WEST LAFAYETTE, Ind. – COVID-19 is putting a dent in farm income and prices, and may prompt farmers to reconsider their planting intentions, officials with the Purdue University Center for Commercial Agriculture said recently.

Net farm income could fall by $20.1 billion, or 19 percent, in 2020, according to a mid-April estimate from the University of Missouri’s Food & Agricultural Policy Research Institute (FAPRI).

For row crops, projected revenue from corn and soybeans is down from January estimates, said Michael Langemeier, the Center’s associate director. Corn projections fell $116 per acre, from $781 to $665. Soybean estimates dipped $43 per acre, from $579 to $536. FAPRI data shows corn prices have dropped 9.5 percent ($3.70 a bushel to $3.35) since March, while soybeans have declined 6.6 percent ($8.85 to $8.27).

To assist producers and consumers, USDA announced April 17 it would provide about $16 billion in direct payments to farmers and ranchers. Under the plan, livestock producers would receive $9.6 billion, row crop farmers, $3.9 billion, and specialty crop producers, $2.1 billion. In addition, $500 million would be available for other crops.

While details are still to be ironed out, the USDA has indicated producers will be compensated for 85 percent of the estimated price losses that occurred from Jan. 1 to April 15, 2020, said Jim Mintert, the Center’s director. Producers would be compensated for 30 percent of estimated price losses beginning April 15 and continuing through the next two quarters.

USDA would spend about $3 billion to purchase produce, dairy and meat for food banks and other non-profits.

The dollars announced by USDA might not be enough, Langemeier said. “That sounds like an awfully big number, $16 billion,” he stated. “But if you look at $3.9 billion for row crop producers and you’re looking at compensation 85 percent of the price drop, I don’t think that math quite works. I think you’re going to need more money than $3.9 billion.”

The Center hosted an April 20 webinar on how the coronavirus pandemic has impacted U.S. food and agriculture. Grocery store sales of fresh chicken, pork and beef spiked when consumers stocked up in mid-to-late March but have since fallen, said Jayson Lusk, department head and distinguished professor of agricultural economics at Purdue.

“More than half of our food spending is away from home – about 54 percent,” he noted. “While we’re moving more through the grocery stores, it’s probably not enough to offset what we’re losing through the food away from home (market).”

Since March 20, steer prices per hundredweight have dropped 11.5 percent, while barrows and gilts have fallen 9.1 percent, according to FAPRI. Wholesale meat prices increased during the stocking up period but have since leveled and are below where they were at the same time last year.

“There’s a lot of discussion about what this means for feed demand,” Mintert pointed out. “In the short run, I don’t expect a big impact on feed demand because the animals are still out there. But these kind of price changes do suggest smaller livestock production, smaller feed consumption, going forward.”

In its March 31 Prospective Plantings report, USDA estimated farmers would plant 97 million acres of corn this year. Things have changed a lot since data was collected for the report, he said. “We think weakening returns for corn suggest an acreage shift is likely,” Mintert explained. “We think planted corn acreage could easily fall a million acres below the intentions. It might even be more than that. We haven’t any experience with this kind of a shock to the system at this time of year. I think that’s important to remember.”

Corn acreage could be shifted to soybeans, he said. Larger carryover for corn and soybeans at the end of the 2020 marketing year is possible, he added.

Ethanol demand and the need for corn at processing plants have taken a hit during the pandemic, he said. Recent estimates suggest the industry is operating at 50-60 percent capacity, meaning less corn is moving through the plants, Mintert said.