CHICAGO, Jan 15 (Reuters) - The U.S. Department of Agriculture said on Friday it will pay an additional $2.3 billion in COVID-19 aid to farmers, directing more money to livestock producers suffering from disruptions in slaughtering and restaurant demand for meat.
The aid, which comes from money allocated to USDA from previous pandemic stimulus legislation, follows record U.S. government subsidies for farmers last year.
About 87% of the funds are earmarked for farmers who raise pigs and poultry under contracts with food companies like Smithfield Foods and Tyson Foods, which own some livestock that are delivered to farms to be raised.
Contract farmers need help because some companies cut back on production after the health crisis temporarily shut slaughterhouses and processing plants last spring, according to the USDA. That meant farmers had fewer animals to raise or faced delays in animal deliveries, the agency said.
Food companies also required some contract producers to keep animals on their farms longer before shipping them to plants, increasing labor and other costs, the USDA said.
"The impacts of slowdowns and shutdowns at processing facilities in late spring and early summer are still being felt in the poultry and swine industry," the USDA said.
Contract farmers were not eligible for COVID-19 aid under previous USDA programs. They can receive payments if they produced hogs or poultry under a contract for the last two years and had lower revenue in 2020 than 2019.
The USDA said it will also double payments to non-contract hog farmers from its first round of COVID-19 aid announced last year. The agency will pay an extra $17 per head for pigs owned from April 16 to May 14, 2020.
"The inventory payment rates were determined to be insufficient to alleviate ongoing market price losses in the sector, the USDA said.
(Reporting by Tom Polansek Editing by Chizu Nomiyama)
