Spring Planting COVID-19 will be a major factor for producers everywhere
Published on April 4, 2020
Though agriculture was deemed an essential industry by the Centers for Disease Control and agriculture may not be seeing the same implications as other industries, producers will still see repercussions from the pandemic.
“Things are far from business as usual in cities and towns across America. Millions of us are being called to serve our neighbors by staying home. There is a lot beyond our control and still unknown as we face this crisis, but we can focus on and be faithful with the tasks at hand,” says American Farm Bureau Federation (AFBF) President Zippy Duvall.
“For farmers and ranchers our calling hasn’t changed, though its importance hits closer to home in times like these – we are committed to rising every day to grow and harvest the food we all depend on,” he says. “We can’t do that work alone, however. In the days, weeks and months ahead, agriculture will continue to depend on access to a skilled workforce to help with the work of planting, cultivating and harvesting our crops.”
Background
The COVID-19 outbreak, previously 2019-nCoV, was caused by the SARS-CoV-2 virus. This outbreak was triggered in December 2019 in Wuhan city in the Hubei province of China.
COVID-19 continues to spread across the world. Initially the epicenter of the outbreak was China, with reported cases either in China or being travelers from China.
“Trade conflicts, prevented late planting and policy innovations have presented a difficult decision-making environment to farmers over the past several years,” according to University of Illinois (UI). “The decisions for this spring are now drastically complicated given the rapidly changing situation with the spread of COVID-19 and its attendant health threats and control measures.”
UI continues, “Currently, a paramount concern is continuing farming and livestock activities in the face of COVID-19 health threats and control measures. Farmers and input suppliers are coming up on a very busy planting season.”
“To the extent possible, assuring a workplace free of COVID-19 is important. A U.S. recession is expected to result because of COVID-19 control measures, the extent of which remains unknown,” says UI. “At this point, the economic implications are uncertain, but some sort of acreage and public policy response seems likely.”
Labor
According to AFBF, the U.S. State Department revised its restrictions on the processing of visa applications submitted by farm workers in Mexico after hearing concerns that the restrictions would lead to a farm worker shortage in the U.S.
Consular officers can now waive the visa interview requirement for eligible first-time and returning H-2A and H-2B applicants, making more workers in the H-2 program available while prioritizing public health.
“America’s farmers and ranchers are committed to feeding America’s families during the coronavirus pandemic and beyond,” says Duvall. “Workers in the H-2A program represent 20 percent of the country’s farm workforce, so their contributions are necessary as we enter a critical time in the planting season.”
“The introduction of COVID-19 into the personnel of a farm or input supply firm will present difficulties, particularly given no other trained personnel are likely to be available,” UI notes. “Many farmers are in the at-risk group being older and perhaps having other factors increasing risk. Working through a COVID-19 infection during planting is not wise, particularly given the reported death rates from COVID-19 in other countries.”
UI says a COVID-19 free labor force needs to be maintained if possible.
“As a result, farmers may wish to emphasize measures suggested by health officials – washing hands, limiting travel and social distancing,” says UI.
“Perhaps most critical will be those individuals providing input supply to other farmers. Seeds, fertilizer and herbicides soon will be needed to be delivered to many farmers,” says UI. “Moreover, grains and livestock need to be transported to markets and processing destinations. The needs to limit COVID-19 spread among workers across these supply chains need to be considered and taken seriously.”
Economic impacts
USDA reports the month of March proved to be turbulent at best as the pandemic spread across the world and struck fear and uncertainty in the markets.
According to USDA, “U.S. corn stocks dropped to their lowest level since 2015 in the Dec, 1, 2019 quarterly grain stocks report. Analyst expectations of 8.125 billion bushels as of March 1, 2020 would be in line with historical trends and would follow December 2019’s trend of a four-year low.”
“Despite tightness in global stocks, the December 2019 quarter soybean stocks were the second highest in history,” says USDA. “Soybean crush levels have risen to record highs this year which will likely offset slower export numbers.”
USDA continues, “Soybean stocks have the most potential to influence planting acreages as well. If the March 1, 2020 soybean figure comes in lower than expected, new crop soybeans may gain favor over 2020/21 corn acreage, especially considering the recent uptick in demand for soymeal.”
“Higher levels of soybeans will likely send the soybean-corn price ratio below the critical 2.4 level it has hovered above recently, shifting acreage favorability to corn,” they say.
USDA notes U.S. wheat stocks as of March 1, 2020 are predicted to total 1.432 billion bushels. That estimate would be consistent with December 2019 stocks as the lowest March figure in four years.
“Usage rates will not include the recent spike in demand for wheat products following consumer stockpiling due to COVID-19 pandemic-induced panic buying,” according to USDA.
A Brookings analysis published in late March laid out seven possible economic scenarios for the COVID-19 pandemic, the most severe of which puts the cost of a disease-related recession in the trillions of dollars range.
“The magnitude will depend on how long COVID-19 social distancing measures will be in place, the severity of the COVID-19 outbreak and other general economic factors,” Brookings notes.
“It is safe to say this recession would also negatively impact agriculture. Corn and soybean prices have fallen since COVID-19 measures have been put in place, roughly six percent for corn and eight percent for soybeans,” according to UI. “These percentage declines are based on a comparison of current future contract levels to projected prices for crop insurance.”
UI notes the projected price for corn in Midwest states is based on the February average of December 2020 corn futures contract prices on the Chicago Mercantile Exchange (CME).
“The corn projected price for 2020 is $3.88 per bushel. The price on March 16 was $3.66, a decline of six percent from the $3.88 projected price,” according to UI. “The projected price for soybeans – the average of February settlement prices of the November 2019 CME soybean contract – is $9.17 per bushel. The settlement price on March 16 was $8.45, a decline of eight percent from the February average.”
“Whether COVID-19 has larger impacts on corn and soybean prices in the future is an open question,” says UI. “Reduced travel will decrease fuel use, leading to less ethanol use, and potentially lower corn prices. Lower crude oil prices from Saudi – Russian exchanges also will play a role in corn prices.”
“Chinese demand for soybeans is uncertain, particularly given that China could be harder hit by COVID-19 than the U.S. A Chinese recession would lower U.S. soybean exports to China,” UI explains. “Moreover, a major recession will impact livestock demand, which will have impacts on both corn and soybean prices.”
Callie Hanson is the managing editor of the Wyoming Livestock Roundup. Send comments on this article to roundup@wylr.net.
