Iowa’s coronavirus-related agriculture losses projected to be ‘truly awful’
"It looks truly awful," said Dermot Hayes, an Iowa State University agricultural economist. Even with assistance, Hayes expects about half of Iowa farmers to post losses this year.
Tim Burrack thought a month ago he'd have to destroy hundreds of pigs he was unable to get processed after thousands of front-line meatpacking workers became sick with the coronavirus, forcing plants in Iowa and the Midwest to temporarily shutter.
"It was a pretty damn dark time," said Burrack, an independent northeast Iowa pork producer, who recently sent the last of the 25,000 pigs he had at the start of the coronavirus outbreak to a meatpacking plant.
Burrack said he's relieved the animals will go to feed families, instead of paying to have them killed and rendered. The Arlington farmer says he'll get $200,000 from the federal government in aid after prices for his hogs were cut in half.
"It sounds like a lot, until you look at the full impact," said Burrack, who faces $1.5 million in losses with falling hog prices.
The Trump administration has sent $4 billion in payments to U.S. farmers to help cover losses due to the coronavirus, part of $16 billion that's available to provide direct aid to offset losses for farmers and ranchers.
Iowa farmers have snagged $423.5 million of the pandemic payments, the most of any state nationally, based on U.S. Department of Agriculture data through Monday.
But critics say the coronavirus program addresses only a small portion of the losses farmers are experiencing. The American Farm Bureau Federation and other major ag groups are pushing Congress to include agriculture in the next federal coronavirus aid package.
"We've put a small Band-Aid on a very large wound that's still bleeding," said Chad Hart, an Iowa State University agricultural economist.
Estimated loss for Iowa farmers: $7 billion
Farm Bureau, which estimates the value of corn, soybeans, beef, pork and other commodities will fall by $50 billion through 2021 nationwide, is pushing congressional leaders to give the USDA access to $68 billion to address farm losses from the pandemic.
ISU economists estimate that Iowa farmers — corn, soybean, pork, beef and ethanol producers — will lose nearly $7 billion due to the coronavirus outbreak. The largest hits are to ethanol producers, estimated to lose $2.5 billion, and hog producers, shorted an estimated $2.1 billion.
The public health emergency has ripped through Iowa agriculture: Meatpacking plant closures backed up millions of animals on farms and caused farmers to euthanize pigs and other animals. Producers are dumping milk and cracking eggs after schools, hotels and restaurants closed. And stay-at-home orders slashed travel and fuel use, including demand for ethanol. Dozens of plants were idled to cut production.
The biggest coronavirus impact will come this fall, when farmers harvest their crops, experts say. Prices for corn, soybeans, pigs and cattle are below the cost to produce them.
"Market prices for this year's crop have fallen tremendously," said Dermot Hayes, an Iowa State agricultural economist.
"It looks truly awful," he said. "Everybody who has corn and soybeans in the ground right now is going to be damaged" if another round of assistance isn't provided.
Corn prices fell about a dollar a bushel in northwest Iowa when three of five local ethanol plants temporarily closed, said Kelly Nieuwenhuis, a corn grower and Siouxland Energy Cooperative board member.
"Corn prices haven't recovered yet," said Nieuwenhuis, even though biofuels plants are restarting. The manufacture of ethanol uses about half of Iowa's corn crop annually.
Even with assistance, Hayes expects about half of Iowa farmers to post losses this year.
That will make the state's economic recovery tougher. Iowa is the nation's second-largest agricultural-producing state, after California, and racked up nearly $30 billion in farm sales in 2018. Iowa is a leading producer of corn, soybeans, pork, beef, turkey, eggs, milk, ethanol and biodiesel.
Some experts estimate farming drives about 25% of Iowa's economy, when ag equipment manufacturing, seed production, food processing, crop insurance and other business activities are added.
Farmers already hit by trade losses
The coronavirus' hit to agriculture comes as Iowa and U.S. farmers have struggled for five years with low prices. "We've had a perfect storm of financial devastation," said Burrack, the northeast Iowa farmer.
Burrack notes that U.S. trade wars with China, Mexico and Canada that began two years ago pushed prices and profits lower. Then came a battle with the oil industry over waivers that cut demand for 4 billion gallons of ethanol, and finally, the global economic fallout from the coronavirus, which has depressed exports.
The Trump administration has already sent nearly $15 billion to U.S. farmers since 2018 to offset trade losses. Iowa farmers have received about $1.6 billion from those programs.
Today's agricultural coronavirus program covers nearly five-dozen grains, fruits and vegetables, and losses to beef, hog, lamb and dairy producers. It doesn't include egg and turkey farmers or ethanol producers.
"There are some holes here," Hart said.
Production of eggs cracked on farms for use for restaurants, hotels and food manufacturers has dropped by about $110 million, the Iowa Poultry Association estimates.
Iowa's turkey producers have agreed to cut production by 1.8 million birds, given the drop in institutional demand and mounting of meat in cold storage, said Gretta Irwin, the Iowa Turkey Federation's executive director.
"That demand is gone. It's not coming back," said Ron Kardel, an eastern Iowa turkey producer. Cutting turkey production means West Liberty Foods, a farmer-owned turkey processing plant, will need to close for at least six weeks, said Kardel, chairman of the plant's board.
Cutting production will pull $54 million from the state economy, Irwin said.
Aaron Lehman, president of the Iowa Farmers Union, said growers need federal safety nets now more than ever. But he worries about taxpayer support, given ongoing federal assistance.
"There was a big need for those programs, but they were done without a lot of public input," Lehman said.
The Environmental Working Group, a Washington, D.C., group critical of subsidies to farmers, wants Congress to send pandemic assistance to workers in meatpacking plants and in fields picking fruits and vegetables, instead of to growers, saying too much of the aid goes to big producers. Even though the programs have caps, many large producers have found ways around them, the group says.
Nieuwenhuis also would like to avoid additional government assistance. But that would require a massive turnaround in demand.
Growers had hoped for increased exports with China's pledge to buy $36.6 billion worth of American farm goods this year under the first phase of its trade agreement with the U.S. But so far, China has purchased only $6.3 billion, about half of the country's $12.2 billion year-to-date target, according to a Peterson Institute for International Economics tracker.
While China is signaling it will increase purchases, it could take awhile. And short of adverse weather, U.S. farmers are expected to harvest a record 16 billion bushel corn crop this fall.
"Right now, it’s hard to find a pathway where we could find significant improvement in prices," Hart said. "We're seeing some recovery, but it's not rapid enough to match our ability to produce."
Donnelle Eller covers agriculture, the environment and energy for the Register. Reach her at firstname.lastname@example.org or 515-284-8457.
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