Ag Insight

BY JIM ERICKSON

Pandemic leads to shifts, decline in U.S. food spending

The COVID-19 pandemic led to major changes in U.S. food expenditures, according to data from the U.S. Department of Agriculture’s (USDA) Economic Research Service (ERS).

The ERS analysis shows that real total food expenditures in 2020 fell 7.8% from 2019. Food away from home (FAFH) spending decreased by 19.5%, while food at home (FAH) spending outlays went up 4.8%. The pronounced substitution from FAFH to FAH spending was the primary driver of the decrease in real total food expenditures in 2020. Consumption at FAFH establishments generally is a more expensive choice.

As a comparison, real total food expenditures during the Great Recession decreased 1.5% in 2008 and 3.0% in 2009. FAFH spending fell 4.9% between 2007 and 2009, and unlike the 2020 recession, FAH spending also declined (4.0%).

In 2020, as in previous recessions, U.S. consumers shifted food expenditures to more cost-efficient FAH outlets instead of FAFH restaurants. However, public health concerns associated with the pandemic led many FAFH establishments (restaurants) to operate at a limited capacity or cease operations, compounding the change in how consumers spent their food dollars.

Grants available to support wood products, energy innovation

Some $13 million in new funding opportunities is now available to support market innovation in wood products and wood energy.

The announcement from Deputy Agriculture Secretary Dr. Jewel Bronaugh came during a recent “Leaders for the Built Environment” virtual event and kicked off National Forest Products Week.

Organized by the Forest Service, Dovetail Partners, WoodWorks and the Softwood Lumber Board, the event aimed to challenge senior leaders from companies in attendance – including Walmart and Microsoft – to explore how mass timber construction can support their climate and sustainability goals.

The USDA Forest Service is now accepting applications for these funds through the 2022 Wood Innovations Grant Program and the 2022 Community Wood Grant Program. These grants are designed to develop and expand the use of wood products and strengthen emerging wood energy markets that support sustainable forest management – particularly in areas of high wildfire risk.

Since 2015, the Community Wood and Wood Innovation grant programs have provided more than $62 million to 288 recipients to support wood products and wood energy projects.

The application period for both grant programs closes Wednesday, Jan. 19, 2022. To learn more, visit www.usda.gov.

Paycheck Protection Program draws some farm operation participation

As part of its response to the Coronavirus pandemic, the U.S. federal government implemented the Paycheck Protection Program (PPP), one of many stimulus and relief measures designed to aid consumers and businesses, including agricultural producers.

Agricultural producers could use forgivable loans from this program to help keep employees on payroll and offset some of their operating costs. The maximum PPP loan amount was 2.5 times the monthly average profit plus payroll and eligible overhead expenses (such as the employer’s share of insurance payments and unemployment taxes). PPP loans were forgivable if used within 24 weeks after the first disbursement of the loan on eligible expenses.

Data from the U.S. Small Business Administration (SBA) showed that more than $525 billion in PPP payments were disbursed through more than 5.2 million loans in 2020. Although little information on PPP recipients was available, researchers from USDA’s Economic Research Service examined information collected in USDA’s 2019 Agricultural Resource Management Survey (ARMS). According to ARMS, 72% of all commercial farm operations (farms making $350,000 or more in Gross Cash Farm Income) had either positive net income or paid labor – and, therefore, would meet the two most important eligibility requirements to apply for PPP loans.

Individual SBA loan data revealed that almost 121,000 farm operations applied for a total of $6 billion in PPP loans. That would account for 17% of farm operations presumed eligible based on the 2019 ARMS. Of the total PPP loans that went to farm operations, $2.1 billion (35%) went to livestock operations and the remaining $3.9 billion (65%) went to crop operations. 55% of all commercial farm operations did not apply for a PPP loan.

Federal loans, grant to benefit 2 Alabama communities

USDA has announced it is investing $272 million to modernize rural drinking water and wastewater infrastructure for 270,000 people and businesses in rural communities across 37 states and Puerto Rico.

“As people in many parts of the nation battle drought and fires brought on by climate change, there has never been a more urgent need for this assistance,” said USDA Secretary Tom Vilsack. “When we invest in rural infrastructure, we build opportunity and prosperity for people in rural communities.”

USDA is financing 114 projects, including two in Alabama, through the Water and Waste Disposal Loan and Grant Program.

The Alabama projects include: A $217,000 loan to the City of Tuscumbia to help the city acquire a sewer line from an adjacent wastewater system and allow the city to bore additional lines under a major thoroughfare to facilitate future expansion.

A $1.056 million loan and a $584,000 grant to the Chisholm Heights Water and Fire Protection Authority to upgrade the authority’s water system with a water pumping booster station, supply line, master water meter and a water connection.

World, domestic cotton forecasts

The latest U.S. Department of Agriculture (USDA) estimates indicate that world cotton mill use in 2021/22 (August – July) is projected at 123.4 million bales, 3% above 2020/21. China and India lead the way, accounting for a combined 53% of the total. In addition, gains are seen for Pakistan, Bangladesh, Turkey and others.

Global cotton production is forecast at 120.3 million bales in 2021/22, 7% above the year before, as a rebound in harvested area and a forecast record yield combine for the higher output.

World cotton trade is projected at 46.4 million bales this season, second to 2020/21’s record and supportive of the higher mill use estimate. Global cotton mill use remains forecast above production, reducing 2021/22 ending stocks to 87.1 million bales, the lowest in three years. Likewise, the world stocks-to-use ratio is expected at its lowest since 2018/19, strengthening world cotton prices to levels not seen in a decade.

Domestically, USDA’s October Crop Production report forecast 2021 U.S. cotton production at 18 million bales, 500,000 bales below the previous forecast but 23% (3.4 million bales) above the 2020 crop. The smaller October forecast is attributable to a lower national yield projection, largely the result of a reduced yield for Texas. If realized, 2021 U.S. cotton production would be the second smallest crop in five years.

AMS advisory committees provide a way to serve

One of the ways that USDA’s Agricultural Marketing Service (AMS) serves America’s diverse agricultural industry is through the coordination and oversight of federal advisory committees.

USDA believes having transparency and objectivity within these organizations to guide the agency is crucial to the long-term success of the industries it serves. By leveraging expertise from the private sector to identify best practices and overcome challenges, the boards and committees help shape and ensure the future of American agriculture.

Advisory committees include:

• Advisory Committee on Universal Cotton Standards

• Fruit & Vegetable Industry Advisory Committee (FVIAC)

• Grain Inspection Advisory Committee

• National Organic Standards Board (NOSB)

• Plant Variety Protection Board

In addition to a Peanut Standards Board, AMS also provides oversight for marketing orders and national research and promotion programs.

Marketing agreements and orders are initiated by industry to help establish the grade, size, maturity, quality or prices of goods. Each marketing order or agreement includes a framework for industry oversight through a council, committee or board made up of appointees from within the industry.

Research and promotion programs focus on nutrition, research, marketing, and consumer outreach efforts that improve, maintain, and develop opportunities for agricultural commodities and products. They are administered by a board or council whose members are nominated by the industry and then appointed by the Secretary of Agriculture.

If you are interested in being a voice for your industry and serving on a council, committee or advisory board, contact the AMS Outreach Office at 202-690-0487.