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.
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."
Yes, but: 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.
Yes, but, 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."