All agriculture industries truly are
WHAT IS THE COVID-19 ECONOMIC IMPACT ON DIFFERENT SECTORS OF AGRICULTURE? A
lthough the true impact may not be known until years after the pandemic, different agriculture industries are opening up about hardships they are facing and putting money towards economic analyses to understand farmers’ losses in hopes to better help them recover. Iowa corn farmers are impacted by our customers’ reduced corn-for-feed demand, and Iowa as a leader in agriculture is impacted across the state. Below are some industry findings thus far.
Beef
All sectors of the beef industry are experiencing major losses as the COVID-19 pandemic continues. The National Cattlemen’s Beef Association (NCBA) has estimated the beef industry as a whole has lost $13.6 billion in economic damage, as a result of $9.2 billion in total revenue loss across 63 million animals (based off information available on April 8, 2020). These numbers reflect an $8.1 billion loss to the cow-calf group, which represents 59.7% of the total impact. The stocker/backgrounding sector reports $2.5 billion in losses, representing 18.2% of total economic loss, and a $3 billion loss to the feedlot sector, which makes up 22% of the total economic loss. Currently it is not projected what impacts COVID-19 will have on total beef production for 2020. At the beginning of the year, a record 27.5 billion pounds were forecasted. This number is larger than beef production in 2019, which totaled at 27.15 billion pounds. It is possible a large enough labor disruption in processing facilities could lower the slaughter potential for the year, which would create a surplus of cattle and force some production into 2021. We will continue to see the significant impact on market prices and beef available to the consumer. For the producer, cash-fed and feeder cattle prices have been impacted, as well as Live-and-Feeder futures, as prices swiftly decrease; they could continue to stay low for the remainder of the year.
Swine
The Iowa Pork Producers continue to reassure the American public that there is no shortage in pork itself, but there are disruptions along the pork supply chain. In fact, the U.S. Department of Agriculture (USDA) March report showed that a record number of hogs being raised, and that cold storage stock of pork is the highest it has ever been. Before the
pandemic hit, there were already record low unemployment numbers, making it difficult to find workers for pork plants in rural areas. The National Pork Producers Council (NPPC), in a study with Iowa State University, estimate that hog farmers will lose nearly $37 per hog for each hog marketed for the rest of the year, or almost $5 billion collectively. Another issue the industry is struggling to address is providing correct packaging of products. Pork product packaging varies for different needs and not all is packaged for retail sales. The industry has stressed it will take time to package the pork supply to meet retail packaging needs.
In a time of great uncertainty and struggle, please remember no farmer is alone. Turkey
Iowa’s turkey industry has also been severely disrupted as restaurant closures and quarantine continues. Because of the COVID-19 impact on restaurants, the turkey industry has a seen a 60% drop in sales to restaurant chains. Sixty-five percent of Iowa-based West Liberty Foods business relies on the restaurant industry, making up 80% of their profits. Because of these trying times, the farmer-led Board of Directors of West Liberty Foods has cut turkey production by 15% for the next 12 months, which means 15% of the turkeys under contract for delivery to the plant are now cancelled. Farmers will start to feel this impact in September as turkeys that were supposed to be placed in May will not go to market like normal. These producers may find themselves not having an adequate income to pay for fixed costs for turkey production, including labor, building payments, taxes and more. The Iowa Turkey Federation estimates losses of $23.9 million to Iowa’s economy and a $785,000 loss to Iowa feed mills. Grain farmers can also expect to see 810,00 bushels of corn and 270,000 bushels of soybeans not consumed by turkeys.
stronger together.
Corn
The National Corn Growers Association (NCGA) commissioned Dr. Gary Schnitkey of the University of Illinois to conduct an economic analysis to better understand the impact COVID-19 will have on the corn industry. The analysis showed a decline in cash corn prices by 16% since March 1, 2020, with some regions experiencing more than a 20% decline, leading to the projection of a $50-per acre revenue decline for the 2019 corn crop. Dr. Schnitkey based the analysis on cash corn prices as of mid-April and estimates losses could increase through the current marketing year. Farmers will look for more assistance as the average Price Loss Coverage (PLC) Program payment of $17 per base is projected for corn, and this number would fall short in covering the 2019 revenue loss for farmers. These revenue losses emphasize the need for assistance provided by the USDA Coronavirus Food Assistance Program (CFAP). Currently the analysis continues as we begin to look into the 2020 crop year, where losses are anticipated to be higher than 2019. To learn more about these efforts visit iowacorn.org/covid-19-2/. Due to struggles of our top customers, the corn farmer will feel the impact as well. Iowa livestock consumes 320 million bushels of corn, with swine (58%), beef (18%) and poultry (17%) being the top consumers. According to the UC Davis review, food-producing animals like cows, pigs, goats and poultry species consume 70% to 90% of all genetically engineered crops. But many other products depend on corn as well, from paper goods and cardboard packaging to all the milk, eggs, poultry and other protein products that come from corn-fed animals. With early planting, good conditions and the projected acres, 2020 is predicted to be the biggest crop produced on record; but once harvested, what will it be used for if the livestock industry begins to cut back? Because of the strong partnership corn farms have with the livestock industry, many Iowa jobs rely on both industries. Statewide output attributed to livestock production and further processing is just under $31.6 billion and is responsible for more than 122,000 jobs. Also, 23 of Iowa’s counties derive at least 1/5 of their total agriculture and agriculture-related jobs from the livestock and meat processing industries. Not only does corn-fed livestock feed Iowans — it also provides many job opportunities.
All agriculture industries truly are stronger together as they all rely on each other in more ways than one. In a time of great uncertainty and struggle, please remember no farmer is alone. Resources are available for anyone personally struggling with this situation. You can find those resources at iowacorn.org/education/farmer-resources/