up alongside their colleagues as the days drag on.
Surplus Commodity Purchases/Diversion
As the government had its role in the shutdown, it also has a responsibility in providing solutions. In effect (and for good medical reason) the government said “you cannot have customers” for an indefinite period of time. Therefore, the federal government needs to become that customer for our industry.
Over the past two weeks, your state organizations, processors, and NPC have identified between $750 million-$1.3 billion in potatoes and potato products that are clogged up in the pipeline. We also agreed upon a plan and took it to USDA, urging them to aggressively purchase products in order to provide flexibility and options now and also for the 2020 crop. Urgent substantial action now can have meaningful impact for growers, though it won’t solve the full scope of the problem.
The highest priority for these purchases should be food banks, school meals, and related federal feeding programs. Any needy recipient should be taken care of via this massive amount of necessary purchasing. Once those recipients are exhausted, USDA should consider simple product diversion, including livestock feed, storage, or outright destruction of product in order to restore some supply and demand balance.
Direct Payments for Relief
Additionally, NPC has joined with other major specialty crop organizations across the country in pushing USDA for direct payments to producers for disaster relief. After numerous conference calls and individual discussions, we came to a simple mechanism that we think USDA should put in motion. Individual producers certify their economic injury from the pandemic with their Farm Service Agency office. The FSA County Committee would then validate the producer’s claim. The payment could be issued either before or after that validation, but the intent is to move relief rapidly to growers and other eligible entities.
NPC, the state organizations, and members of Congress have pushed USDA to implement both of these necessary programs in tandem and to date they have been receptive. They understand the challenges and vulnerability we face. As this week moves on and more details come out as to USDA’s initial relief plans, we will have a better idea how the short term will look. It is nearly certain that Congress and the Administration will have to take sustained additional steps to provide the necessary relief we need.
Though our members are suffering through an unprecedented crisis, this is a strong industry. We exercise that strength when we work together toward common goals. I cannot thank enough your state organization leaders, Potatoes USA, the team at NPC, and organizations throughout the supply chain from growers to suppliers and processors for their team-oriented approach in seeking meaningful relief for this great industry. Your operations are in our thoughts constantly during this crisis and the challenges you are facing motivate us to deliver results that matter for you.
Please visit NPC’s Coronavirus Update page for new resources and information as they become available.
Thank you for your role in feeding America.
Sincerely,
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