Groups study impacts of the COVID-19 pandemic on U.S. agriculture sectors
This spring, following the onslaught of a pandemic that turned the world upside down, Texas A&M’s Department of Homeland Security, the Center of Excellence Cross-Border Threat Screening and Supply Chain Defense (CBTS), Arizona State University’s Department of Homeland Security Center of Excellence and the Center for Accelerating Operational Efficiency, partnered with researchers from Victoria University in Australia, examined the economic impacts of COVID-19 on U.S. agriculture sectors.
In a newsletter dated Sept. 8, Texas A&M AgriLife noted the researchers utilized a model of the U.S. economy, including quarterly data, to better understand the economic impacts of the pandemic. This model included a special emphasis on the major food and agriculture sectors.
“While certain the pandemic would have a significant impact on the U.S. economy, the researchers used this project to gain a clearer picture of the pandemic’s short and long-term impacts on the U.S. food and agriculture sectors in comparison to other critical sectors,” said Dr. Greg Pompelli, Texas A&M’s CBTS director.
Research findings
In July, the researchers completed their initial quarterly economic projections for the U.S. economy and agricultural sectors between March 2020 and February 2022.
Their findings estimate COVID-19 will reduce U.S. gross domestic product (GDP) over the next year by 11.9 percent, or $2.5 trillion, and reduce employment by 12.2 percent, or the equivalent of 19 million full-time jobs.
“However, the report also concluded that compared to most other sectors such as tourism, air transport, education, restaurants and lodging, the U.S. food and agricultural sectors will experience smaller economic impacts because they were not subject to shutdowns and reductions in aggregate consumer spending brought on by job losses,” noted Texas A&M AgriLife.
“As we all witnessed, COVID-19 and measures taken to slow disease spread harmed lives as well as the economic prospects of businesses and communities worldwide,” Pompelli said. “The resulting recession had a relatively small impact on the overall demand for farm products. Still, COVID-19 caused income declines in all food and agricultural sectors.”
Agricultural impacts
In fact, the agriculture industry saw significant impacts early on in the year as cases of COVID-19 increased rapidly.
These included supply-chain disruptions such as the closure of some meat processing facilities, supply and demand imbalances caused by school and restaurant closures, transportation problems and shortages of labor. Some producers even lost access to their traditional marketing channels, and consumers periodically had trouble finding products they desired.
These challenges led to increased retail prices. However, prices paid to producers declined and producers could not find a channel to sell their livestock or produce. In some areas, these problems forced producers to destroy or dispose of their agricultural products.
In fact, in April, Dairy Farmers of America estimated U.S. farmers were dumping as many as 3.7 million gallons of milk each day. And, in July, David Miller, chief economist for Decision Innovation Solutions, estimated 800,000 hogs were euthanized as a result of market disruptions caused by the pandemic.
While some of these could not be fully captured by initial modeling efforts in their study, Pompelli said, based on their estimates, the researchers expected a 5.2 percent decrease in real U.S. farm income this year and projected a 0.76 percent decrease in 2021.
However, USDA’s latest estimate for real farm income, according to the Farm Sector Income Forecast for September 2020, shows an increase of 3.6 percent to $102.7 billion, the highest level since 2014.
Researchers from the study also found the economic impacts of COVID-19 were not uniform across agriculture.
The team estimated livestock operations would experience more negative effects, and USDA’s latest figures show animal product receipts in 2020 are down just over 8.1 percent. However, for crops, cash receipts are expected to increase 6.9 percent, according to the USDA.
Government funding and the future
In response to impacts felt across the agriculture industry in the U.S., the federal government attempted to offset COVID-19 disruptions through the Coronavirus Food Assistance Program (CFAP), designed to provide up to $16 billion in direct payments to farmers and ranchers affected by the pandemic.
In addition, USDA’s Farmers to Families Food Box program purchased $3 billion in fresh produce, dairy and meat to help Americans in need.
“Sadly, the COVID-19 recession will have important humanitarian and food insecurity implications, and, through reduced global consumer incomes, could affect U.S. agricultural trade prospects which will be critical to the recovery of major U.S. agricultural sectors,” researchers stated.
The researchers further noted that although they cannot predict if a second wave of the pandemic will impact the U.S., their current projections align with other forecasts about the future of the United States’ economy.
“Although the U.S. economy will steadily recover, we found GDP and employment going into 2022 will remain about five percent below where they would have been in the absence of COVID-19,” they state.
In the next few months, the research team said they will re-estimate the economic impacts of COVID-19. They will also work with the Food and Agricultural Policy Research Institute at the University of Missouri to examine the impacts the pandemic has had and is expected to have on major U.S. agricultural commodities and trade.
Hannah Bugas is the managing editor for the Wyoming Livestock Roundup. Send comments on this article to roundup@wylr.net.
