America’s Farmers: Resilient Throughout the COVID Pandemic

Oct 13, 2020

The disruptive impacts of the COVID-19 pandemic on the U.S. agricultural system have been broad and varied. And they follow several years of trying production and market conditions for U.S. farmers. In 2017 and 2018, several hurricanes pummeled U.S. farms; 2019 brought historically poor planting conditions and retaliatory tariffs cut potential for our agricultural exports compared to 2017.

This year, farmers and consumers have been planning production and managing household budgets at a time when markets — food, commodity, labor, energy — are being jolted by global, national and regional shutdowns, slowdowns, and overall uncertainty. Those shocks to the U.S. and global economies have affected both the supply and demand for food in the U.S. and the rest of the world, leading to short-term, localized shortages in the U.S., particularly in livestock products like meat, while farmers had to deal with, for example, excess milk supplies in other areas.

In general, U.S. food prices have risen since January while prices received by U.S. producers have fallen. But while rising wholesale and retail food prices and some temporarily empty shelves drew a lot of public attention and stoked fears over availability and affordability of our food, the severe impacts of the crisis on U.S. farmers have been much less visible.

Here we share some information and data on farming operations and how the crisis has impacted U.S. farmers over the past few months.

Tough times have been underway for years

The COVID-19 pandemic not only triggered a new type of crisis for the farming sector, it also came at a tough time for U.S. farmers. For the past few years, global commodity production has outpaced demand in most years and prices have been falling. Since the historic 2012 U.S. drought and peak in commodity prices in 2013, global commodity production has generally outpaced demand, fueling continued price declines – in nominal and real terms. Between 2012-2019, producer prices for corn fell 48% from $6.89 per bushel to $3.56, and producer prices for soybeans fell 40% – almost six dollars per bushel Prices for cattle, hogs, broilers and milk have also been on downward trend over the past 5 years. However, cost of production for these commodities in 2019 was higher or only marginally lower than five years earlier (see chart 1).

Chart 1: Commodity Cost of Production

During the same period, many of our global competitors, supported in part by advantageous currency values, have ramped up production for export —wheat in the Black Sea region, and corn, soybeans, and cotton in South America. Meanwhile, U.S. farmers have had to deal with a significant economic (tariffs) and weather-related challenges (drought and hurricanes) that have kept production costs relatively high, squeezing the margins for many crop, livestock, and dairy farmers.

Clear signs of financial distress had emerged among U.S. farmers even prior to the onset of the COVID-19 outbreak. Investment in equipment was down, farmer debt was up, and so was borrowing against land. By the end of 2019, the delinquency rate on commercial loans hit a six-year high, and the delinquency rate on farmland loans was at its highest level since 2013.[1] Inflation-adjusted farm income increased in 2019, but only when including federal farm aid payments and indemnities for crop insurance. Some of those payments were specifically introduced to assist farmers in adjusting to market disruptions caused by the retaliatory tariffs imposed by China and other countries on U.S. agricultural exports and the unprecedented levels of weather-induced prevented plantings in 2019.

COVID-19 exacerbated the challenges facing farmers

The rapid proliferation of COVID-19 at home and abroad and subsequent shutdown of parts of the economy led to unprecedented and simultaneous supply and demand shocks to the food system.

Crude oil prices, which began the year at $61.18 per barrel, briefly traded negative for the first time ever in April. Grocery store retail sales rose sharply while sales at food service and drinking places during March and April were $47.5 billion lower than during the same period in 2019.

The consequences of the crisis for farmers and their families were immediate and severe. For example, the reduction in miles driven as the…