Estimates are that 35% to 50% of Nebraska’s net farm income from 2020 will come not from the sale of livestock and crops, but from federal financial assistance.
That is the stunning measure of the devastating impact of COVID-19 on the state’s largest industry. And it will be months, perhaps years, before the ag economy recovers to its pre-COVID-19 levels.
COVD-19 staggered agriculture with a one-two punch in the spring, the Nebraska Farm Bureau found in a report issued last week.
In mid-March, the shutdown of food service at restaurants, schools and businesses instantly wiped out the sector, known as HRI, that accounted for 54% percent of pre-COVID 19 food consumption.
At the same time, consumers hit grocery stores. But the HRI and retail grocery sectors have different supply chains which weren’t prepared for the sudden shutdown of one and skyrocketing demand at the other, which led to shortages in some stores and contributed to a downturn in commodity prices.
The second punch came in April when COVID-19 raced through meatpacking plants, forcing facilities to operate at 50% to 70% of capacity. That led to skyrocketing meat prices at the retail level, a plunge in livestock prices and the costs of additional feed to keep animals, which led some to be euthanized.
Earlier this year, the Farm Bureau and the Platte Institute, which co-authored the study, estimated that Nebraska agriculture could see as much as $3.7 billion in losses from COVID-19, with drops in the $1 billion range for beef, corn and soybean producers.
Markets could rally in the last quarter of the year, and demand could increase with the return of restaurants and schools, decreasing the downturn. But the losses will nonetheless be considerable.
And they ripple throughout the state, in households that depend on agriculture for their income, in businesses that service the farm economy and in government, which receives taxes and other revenues from the ag sector.
The state has not yet seen a dramatic downturn in tax receipts. But senators on the Legislature’s Appropriations Committee are bracing for an impact on the budget.
Federal government programs have provided some relief for Nebraska agriculture, including 19% of the loans that came to the state under the PPP program. But more such relief is needed, particularly for family farmers, who were struggling prior to COVID-19.
The federal funds, however, will be temporary. Agriculture will struggle to recover as international export markets have become uncertain, a labor shortage continues and the supply chain issues remain unresolved.
It’s imperative that Nebraska, in government and private industry, address those issues, by pressing for stable international trade policies, providing incentives to bring in workers and creating cooperative interaction within the supply chains to create the ability to switch from one to the other.
Those measures won’t solve agriculture’s problems. Nor can any changes happen overnight. COVID-19’s impact on Nebraska agriculture will continue to hurt for years.
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