By Dennis Minich
While farmers are used to difficult conditions and working from home, the agriculture industry is far from immune to thefallout of the COVID-19 outbreak. Both nationally and locally, the stories are very similar.
While there is demand for meat and commodities in the stores, the major consumers, restaurants and schools are buying less, resulting in a backlog of products.
One of the hardest hit markets is beef cattle.
“Two or three weeks ago the cattle market took a big hit,” Ron Highley of theUSDA office in Harrisonville said.
Tom Kurzweil, whose family farm raises cattle, hogs and row crops was muchmore direct.
“It destroyed the cattle market,” he said.
While demand in the grocery stores is high, the ability to get market-ready animals to the packing houses has been the problem. Traditionally, most of the beef is sold to restaurants so converting to the grocery store market has not been easy.
Kurzweil said the delay at the packing plants leads to less demand at the feedlots which leads to less demand for cattle at each stage of the growing process, resulting in reduced prices.
“We don’t have any cattle for sale right now because we sold some spring calves right before the market took a big tumble, but those needing to sell are in trouble,” he said.
The same is also true with hogs. There have been some issues with a couple of the national packing houses because of possible coronavirus outbreaks.
“The packers are used to handling 450,000 hogs per day. You have a hiccup
in the process and suddenly they still have 450,000 hogs from yesterday and 450,000 more coming today. The problem with hogs and cattle is you just can’t store them that long when they are ready to go to the packing house. They have to go,” Kurzweil said.
Brent Heid of Lone Tree Farms has a hog operation which produces about
100,000 pigs per year. Once the piglets are weaned, they are sold to farmers who raise them for market. Heid said he has been lucky as his buyer in Iowa has continued to purchase, but not all farmers have been so lucky.
“Many pork producers have seen their prices cut in half. Some are selling for the price of the truck to come pick them up because you have to do something with them,” Heid said.
Last year, the concerns on many products was the lack of foreign markets, but now its domestic use which is killing the prices.
“Actually, China is buying much more. About 24 percent of the hog market goes to Asia – China, Japan and South Korea. And Mexico is still the No. 1 importer.
But the problem is many people don’t cook pork at home so when the demand at restaurants is down, so are the prices,” Heid said.
He noted six major packing houses account for about 85 percent of the market.
One of those six had to close because of coronavirus and two smaller plants closed as well.
Low prices are also the story in most of the crop markets. People staying home means gasoline prices have dropped.
Added to the mix was the recent problems among OPEC members which dropped the price of gasoline further. As a result, the need for corn dropped so corn prices fell dramatically.
“About 40 percent of the corn market goes to ethanol,” Heid said. “When the
cost of oil gets too low, the ethanol gets expensive to produce. Soybeans tend to follow corn.”
Highley said prior to the virus outbreak, corn was going for about $4 per bushel. The current price is $3.42.
“And $4 was not a good price to begin with. With prices this low, many farmers are not selling, they are just holding out.”
One commodity which actually has increased is wheat, which has risen to
about $5.43 a bushel, about 50 cents higher than earlier in the year.
Heid and Kurzweil both have row crops and said despite the prices they will probably plant as they had previously planned. Heid noted the U.S. Department of Agriculture’s trade mitigation programs will help many farmers affected by trade war with China, which has now been resolved, and the COVID-19 outbreak.
Nationally, stories in a variety of markets tell the problems farmers are facing.
Heid noted the dairy farmers in Wisconsin who are dumping milk.
“Public schools are the No. 1 consumer of milk products. With schools closed, that market is gone. Additionally, Costco and Walmart have opened their own dairies meaning many producers who had sold to them, suddenly have no market,” Heid said.
The oddity in all of the products is the impact at the grocery store has not followed the costs. While beef is being sold cheap by the ranchers, prices at the grocery store are trending up. Pork remains fairly steady, but long-range projections appear to see prices climbing.
Highley said everything will likely remain in turmoil until some normality
returns to life.
“If we can get back to exporting and get people back in the restaurants, we
will be OK,” Highley said.