COVID-19 Impact on Agriculture

In 2019 our total Ag receipts was $21.6 billion.  Our top commodity is Cattle/Calves worth $10.6 billion, followed by corn ($6.3 billion), soybeans ($2.5 billion) and hogs ($872 million).  Cattle, corn and soybeans make up 90% of our Ag receipts.  There was 19 million crop acres in production in 2019 and we had 6.8 million head of cattle and 3.0 head of hogs in 2019.

 

There are several other Ag sectors that must be considered such has $940 million output in other livestock with 4,268 people employed in this sector, $122 million output in grain processing with 1,200 people employed.  We also have the feed/pet food that had $18.2 billion in output and 2,650 people working that area.  One of the largest sectors is animal processing with $18.2 billion and 27,838 people employed in this area.  There was $3.02 billion in output in the Ethanol industry with 1,934 people working in that area.

Agriculture plays an important part in our state economy such 23.3% has to do with employment in this industry, 19.9% is labor income, 21.6% is value-added where output (business receipts plays 33.9% into the state economy through agriculture.  When you think about value-added you look at the different areas of the state.  The northeast and southeast have the highest percentage, where east (Lincoln and Omaha) has only 11.2% added value to the state economy.  Both central, north and south areas have between 36.7 – 39.5% added value, where northwest and southwest have between 20.7-23.9% added value.

 

Farm income between 2013 and 2017 dropped, but during the last two years it has gone up because of the government assistance program.  It is down some now because of the trade issues we have been having recently with China and some other countries.

 

In 2003 there was 55 bankruptcies, and 2019 there was 38.  In 2020 so far there has been 16 bankruptcies.  We have actually had more bankruptcies than Wisconsin.

Land values have increased for 34 years and decreased only 14 years.  In 2020 there is a slight decrease but a lot.  The land values have been staying stable because of the low interest rates.

 

The 2019 net farm income was up and this was due to MFP.  Debt loads were up and loan repayment problems were beginning to appear.  Land values were staying stable.  There were many bankruptcies, but forced sales of assets remained low, but the working capital was down.

 

About the middle of March is when the coronavirus (COVID-19) hit.  Prices for some of the commodities changed about mid-May and are starting to slowly come back.

 

 

As you can see when the COVID-19 hit in mid may the prices went down and just in late September they started to improve.

 

There were price drops from January to May 18^th of this year.   There was a -$971 million loss in beef cattle with cow/calf losing -$188 million, feeders - $511 million, and backgrounders -$271 million.  Pork was losing -$166.5 million, while dairy cattle had lost -$66.1 million.  When it came to commodities like corn/soybean it lost -$1.17 billion and wheat was -$8.7 million.  That is a total loss of -$2.380 billion.  There were other industries that also lost money during this time, they are Ethanol production facilities was shuttered and reduced capacity.  There are still two plants that are idle today.  The other is Animal Processing – several plants had to shut down because many of the workforce either were infected or it was unhealthy for them to work.  This industry has had to spend lots of money to get their plants safer for the workers.

 

There are other factors that have affected agriculture and this is that there is a large cattle inventory and plants already are operating near/at/over capacity when it comes to supply.  The demand was high.  COVID shifted from hotel-restaurant to the grocery store.  There was a lot of consumer panic buying and different product mixes and supply chains too.  There were uncertainty over length and nature of these challenges.

 

Taxpayers got a Stimulus check of $1,200/person, and there was the Paycheck Protection Program (PPP) which helped many of the small businesses with payroll, utilities, etc.  The government also offered the Economic Injury Disaster Loan (EIDL) and of course, we had the Coronavirus Food Assistance Program which gave our about $700 million.  Nebraska CARES was given for livestock at $100 million, crop insurance (revenue protection) and farm programs (PLC) which also helped.

 

Crop/Livestock Prices are currently steady and heading up.  The US Economy for the 1^st/2^nd quarters were down.  The remainder of 2020/2021 shows that things are starting to go up.  Currently, we do not know if there will another Stimulus package or what the jobs/consumer confidence might look like.  Our International Trade put the World Economy (-5.2%) down and with the trade agreements between US and China what will happen we don’t know.  The value of the dollar will be important as we continue to try to improve our economy.