SPECIAL UPDATE: IMPACT OF COVID-19 ON AGRICULTURE
DR. JOHN NEWTON, @NEW10_AGECON JNEWTON@FB.ORG 1 CHIEF ECONOMIST, AMERICAN FARM BUREAU FEDERATION
Nearly 20,000,000 Acres Unplanted in 2019 Due To Flooding
Prevent Plant Prevented planting is a failure to plant an insured crop with the proper equipment by the final planting date.
2
Source: USDA FSA, Farm Bureau Calculations
A Bounce Back From #NoPlant19 Was Expected for Corn and Soybeans, Wheat Record-Low Acreage 120
Million Acres Planted
100 80 60
Decoupling of Farm Programs
40
Freedom to Farm Bill
20 0
1960
1965
1970
1975
1980
Corn
1985
1990
Soybeans
1995
Wheat 3
2000
2005
2010
2015
2020P
Cotton Source: USDA OCE, USDA NASS, Farm Bureau Calculations
Record Meat Production and a Competitive Meat Case Was Expected for 2020 50
Poultry
45
Production Expected to Climb 1% to 45.5 Billion Pounds
Billion Pounds
40 35
Pork
30
Production Expected to Climb 4% to 29 Billion Pounds (CWE)
25 20
Beef
15
Contraction the the cattle herd likely to slow production to only 1% in 2020
10 5 1965
1970
1975
1980
1985
1990
1995
2000 4
2005
2010
2015
2020
Source: USDA FAS PSD Online, USDA OCE, USDA NASS, Farm Bureau Calculations
Rewind to the March U.S. Farm Sector Net Farm Income and Net Cash Income Forecast $160
U.S. Net Cash Income was Projected to Decline 9% or $10.9 Billion from 2019
Net Cash Income
$140
$109.5B
Billion Dollars
$120 $100 $80
$96.7B
$60
Net Farm Income
$40 $20
U.S. Net Farm Income Projected was to Increase 3.3% or $3.1 Billion from 2019 (Includes Depreciation and Inventory Changes)
$0 1990
1995
2000
2005
2010
5
2015
2020P
Source: USDA ERS, Farm Bureau Calculations
Light At The End of The Tunnel…Was a Freight Train Daily Change In Infected COVID-19 Cases 60,000 54,461 52,104 51,174
50,000
49,199
45,255
45,746
45,283
42,705 41,374
40,000
39,873 34,756
33,501 32,724
33,152 31,298 31,937 31,694 29,096 30,777 30,405 30,026 29,642 28,553 27,874 27,065 26,017 25,481 25,291
30,000
36,291 34,195 32,921
28,341 27,341 28,194 26,038 25,512
10,000 0
35,189 34,935
34,162
32,748 31,480 30,536
29,741 29,195 27,689 27,408 24,519 22,481
21,502
20,000
39,035
27,882 27,178 25,587 25,256 25,733 24,185 22,475
19,793 19,136 18,185 18,036
27,809
27,617
25,300 25,101
21,954 21,193 19,764 18,878
25,541 24,141 23,621
21,769 20,449 19,004
21,823 20,813
24,504 24,230 22,815
18,991 18,883 18,282
25,224
22,732 21,351 20,895 20,129 19,958 17,354
25,556 25,334 22,950 20,794
25,559
26,439
23,705
19,824 19,660
18,127 17,731 17,414
11,943 10,262 10,089 7,936 6,346 5,322 5,240 2,776 1,781 1,392 713 596 452 398 11468192 98 6 2320317048115
3/1/20 3/8/20 3/15/20 3/22/20 3/29/20 4/5/20 4/12/20 4/19/20 4/26/20 5/3/20 5/10/20 5/17/20 5/24/20 5/31/20 6/7/20 6/14/20 6/21/20 6/28/20 7/5/20
US
7 per. Mov. Avg. ( US )
6
Source: Johns Hopkins GitHub, Farm Bureau Compilations
Americans Spent $1.7 Trillion in 2018 on Food 54% of Food Expenditures in 2018 Occurred Away From Home
$253B Other Food Away From Home
15% 37%
$678B Restaurants (Full- and Limited-Service)
39%
$628B Grocery Stores, Warehouses and Supercenters
9% $153B Other Food At Home
7
Source: USDA ERS, Farm Bureau Calculations
Total Expenditures in Grocery Stores and Food Service Established Declined by $50B in March – May YoY Billion Dollars
$75
$67B
$70 $65
Grocery Stores, +23% May 2020 Compared to February 2020
$60
$55 $50
$41B
$45 $40 $35
