Apr 22, 2020 - Economy

Coronavirus has hit American farmers from all sides

Illustration of American Gothic with the farmer and his wife in hazmat suits.

Illustration: Aïda Amer/Axios

U.S. farmers are fighting for their livelihoods as the coronavirus pandemic slashes commodity values, cuts off supply chains and closes markets around the globe to their products.

Why it matters: Farmers are at the center of industries being hardest hit by the virus and states' stay-at-home orders.

  • Fuel, retail, restaurants and manufacturing all trace their products back to American farms, whether that's livestock, cotton, soy, corn or the hundreds of other products that provide the backbone for the U.S. economy.

What's happening: Already reeling from the trade war — which cost farmers significant revenue from China, the world's largest U.S. agriculture buyer — the COVID-19 outbreak has wrought a situation the American Farm Bureau Federation's chief economist John Newton calls simply "catastrophic."

What we're hearing: "It seems like we’re fighting a battle on all fronts right now," Newton tells Axios.

  • "It’s not like commodity values hit a reset button. These are continuous demand shocks that are impacting the value of agricultural products."
  • The widespread decline in demand, combined with most Americans' move from now-shuttered restaurants to grocery stores for most of their food needs "is having a ripple effect throughout the farm economy," he adds.

Uncertainty overwhelmed the agriculture sector in 2019 as farm debt hit a record high and so-called family farmer bankruptcies rose by the most in eight years, up 20% from the previous year.

Where it stands: There were high hopes that China's commitment to $200 billion of increased spending on U.S. agriculture, energy, manufacturing and services as part of the "phase one" trade deal would help make farmers whole. But as the virus outbreak rattled Chinese demand, those planned purchases evaporated.

  • In fact, overall demand for U.S. agriculture exports has declined from 2019's low levels, Cullen Hendrix, a nonresident senior fellow at the Peterson Institute for International Economics, tells Axios.
  • And now "the whole deal is really under threat."

In 2020 things have gotten worse. Farmers now face declining prices and demand, shortages of labor, and disruptions to processing facilities and labor markets.

  • Farms relied heavily on migrant labor, which has dwindled in recent years, and workers at meatpacking plants have started to contract COVID-19 in large numbers, shutting down some of the country's largest facilities.

Between the lines: Direct payments to farmers and ranchers totaling $16 billion along with $3 billion in product purchases were authorized as part of the $2 trillion CARES Act.

  • But industry groups' anticipated losses far exceed that total. The beef industry says it expects to lose $13.6 billion, pork producers expect to lose $5 billion and the dairy industry anticipates $2.85 billion in losses.
  • That doesn't include farmers who plant cash crops like soy and sorghum, or corn growers who expect to lose $50 per acre in revenue.
  • It also excludes representatives for chicken producers and cotton growers, which have requested unspecified "relief measures for all of agriculture."

Go deeper: Farmworkers risk coronavirus to keep supermarkets stocked with fresh food

Editor’s note: The piece was corrected to show overall demand for U.S. agriculture exports has declined (not imports).

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