April 29, 2020
Sara Schafer
The coronavirus (COVID-19) has disrupted and impacted every type of agriculture in every corner of the globe. Supply chains have snapped, consumer demand has surged and waned, and the food sector has had to shutter or dramatically transform its business model.
The future will definitely look different from the past. In the long run, what opportunities could farmers harvest? That was the topic of an April 28 Farm Foundation virtual forum.
“We are navigating without a road map,” says A.G. Kawamura, owner and partner of Orange County Produce in Irvine, Calif. “Thank goodness this pandemic showed up in 2020, not 2010, 2000 or 1990.”
With today’s technology, logistics and connectiveness, he says, the agricultural industry across the globe can quickly pivot and solve problems in ways never done before.
Here are a few of the silver linings for farmers amid COVID-19.
1. Livestock prices should significantly improve later in 2020.
Net farm income could drop $20 billion this year alone, according to research by the Food and Agriculture Policy Research Institute (FAPRI) at the University of Missouri. That’s roughly 19% less than FAPRI’s estimates prior to the COVID-19 outbreak.
Livestock prices are expected to drop 8% to 12%, FAPRI projects.
As packing plants reduce their daily slaughter number due to COVID-19 outbreaks and social distancing protocols, a domino effect is taking place.
With less slaughter capacity, livestock producers will cut back on their placement numbers, says Dan Basse, president of AgResource. As a result, there could be a potential shortfall of meat available to consumers later this year.
“There is optimism for the U.S. livestock industry and prices in Q4 and beyond on supply shortfalls,” Basse says.
2. The return to cooking at home will create demand for ag products.
2019 was the first year Americans spent more money on food away from home versus money spent on food consumed in the home, but that’s shifting due to #COVID-19, Basse says.
“We will consume more meals in the home than pre-COVID-19 days,” he says. “The food consumption skew favors an ‘American renaissance’ with home meal preparation.”
This trend of cooking at home will likely be necessary due to some of the supply chain disruptions.
“I expect you'll see bigger poundage of meat at stores – brisket, ribs, etc. – because of the way that processing is going on,” Basse says. “Consumers may have to do more processing at home.”
3. You can pivot your operation to a more resilient business model.
The food system’s just-in-time inventory and processing model is highly efficient. But, when there are disruptions, Basse says, the impact to producers and consumers are dramatic.
“Look for expanding producer investment in processing as the farm-to-table trend accelerates and more products are created on-farm instead of in plants,” he says.
This could include more on-farm creameries or on-farm meat processing.
“Both larger and smaller farmers can pivot how they're working,” Kawamura says. “If they can make some changes, they'll have opportunities on both a large and small scale.”
In the produce industry, for instance, Kawamura is seeing growers capture profit through drive-thru farmers markets, ready-to-go packages of produce and roadside stands.
This long-term and resilient view will be critical to survive the current pandemic as well as future ones, adds Luke Chandler, chief economist for John Deere.
“We need to think about global competitiveness related to U.S. agriculture,” he says. “We will be facing this headwind in global export markets for some time.”
4. U.S. agriculture will receive more support and respect.
A great upside to COVID-19 is consumers are starting to understand how agricultural supply chains work, Basse says.
Chandler agrees. “Consumers have not had a relationship back to the farmgate,” he says. “This crisis gives us an opportunity to tackle that challenge and look for the opportunities to connect with consumers so they can value the entire supply chain.”
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