Op-Ed

Op-Ed

David Sparks Ph.D.
David Sparks Ph.D.
Some say this is the week when the coronavirus outbreak and business closures will hit the make-or-break point for the U.S. economy. Things would be much worse if Congress and the President had not taken action—passing and signing the coronavirus aid package last week. None of us can afford to lose farms and ranches, especially now that we’re more focused than ever on the security of our food supply chain.

Most people are focused on businesses such as restaurants or airlines, which certainly have experienced a sharp and sudden decrease. What they may not be thinking about is the cumulative impact on agriculture. Most hospitality and travel industries were doing well before the virus. Farmers and ranchers were not. Coronavirus is just the latest in a string of misfortunes that have kept the farm economy down for several years: weather disasters, a trade war and, even before that, commodity prices have been below the cost of production. Which is worse: a sudden blow or a prolonged downturn? The answer is whichever one you and your industry are facing. But none of us can afford to lose farms and ranches, especially now that we’re more focused than ever on the security of our food supply chain.

Consumers understandably might think that farmers and ranchers are doing well, given the empty shelves we’re all seeing at grocery stores. But those buying habits could slow down, and we’ve already seen a dramatic drop in demand from food service, restaurants and schools and universities. There are unofficial estimates that the current market price of milk is down 40% compared to January. Prices for cattle, corn and other farm goods also are falling. We are thankful for the aid package that will help us sustain our food producers. Farm Bureau worked tirelessly to include up to $23.5 billion that USDA can use to help farmers and ranchers when estimates turn into hard data on the impacts to producers.

People are driving less, and that has driven down demand for ethanol made from corn at the same time as oil production has increased. Ethanol plants are idled, corn prices are down, and livestock producers who relied on distillers dried grains—a byproduct of ethanol production—are scrambling to replace that source of animal feed.

Agricultural futures, which many farmers and ranchers depend on to lock in better prices later on, are down as well. That shows a concern that consumers will buy less in the coming weeks and months, as the economy slows and unemployment worsens. It also reflects worries about whether our overseas markets will return if product can’t move and as economies around the world are reeling from the virus outbreak and restrictions to contain it. We’re certainly hopeful that trade will continue and grow.

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