Food Service and Drinking,
$30
+38% May 2020 Compared to April 2020
2014
2015
2016
2017
2018 8
2019
2020 Source: U.S. Census Bureau, Farm Bureau Compilations
Panic Buying and Increased Grocery Traffic Contributed to Higher Retail Prices For Many Products, CPI jumped 4%-5% Percent Change in Retail Price, May 2019 to May 2020 Eggs Ground Beef Pork Chops Potatoes Sugar White Bread Choice Steak Whole Milk Chicken Breast Cookies, chocolate chip, per lb. (453.6 gm) Wheat Bread American Cheese Spaghetti and Macaroni Cheddar Cheese Bananas Ice Cream Tomatoes Flour Rice Orange Juice Bacon
20% 17% 15% 11% 11% 10% 9%
8% 8% 8% 7% 6% 5% 4% 2% 2% 2% 2% -2% -3% -8%
-10%
-5%
0%
5% 9
10%
15%
20%
25%
Source: BLS, Farm Bureau Calculations
Closed Meat Processing Plants Created Regional Shortages of Select Products YoY Change in Weekly Hog Slaughter
YoY Change in Weekly Cattle Slaughter 20%
30%
2019
2019
20%
10%
10%
0%
0%
+1.4%
-10%
Weekly Cattle Slaughter is estimated to be 1.4% above prior-year levels. Cumulative slaughter is 5% below 2019.
-20% -30%
2020
-10%
+11%
-20%
Weekly Hog Slaughter is estimated to be nearly 11% above prior-year levels. Cumulative slaughter is 0.5% above 2019.
-30%
2020 -40%
-40% 1
6
11
16
21
26
31
36
41
46
51
Week Number
1
6
11
16
21
26
31
36
41
46
51
Week Number 10
Source: USDA AMS, LMIC, Farm Bureau Calculations
Impact of COVID-19 on U.S. Commodity Futures Prices Cumulative Percent Change in Price Since January 80%
Class III Milk, +33%
60%
Rice, +26% 40%
Ethanol, -7% 20%
Soybeans, -8% Feeders, -12% Cotton, -12% Wheat, -13%
0%
Corn, -14% Live Cattle, -14%
-20%
Class IV Milk, -21%
-40% -60%
Hogs, -50% 1/2/20 1/12/20 1/22/20 2/1/20 2/11/20 2/21/20 3/2/20 3/12/20 3/22/20 4/1/20 4/11/20 4/21/20 5/1/20 5/11/20 5/21/20 5/31/20 6/10/20 6/20/20 6/30/20
11
Source: Barchart, Farm Bureau Compilations
USDA WASDE’s Commodity Value Change, Before and After COVID-19 Old Crop and 2020 Livestock
Wheat
New Crop and 2021 Livestock
-$266M -$1.0B
Cotton Pork Soybeans
Beef Corn
$46 Billion -$6.2B -$8.2B -$9.1B -$13.8B
-$1,505
-$4.0B
Change in WASDE Commodity Value for Select Commodities
Milk Broiler
-$3.9B
-$343
-$2,381
-$3,091
-$2,992
-$941 -$3,184
-$4,472
-$3,693
-$4,324
-$4,744
-$655
-$4,801
-$9,042
-$16,000 -$14,000 -$12,000 -$10,000
-$8,000
-$6,000
-$4,000
-$2,000
$0
Million Dollars 12
Source: USDA WASDE, Farm Bureau Compilations
Food and Agriculture Provisions of the CARES Rescue Package, Ag $ Less Than 0.5% of CARES Package Million Dollars Office of the Secretary, $9,500
19%
18% Child Nutrition Programs, $8,800
CCC Replenishment, $14,000
29%
Other, $916
2% SNAP, $15,810
32% Source: USDA, Farm Bureau Calculations 13
$5.4 Billion in Coronavirus Food Assistance Program Direct Payments, Avg. $15K Per Producer As Of July 7, 2020, Million Dollars
14
Source: USDA, Farm Bureau Compilations
Chapter 12 Farm Bankruptcies By Region, 627 Filings, U.S. +23% 12-Month Period Ending in March 2020 Northwest, 46 Filings +109%
Midwest, 316 Filings +42%
Northeast, 19 Filings -24%
Mid-Atlantic, 54 Filings -4%
West, 26 Filings +44%
Southwest, 37 Filings -16%
Source: U.S. Courts, Farm Bureau Calculations
Southeast, 117 Filings +15% Puerto Rico 11 Filings 15 -42%
Source: U.S. Courts, Farm Bureau Calculations
Cumulative Monthly Change in Jobs Thousand Jobs
25,000
January 2010 to February 2020, +22.7 Million Jobs
March, -1.4 Million
20,000 April, -20.8 Million
