At a time when millions of Americans are losing their jobs, many farmers are feeling blessed to have work. But that doesn’t mean that the coronavirus hasn’t hurt us.
The prices we receive for what we grow had already declined significantly over the last few years, and now the pandemic is making 2020 even more financially difficult. We have lost markets due to trade wars, tariffs and disease. African Swine fever decimated pork herds across China and South Asia, obliterating the need for feed like the soybeans their producers were sourcing from the U.S. Lower fuel costs help when we fill our gas tanks, but we also rely on the ethanol industry as customers. Ethanol is produced from corn and its use has decreased significantly due to the weakened demandÂ¾a result of the current oil war and the fact that everyone is staying home.
Longer term, we have added concerns, from the fate of school-lunch programs – which we provide food for – to how Covid-19 has slowed down meat processing since so many workers were getting sick. The entire industry is reshaping itself. In recent years, Americans have gradually come to spend more money eating food outside the home than eating food in their own kitchens. Now this has changed radically with massive implications for production as the food supply chain has to transform its packaging and delivery of food. Milk that was packaged in small boxes for school lunches is now needed in gallon containers a family will consume together at home. As the supply chain is changed, the food supply is backed up and in the case of milk, some farmers were forced to dump it, watching their financial footing go down the drain with it.
As more farmers face growing financial challenges, there is a real concern that farm bankruptcies will continue to increase.
Some farmers with employees have taken advantage of the Paycheck Protection Program to help them fill some of the financial gaps they are dealing with. The recently introduced $3 trillion stimulus package includes special assistance for dairy producers and farmers of specialty crops like fruit and vegetables and another $16 billion in direct payments to farmers. While the CAP is $250,000 most grain producers will get much less. For corn and soybean producers it is based on unpriced grain inventory on January 15, 2020 or 1/2 of your 10-year average production. My early estimate is that I will receive about $15,000.
Even if passed, this new bill will not solve the financial challenges faced by food producers. The command-and-control decisions of federal bureaucrats cannot replace the genuine opportunities of functioning markets. The one bright spot in the economic picture for rural America is the completion of the US-China Phase One trade agreement with the promise of increased demand from China for American products. While there is concern about China meeting its purchase commitments due to economic turmoil and the tensions over the source of Covid-19 and crackdowns in Hong Kong, recent corn purchases have offered some hope.
I appreciate the federal government’s help, but I want it to be temporary. What we producers need is functioning and open markets. I want to grow my crops and sell them to willing buyers. I want to trade.
When it comes to the coronavirus, a lot of things are beyond my control. Yet farming is well within it – and so I’m in the fields, doing my job at the start of a new and confusing season.
Farming is all about adaptation. We’ve adjusted plans based on the unpredictability of the weather as well as the new opportunities presented by science and innovation. 21st-century seed technologies have made our crops hardier and better able to withstand adversity. Without innovative technologies like biotechnology and crop protection products, we’d find ourselves in a more difficult position, up and down the food chain. Now we’re adapting to a world suddenly beset by the novel coronavirus.
No matter what we face, we’ll get the job done. If our economy slips into a disease-driven depression, we’ll have lots to worry about. A reliable source of food won’t be one of them, though, thanks to the farmers who are in the fields today.
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