On Thursday, the Federal Reserve Banks of Chicago, Kansas City and Minneapolis released updates regarding farm income, farmland values and agricultural credit conditions from the second quarter of 2022.
Food Purchasing Dynamics
Wall Street Journal writer Kirk Maltais reported this week that, “Consumers’ rush to buy groceries is fueling a rally in orange-juice prices, making the usually sedate asset the best-performing commodity in the first quarter of 2020.
“The price of frozen orange-juice-concentrate futures trading on the Intercontinental Exchange has surged 24% to more than $1.20 a pound since March 19—a run resulting from demand on grocery-store inventories by consumers looking to stock up on goods in preparation for coronavirus-related quarantines. That is their highest level since June, when traders were anticipating a strong hurricane season bearing down on states including Florida, where U.S. citrus production is centered.”
The Journal article noted that, “The coronavirus panic pushed sales of orange juice in grocery stores up 40% for the week ended March 14 from the same time last year, according to market-research firm Nielsen. Sales of fruit juices overall were up 37% in the same time frame and sales of consumer packaged goods climbed 44%, according to the firm.”
And Bloomberg writer Michael Hirtzer reported this week that, “As restaurants around the U.S. close, prices for the cut of pork used to make bacon have plunged to lows not seen since Bill Clinton was president.
“Pork bellies have tumbled to about 41 cents per pound — the lowest since 1999 — according to the U.S. Department of Agriculture, compared with 93 cents two weeks ago.
“That’s in contrast to some other foods such as eggs and beef that have surged as people prepare more meals at home during coronavirus lockdowns.”
Mr. Hirtzer explained that, “While bacon long has been a popular meat at breakfast, pork belly’s popularity in recent years owes more to its use in restaurants. Bacon tops burgers and donuts, is wrapped around dates, and the cut of pork is included in bowls of steaming ramen.”
More broadly, Wall Street Journal writer Annie Gasparro reported this week that, “Conagra Brands Inc. said it is adjusting its supply chain to meet a surge in demand for its food as more people are staying home during the coronavirus pandemic.
“The Chicago-based food maker said Tuesday that its sales ballooned in March as consumers stock up on its Slim Jim snacks, Healthy Choice frozen meals and Chef Boyardee pastas to help them ride out the health crisis.”
With respect to dairy, Milwaukee Journal Sentinel Rick Barrett reported on Wednesday that, “About 7 o’clock Tuesday night, Golden E Dairy got the call that any dairy farmer would dread. They were being asked to dump 25,000 gallons of fresh milk a day because there was no place for it to go as the marketplace for dairy products has been gutted by the closure of restaurants, schools, hotels and food-service businesses.
An hour later, the family-run farm near West Bend opened the spigot and started flushing its milk into a wastewater lagoon — 220,000 pounds a day through next Monday.
Mr. Barrett explained that, “Dairy farmers, whose product is highly perishable, are seeing processing plants close or curb production, forcing them to flush their milk down the drain if there’s no other buyer.”
Similarly, Bloomberg writers Lydia Mulvany, Leslie Patton, and Michael Hirtzer reported on Thursday that, “With milk prices plunging to lows that haven’t been seen in nearly four years, dairy cooperatives are dumping the product to reduce oversupply.
“While shoppers are clearing out milk cases at grocery stores, that’s not making up for the closings of restaurants and schools.”
Meanwhile, Bloomberg writers Devon Pendleton, Emma Vickers and David Ramli reported on Wednesday that, “The line stretched for over a mile. More than 800 cars idled for several hours, bumper to bumper, on a damp gray Monday in Duquesne, Pa. They were lining up to get food from an emergency distribution organized by the Greater Pittsburgh Community Food Bank. Eventually, each car drove away with two 25-pound boxes of groceries. The food bank estimates it served 1,700 local families in that one giveaway.
“Whether the scene is rows of cars or long lines of people stretching down and around city blocks, similar ones are playing out around the world as the novel coronavirus pandemic strains food supplies and the services of food banks. Brian Greene runs America’s biggest food bank, in Houston, where he’s lived through his share of hurricanes and other disasters. None of those compare to the need he’s seeing from the current crisis.”
The Bloomberg article stated that, “To address the surging demand, many U.S. food banks will seek federal help. The government’s $2 trillion coronavirus relief bill provides billions of dollars in food aid. State agricultural departments are applying for special funds from the USDA which are normally used for boosting food supplies after natural disasters such as floods. But the bigger test will come in a few months if the lockdowns persist.”
