By Rachel Lane
Washington, DC — US agriculture is being hit the hardest right now and it may take more than a year to fully recover from the impact of Covid-19.
The Farm Foundation hosted a forum to discuss the impact of the coronavirus on the future. The panelist agreed that things are bad now in the US, but the recovery should be faster than the 2008 recession. The public perception of farmers is negative right now, too, as some products are destroyed.
“There’s not any grower or producer that grows things just to throw it away... It’s painful,” said A.G. Kawamura, a partner at Orange County Produce, LLC. He farms in California. “The crisis that we have right now is that people can’t quite conceive the business of farming.”
Farmers plan the growing season expecting to grow a certain yield, sell a certain yield per day. When that doesn’t happen, farmers struggle, Kawaruma said.
“You can’t just stop operation or shift into another crop that seems safer,” he said. Some crops involve orchards or vines. Some crops in California, like strawberries, are harvested nine months of the year. At a certain point, farmers are stuck with the plans they made.
It is a global issue. Right now, consumers are running to the stores, worried about food shortages, when the reality is that something might not be available today, but it will be available soon. And there is still food on the shelves, he said.
“We haven’t had a real scarcity in half a century,” he said. “If we have scarcity, we would regularly have empty shelves.”
Right now, there is enough food that some is thrown away regularly. There is enough land that some of it can be used to grow corn for ethanol or shelf stable products. Not everything needs to go straight to the market, but people still worry, he said.
“We can’t quickly pivot and turn and find a place for this product to go,” he added.
About $19 billion has been earmarked for relief for agriculture in the US, said Dan Base, president of AgResource. He expects another $30 to $50 billion will be provided to the industry before the end of the year. Some of the money will be direct payments to farmers, some will be used to purchase products and give them to food assistance programs around the country.
“These are unprecedented times,” he said. “I’ve never seen the struggle, the pain and agony that we’re facing today.”
The only agriculture products that seems to be unaffected are wheat and sorghum. Corn has been impacted by the slowing of ethanol production. Base said about 40 percent of US corn is used to made ethanol, but fewer cars on the road means less need for fuel. The oil industry has been hit hard, too. There is enough ethanol stored to last eight weeks once normal use starts again. This means it will take even longer for corn prices to recover. Since farmers planted more corn this year than last year, the surplus product is being plowed into the ground.
Dairy farmers started 2020 optimistic, but there is little positive news now. Butter is currently selling for less than it has sold in decades. Powdered milk prices are also falling. Farmers are trying to find other ways to use the milk, including as part of livestock feed or fertilizer, but there is only so much need.
Cutting milk levels to the increase prices will take months to achieve, he said. It is the same problem the livestock industry faces, as farmers have more cattle, chicken and pigs ready for slaughter than can be processed. The slaughtering of cattle is down 25 percent as a result of Covid-19. He thinks it might be possible to move some of the production to stores, where a carcass can be processed by employees. Maybe the consumer ends up with large amounts, too, and has to do some processing at home, separating the packaging into smaller portions to eat, refrigerate or freeze.
For now, farmers are cutting back on the number of animals they are raising for slaughter. This means there will be lower supplies of meat in the fourth quarter of this year and the first quarter of next year.
In 2019, Americans spent more eating at restaurants than they did on food they made at home. It was the first time this has happened in history, he said. Now that people are forced to cook more at home, he thinks they might return to more home cooked meals.
“We do think there will be a fairly big political battle around crude oil and biofuel industry,” he said. The energy industry has 6.8 million jobs while biofuel has 30,000. Farmers need to remind congress that biofuel is important to the agriculture industry.
Another issue is the decline in the value of the US dollar. Farmers in other countries are benefiting from the decreased value of the dollar, while US farmers suffer. Something needs to be done to support the dollar, he said.
“Brazil is looking at record profits this year in corn and soybeans - that’s because of the declined value of the US dollar,” he said.