15,000 10,000
June, +4.8 Million 5,000
May, +2.7 Million
0 2010
2011
2012
2013
2014
2015
2016 16
2017
2018
2019
2020 Source: FRED, Farm Bureau Compilations
Food Security Is Directly Related to Per Capita GDP, Global Economic Slowdown in 2Q 2020 90,000 Ireland
80,000 70,000
United States Qatar
Per Capita GDP
60,000
Germany Canada
50,000
United Kingdom
40,000
United Arab Emirates
30,000
Czech Republic
20,000 China 10,000
Mexico Russian Federation Serbia
Ukraine
Myanmar
Nigeria
0 0
10 20 30 40 50 60 Percent of consumer expenditures spent on food & non-alcoholic beverages, that were consumed at home 17
70
Source: USDA ERS, World Bank, Farm Bureau Calculations
A Reversal in the Trend Expected: SNAP Expenditures Have Fallen 15% Since 2017 to $60B Million Dollars
$90,000 $80,000 $70,000 $60,000
$50,000 $40,000 $30,000
$20,000 $10,000 $0 1969
1979
1989
1999
18
2009
2019 Source: USDA, Farm Bureau Calculations
More individuals Likely to Receive SNAP Benefits, Average Benefits Per Household Relatively Could Move Higher SNAP Participation
Average Benefit Per Individual
60,000
$160 $140
50,000
$120 40,000
$100
30,000
$80
$60
20,000
$40 10,000 0 1969
$20 1979
1989
1999
2009
$0 1969
2019 19
1979
1989
1999
2009
2019
Source: Feeding America
U.S. Unemployment, Off-Farm Income and Loan Delinquency, Delinquencies Now At 2.7% 80,000
12%
U.S. Unemployment
10%
60,000
8%
50,000
6%
40,000
4%
Farm Loan Delinquency Rate
30,000
Percent
70,000 Household Income, Off-farm Income
Off-Farm Income
2%
20,000
0% 1996
1998
2000
2002
2004
2006
2008
20
2010
2012
2014
2016
2018
2020F
Source: USDA ERS, Farm Bureau Calculations
Total Farm Debt at $425B & Real Estate Debt Rose to A Record-High $265B, +$3B, in Inflation-Adjusted Dollars $450 2020 Inflation Adjusted Dollars (Billions)
2020 TOTAL DEBT $425 BILLION
1980 TOTAL DEBT $440 BILLION
$500
$400
$350 $300
2020 REAL ESTATE DEBT $265B
$250 $200
$150 $100
2020 NON-REAL ESTATE DEBT $161B
$50 $0 1960
1970
1980
1990 21
2000
2010
2020 P
Source: USDA ERS, Farm Bureau Calculations
YTD U.S. Ag Exports* Down 4%, or $2.3B, to $61.9B YTD Change in Agriculture Exports, Jan to May 2020 Compared to Jan to May 2019 CANADA -$278 M
MEXICO -$448 M
JAPAN -$150 M SOUTH KOREA -$166 M
CHINA +$496 MILLION INDIA -$178M 22
-$350 M HONG KONG Source: USDA FAS GATS, Farm Bureau Calculations *Data Includes Agricultural and Related Goods
U.S. Cumulative Exports to China, January to May FAS Total Exports to China Less Forestry
$12,000 $10,525
$10,354
$10,000
$9,369
Million Dollars
$8,789
$8,696
$8,000
$7,609 $6,534
$6,860
$6,062
$6,000
$5,615
$5,462 $4,962
$4,000
$3,595
$4,797
$3,359
$2,750
$2,049
$2,000 $731
$1,088
$2,281
$828
$0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 23
Source: USDA, FAS GATS, Farm Bureau Compilations
Ag Sales Pace Needed to Reach $36.5 Billion Phase 1* U.S. Exports to China, and Pace Needed to Meet Phase 1 Commitment
$35,000
Pace Needed to Meet Phase 1
$30,000
$27,397
$25,000 Million Dollars
$31,025
$22,482
$20,000
$17,593 $15,501 $13,871
$15,000
$12,403 $11,214 $9,884
$10,000
$8,403 $6,206
$5,000
$5,462
$4,282
$3,335
$2,233
Actual Exports to China Sales Are 50% Below Needed Pace
$3,123
$1,400
$0
JAN
FEB
MAR
APR
MAY
JUN 24
JUL
AUG
SEP
OCT
NOV
DEC
Source: USDA, FAS GATS, Farm Bureau Compilations *Assumes 15% for insurance and freight, fiscal year 2020 adjusted to include aquaculture.
