Looking Ahead

Like most other economic segments in the U.S., agriculture and the protein sector had a rough 2020 because of COVID-19. Dr. Derrell Peel is an Agricultural Economist with Oklahoma State University, and he spoke during the American Farm Bureau’s virtual convention. Looking ahead to 2021 in the protein sector, he says we’re still dealing with COVID-19. “As much as we’d like it to be a past issue, it’s not yet a past issue. So, we’re still dealing with it, we’re not quite sure particularly about this winter, and in the first part of 2021, we have to continue dealing with it. We do have vaccine implementation beginning and so we can sort of see a pathway towards an end to this thing. But that’s going to take a few months and certainly, I think the first half of the year is going to be a continuation of what we were dealing with in 2020 from the standpoint of the pandemic.”

 

The protein sector is still looking for a rebound in the foodservice market after COVID shutdowns.

“That means we continue to see the limitations in the foodservice sector; that’s half or more of our market that is substantially restricted still. We’re still putting a lot of emphasis on the retail grocery sector to compensate for that, and so some of the product market challenges that go with that will continue as we go forward.”

 

Peel says the initial shocks to the market caused by COVID-19 are mostly in the past. The backlog of cattle and hogs was a big challenge, and Peel says the cattle market is “largely cleaned up from that.” Other challenges heading further into the new year include drought.

“One of those is we have a widespread drought in the western part of the country. It’s wintertime, so the drought issues aren’t having a huge immediate impact. But if this persists and we start into a warm grazing season, and crop production season with these kinds of drought conditions, we’re going to see a significant impact, so that’s already there. And we already see significant increases in feed prices based on the grain markets and the kind of demand we’ve had there that’s pushed prices up to levels we haven’t seen in recent years.”

 

He says there are reasons for optimism going into 2021