By driving down commodity prices, the coronavirus outbreak is draining $50-$90 an acre from the corn and soybean revenue that farmers expect to receive this year, said economists Brent Gloy and David Widmar on Monday. Farm leaders said the counterweight to falling prices and economic uncertainty should be federal support.
“We’re in a tough place, we really are,” said Senate Agriculture chairman Pat Roberts, with market prices in a rut since the collapse of the commodity boom in 2013. The economic relief bill proposed by Senate Republicans included a temporary $20 billion increase, to $50 billion, in spending authority for the USDA agency that was the vehicle for trade-war payments to farmers and ranchers.
Farm groups said the Depression-era agency, the Commodity Credit Corp (CCC), should be used to deliver emergency economic relief during the coronavirus pandemic. “There is a long history of the CCC being tapped to responsibly support agriculture in times of crisis. This should be no different,” said president Zippy Duvall of the American Farm Bureau Federation, which advocated a relief bill with “full CCC funding and authority.”
Cattle, hog, wheat corn and soybean futures prices fell as the scope of the coronavirus outbreak widened. By one account, cattle futures tumbled 20 percent in the six weeks ending on March 17. Wheat has recovered in the past few days.
“There possibly could be a CCC payment to help us out in the beef industry,” said Roberts, from Kansas, one of the top three cattle states. “But you could go down every commodity” and all are hurting. “A direct payment that would be immediate, that would be of help.”
The National Milk Producers Federation said it was preparing a “dairy-specific letter” to USDA to ask for aid that could include government purchases of dairy products. “We believe a substantial purchase of multiple dairy products will be important in light of restaurant closures and school and food-service cancellations,” said NMPF chief executive Jim Mulhern, in comments first reported by The Hagstrom Report.
“The decline in corn and soybean prices will take $50-$90 per acre out of crop budgets as producers head into planting,” wrote Gloy and Widmar at the Agricultural Economic Insights blog. “The additional stress is concerning. It’s worth keeping in mind the markets – all markets – are dealing with a massive amount of uncertainty. This uncertainty has translated into downward pressure on all commodity prices.”
Meat consumption could decline as a result of the economic recession that may accompany the disease outbreak, said Gloy and Widmar. Americans also will eat more meals at home, which would mean less demand for higher-priced cuts of meat and delicacies served in restaurants.
Yet large commodity producers aren’t the only ones who believe they should see aid in the coming economic relief legislation. A coalition of organizations that represent small and mid-size farmers and fisherman said in a press release that they should not be overlooked, especially given that larger producers have seen recent federal aid in the wake of the trade war with China.
“While the current administration has provided more than $23 billion to food producers for the loss of export markets since 2018, the majority of small and medium-scale farmers, fishers, and ranchers have seen little of this relief,” said the Northwest Atlantic Marine Alliance, National Family Farm Coalition, Farm Aid, WhyHunger, HEAL Food Alliance, and the Institute for Agriculture and Trade Policy in the press release Friday. “Many family farmers, ranchers, and fishermen have already been struggling through six years of farm prices below average costs of production.”
The groups recommended, among other things, a moratorium on farm foreclosures, disaster payments to farmers, the expansion of USDA’s local food programs, and systemic reforms like enhanced antitrust enforcement in the farm sector.
Organizations that represent farmers who sell to local and regional markets continued their call for federal aid to farmers markets and their growers. American Farmland Trust called for the suspension of Farm Service Agency loan payments and extending pertinent USDA program deadlines.
(Leah Douglas contributed reporting for this story)