$14.3 Billion in 2019 Market Facilitation Program Payments As Of March 16, 2020
Includes payments made for dairy, hogs, specialty crops and non-specialty crops
Source: USDA FSA, Farm Bureau Analysis
$566 Million for Livestock $275 Million for Specialty Crops 25 $13.5 Billion for Non-Specialty Crops
FAPRI Net Cash Income Projections Show Challenges Ahead for U.S. Agriculture U.S. Farm Sector Net Cash Income From USDA and FAPRI $160 Net Cash Income (Minus Federal Support)
$19.7B
Federal Support
$140
$32.8B
Government Payments in 2020 (USDA pre-CFAP)
Government Payments in 2020 (FAPRI)
$120
Billion Dollars
$114.9
$116.1
$108.0
$100
$91.4
$80 $60
$114.9
$82.2
$88.4
$88.1
$90.4
$16.6B
$89.9
$81.7
$78.5
$71.5
$69.4
$57.5
Government Payments in 2021 (FAPRI) (No MFP or CFAP)
$69.4B
$40
Farm-Related Net Cash Income from Crop and Livestock Sales Minus Gov’t Support
$20 $0 2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
26
2018
2019
2020P
2020 2021 FAPRI FAPRI Source: USDA ERS, FAPRI, Farm Bureau Calculations
Share of Greenhouse Gas Emissions by Economic and IPCC Sector Draft U.S. Inventory of Greenhouse Gas Emissions and Sinks, 2018
Economic Sector Residential 5%
IPCC Sector Industrial processes 6%
U.S. territories 1%
Commercial 7%
Waste 2%
Agriculture 9.3%
Agriculture 9.9% Transportation 28%
Industry 22%
Energy 83%
Electricity generation 27%
27
U.S. Livestock Emissions as a Percent of Total GHG Emissions, Based on IPCC Sector 4.0%
1990 to 2018 in CO2 Equivalents
3.5%
Beef Cattle
Dairy Cattle
Swine
Other
0.65% 1.92%
0.67% 1.95%
0.66% 1.88%
0.64% 1.77%
0.62% 1.71%
0.62% 1.76%
0.64% 1.82%
0.61% 1.79%
0.59% 1.80%
0.57% 1.77%
0.61%
0.54% 1.74%
1.87%
0.53%
0.53% 1.75%
1.75%
0.53% 1.76%
1.69% 0.51%
0.53% 1.77%
1.69% 0.50%
0.53%
0.53% 1.82%
1.75%
0.52% 1.85%
0.53% 1.89%
0.54%
0.56% 2.02%
1.95%
0.57% 1.98%
0.58% 1.95%
0.60% 1.95%
1.90%
1.5%
0.61%
2.0%
1.85%
Percent
2.5%
0.62%
3.0%
Swine emissions represented 0.04% of total GHG emissions in 2018
Dairy Cattle emissions represented 0.65% of total GHG emissions in 2018
1.0% Beef Cattle emissions represented 1.9% of total GHG emissions in 2018
0.5% 0.0% 1990
1995
2000
2005
28
2010
2015
Index of Methane Emissions Per Unit of Production for Beef Cattle, Dairy Cattle and Swine, 1990 = 100
-8%
110
Beef
105
Emissions per unit of beef production have declined by nearly 8% since 1990, and was more than 10% lower in recent years
Index (1990 = 100)
100
95
-18%
90
Swine
85
Emissions per unit of pork production have declined by more than 18% since 1990
80
-25%
75
Dairy
70 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
29
Emissions per unit of milk production have declined by nearly 25% since 1990
Harvested Acres Needed to Produce the 2018 Crop 140 120
Million Acres
100 80 60
121
-40 Million
130
It required 33% fewer acres in 2018 to produce corn than it would have in 1990
-42 Million It required 33% fewer acres in 2018 to produce soybeans than it would have in 1990
81
It required 17% fewer acres in 2018 to produce wheat than it would have in 1990
-4 Million
40
48
It required 27% fewer acres in 2018 to produce cotton than it would have in 1990
20
14
0 Corn
-8 Million
88
-1 Million
40
10
It required 28% fewer acres in 2018 to produce rice than it would have in 1990
3
4
Cotton
Soybeans 1990
2018
30
Wheat
Rice
31