Ag Labor Issues
Recent news items have also highlighted how COVID-19 is impacting workers involved in meat processing and seasonal agricultural production.
Reuters writer Tom Polansek reported this week that, “JBS USA will reduce beef production for two weeks at a Pennsylvania facility after managers displayed flu-like symptoms, the company said on Monday, making it the first U.S. meat plant to cut operations due to worries over the coronavirus pandemic.”
“The plant has more than 1,000 workers and is the largest beef facility east of Chicago, serving customers along the eastern seaboard and around the world, according to the company, a subsidiary of Brazil-based JBS SA,” the Reuters article said.
Wall Street Journal writers Alexandra Berzon, Jacob Bunge and Alejandro Lazo reported on Wednesday that, “Tensions are breaking out between employers and workers across the U.S. as some companies push to keep producing during the coronavirus pandemic and some employees push back over health concerns and other issues.
“In recent days, plant workers have walked off the job at companies ranging from poultry producer Perdue Farms Inc. to soda maker Refresco B.V. At Tyson Foods Inc., workers petitioned for more paid sick leave. Some want more protective equipment. Others have complained to regulators about unsafe conditions.”
The Journal writers pointed out that, “Meatpacking, which is seeing increased demand as Americans batten down at home, is one industry where workers have become concerned about being in proximity while cutting carcasses and trimming meat. Some companies have spaced workers farther apart and staggered shift starts and break times. Tyson and others have begun offering employees masks and gloves, and taking their temperatures.”
Reuters writer Tom Polansek reported this week that, “U.S. poultry company Sanderson Farms Inc on Thursday said it is reducing chicken production in Georgia, the top U.S. chicken-producing state, after ordering more than 400 slaughterhouse workers who seem healthy to stay home as a precaution against infection by the novel coronavirus.
“The move could eat into margins at the company and is an early sign of strain in the U.S. food supply chain at a time of surging consumer demand at grocery stores.”
Mr. Polansek indicated that, “U.S. meat and poultry processors have been shaken by the coronavirus pandemic as workers have fallen ill and consumers shifted demand to grocery stores from restaurants, bars and cafeterias that are shut.”
And Andrea Castillo reported on the front page of Thursday’s Los Angeles Times that,
More than a third of the country’s vegetables and two-thirds of its fruits and nuts are grown in California. Stay-at-home orders in California exempt farmworkers as essential employees. But many are undocumented, lack health insurance and don’t qualify for unemployment insurance or federal COVID-19 relief, placing the state’s estimated workforce of 420,000 in a vulnerable position.
“The United Farm Workers union has called on agricultural employers to protect workers from the coronavirus by extending sick leave, eliminating wait periods for sick pay eligibility, increasing cleaning of frequently touched surfaces and offering assistance with child care amid school closures.”
The LA Times article noted that, “Farmworkers in California make $26,000 a year, on average, according to the U.S. Bureau of Labor Statistics. Many families share a home with other families and drive to work in crowded vehicles, making physical distancing difficult.”
Likewise, Miriam Jordan reported on Thursday at The New York Times Online that, “Across the country, farmworkers have been struggling to understand what the coronavirus outbreak will mean for their safety and livelihoods. Even if they face a lower risk of deportation, many worry that the close working conditions in fields and packing facilities put them at risk for contracting the virus, and some warehouse workers are seeing their hours cut as employers adjust to the shifting market.
“For many workers, the fact that they are now considered both illegal and essential is an irony that is not lost on them, nor is it for employers who have long had to navigate a legal thicket to maintain a work force in the fields.”
Corn Belt Supply Logistics
In a closer look at Corn Belt agriculture, DTN writer Pamela Smith reported on Wednesday that, “Nothing about doing business with local ag business retailers is usual in these days of social distancing.
‘Getting equipment parts now feels like a drug deal,’ tweeted Ken Franklin, Nation Farms, of Taylorville, Illinois. ‘Call when your 10 minutes out. I’ll leave your stuff in brown bag, under the bench, by the tree at the corner of building.’
“While most farmers aren’t noting shortages of inputs or other essential supplies as spring planting kicks into gear, COVID-19 is changing many established ways of doing business.”
An unprecedented race is on to save North America’s planting season as farm suppliers battle staff shortages and travel restrictions pic.twitter.com/8XvHjpRi54— Reuters (@Reuters) April 1, 2020
The DTN article stated that, “So far, getting the inputs needed to put in the crop doesn’t appear as though it will be a problem, said Sean Arians, who farms in Morrison, Illinois, and is the regional business director for Advanced Agrilytics.”