Tom Hall, Senior Agronomist, Rooster Strategic Solutions
A farmer friend told me recently that stay-at-home orders have changed the way neighbors see him. “People used to call me anti-social,” he said. “But now they praise me for my social distancing.”
All kidding aside, the lives of farmers have been turned upside-down along with everybody else, and the impact is even higher when you consider the demographics. According to recent Ag Census data the average age of farm operators is almost 58, a full 10 years older than workers in most other sectors, and 37% of farmers are 65 years or older, putting them at much higher risk for contracting coronavirus. What’s more, farmers and growers today face a long list of business challenges that most people haven’t even considered. If you work with farmers, growers, or other agribusiness professionals, you should be aware of these issues – as well as ways you might be able help.
Livestock producers are on a roller coaster. If you want to see the extreme volatility that Covid-19 has had on agriculture, take a quick look at poultry operations. When the disease first broke, egg prices skyrocketed to more than three times normal as panic-stricken grocery shoppers stripped supermarket shelves. Prices for chicken breasts soared more than 30 percent during the first 3 weeks of March. After the initial euphoria the bottom dropped out as restaurants, cafeterias, and schools began to close. It takes four to five months to raise a hen to an egg-laying stage; in the midst of uncertainty, it’s unlikely that poultry producers will have the confidence to increase their stocks or infrastructure.
Dairy producers are facing the same hurdles, and then some. Milk and cheese production was already decreasing year-to-year, and when restaurants and schools closed, demand plummeted further. Producers are scaling back production, and local television news segments are routinely airing segments showing farmers literally dumping hundreds and thousands of gallons of unwanted milk.
Beef producers are being hammered on two sides. Although demand in supermarkets is still high, restaurant closures have reduced overall sales. At the same time demand is lowering the risks for workers in processing plants is raised, since an outbreak among workers toiling side-by-side could explode quickly, shutting down the plant and overwhelming rural medical facilities. In response, many processing plants have already closed as a precaution, or curtailed production dramatically, further reducing sales.
Likewise, pork producers are reeling. They suffer from the same labor issues in the processing facilities, as well as the same decrease in demand as restaurants close. Bacon, more than any other pork product, is heavily reliant on restaurant sales, and as major fast-food and fast-casual operations moved to drive-through/pickup-only, sales have cratered. Overall, lean hog futures have declined by more than 30 percent since January.
Crop growers are in an equally precarious position. Major commodity prices are down 15 to 25 percent, with projections for corn expected to drop further to $3.30 per bushel and soybeans to $8.30 per bushel. At these prices it’s virtually impossible for growers to break even. According to University of Illinois economists, the most productive acres in the state will lose $107 for corn and $40 for soybeans per acre at current prices. What’s more, ethanol production underwrites a third of the corn price; as Americans drive fewer miles, the likelihood of turning a profit on corn acres is driven down even more. As a result of these factors – on top of general uncertainty – there is likely to be a reduction in acres planted for both corn and soy in 2020, despite the USDA’s original projection of near-record totals for both crops before the pandemic hit.
Farmers in key fruit- and vegetable-growing regions including Arizona and Florida have been pictured plowing their acres under, and the reason is simple: no demand. On top of that, farmers were already having trouble finding consistent labor as immigration policies are debated in Congress.
Some practical advice for dealing with farmers and agribusiness professionals in a pandemic: First and foremost, understand how serious these problems are. A little empathy goes a long way here. Whether they grow corn, raise hogs, or take care of cattle, farmers and farm-related businesses are seriously struggling to survive this year, much less turn a profit, so this isn’t the time or place for humor or for strong-arm sales tactics. Let the farmers know that you understand how dire the situation is and that you support them, but don’t tell them that you want to be their partner – unless you’re planning to share the risks and help them pay their bills, you’re not a partner.
Look for opportunities to help – the more local the better. How can you help the farmer’s dollar go further? Can a fertilizer application be delayed? A seeding recommendation reduced? Are extended terms available for your products or services? Make sure the farmers know of any options that can help them survive this crisis.
Farmers markets are still open in many communities; publicizing these – while encouraging consumers to maintain safe distances between themselves and others – is an easy way to support farmers’ efforts. Many farmers are creating new, direct-to-consumer ordering and delivery options that should also be promoted. Use your company’s social channels to highlight both the impact of the coronavirus on farmers and their often-heroic responses. This raises awareness in your community on how serious this issue is as well as how farmers are reacting positively. Share examples of new approaches, community involvement, or efficient practices that farmers are employing to ensure that we as Americans continue to enjoy the safe and abundant food supply that we often take for granted.
The U.S. government is doing what it can, labeling agriculture a “critical industry” and rolling out a list of programs to assist farmers, ranchers, producers, rural-based businesses and organizations affected by the pandemic (for more information, see www.usda/gov/corornavirus). But it will take more than Uncle Sam or our individual thoughts and prayers to get through this crisis – and those of us who routinely work with farmers, ranchers, producers, and other agribusinesses should be the first to start.
Agriculture is a cyclical business and times of boom and bust are going to happen. The absolute worst crisis management strategy is to turn inward. Encourage farmers experiencing financial problems that this is the time to talk and over-communicate to lenders and vendors. Loans can be extended, new terms established, and new plans put in place – help is out there, and it all starts with a conversation.