How long will it take ag to return to normal?
By Sean Ellis
Idaho Farm Bureau Federation
POCATELLO – When it comes to COVID-19’s impact on the economy, there appears to be at least some glimmer of light at the end of the tunnel.
Many states, including Idaho, have released plans to reopen their economies in stages. That has created some optimism in farm country that maybe things are starting to get back to normal.
But farmers and agricultural industry leaders caution it will take more than just a few weeks or months for the farming industry, which has been hammered by declining commodity prices linked to the coronavirus outbreak, to get back to normal.
The farming industry won’t return to pre-coronavirus levels quickly, said Idaho Barley Commission Executive Director Laura Wilder.
“It’s going to take some time and it could take up to two years,” she said.
North Idaho farmer Bill Flory said he’s optimistic the economy will open back up sooner rather than later but he agrees pre-virus normality levels won’t happen immediately.
“I’m optimistic that the states are going to continue to loosen criteria and stay-in-place orders and commerce will begin coming back, but I don’t think it’s going to be fast,” he said.
Kam Quarles, CEO of the National Potato Council, said nobody thinks that resumption of the normal farming economy will be like flipping a light switch.
“Most optimistically, it will take many months of gradual attempts to get back to where we were,” he said.
“It’s going to take six months or longer to get this thing headed back in the right direction,” said Don Tolmie, production manager of Treasure Valley Seed Co., a Homedale company that markets dry bean seed.
Dry bean prices have fared well during the outbreak because that product has flown off grocery store shelves at a rapid rate, Tolmie said. But many other farm commodities, including corn, potatoes, hops, dairy and beef, have experienced some tough prices, he added.
“The outbreak response has backed up so many things like potatoes, onions and other vegetables,” Tolmie said. “This whole thing is going to impact agriculture in a lot of ways and some of them we haven’t seen yet.”
Meridian farmer Richard Durrant said the disruptions caused by the outbreak have created a lot of challenges for farmers and many of them won’t go away as soon as the lock-down orders are lifted.
“We’re going to see these ongoing trickle-down effects go on maybe for years,” said Durrant, who is vice president of Idaho Farm Bureau Federation.
The stay-at-home orders have caused major disruptions for many agricultural commodities, including Idaho’s important potato industry, which contributes billions of dollars to the state’s economy.
Sales of potatoes and potato products through foodservice channels such as restaurants and schools have basically ceased, said Blair Richardson, president and CEO of Potatoes USA, which markets and promotes U.S. spuds.
Americans used to spend the majority of their food dollars outside their homes but “now the majority of our food dollars are being spent at home, by a wide margin,” he said. “The demand channels have just shifted dramatically.”
There has been a major effort by the Idaho Potato Commission and other spud industry groups to try to redirect potatoes that were destined to foodservice channels over to retail outlets, where fresh potato sales have soared.
The potato chip market is doing great, as are dehydrated potato products, Richardson said.
But that has not been enough to offset the loss of sales through foodservice channels, he added.
The U.S. potato industry is a $4 billion industry in terms of farm cash receipts or what farmers get for their spuds. Sixty percent of those sales are to the foodservice industry.
“The foodservice sector is such an important part of our economy. If we don’t get that back up, soon, it’s going to be a very difficult thing for the potato industry,” Richardson said.
Because of the dramatic decrease in foodservice sales, many potato processors have stopped operating or significantly cut back. That has sent ripple effects through farm country.
American Falls farmer Klaren Koompin still has about 130,000 sacks of spuds left to market from his 2019 crop. They were under contract but he’s not sure if processors are going to need them any time soon.
“There is that hanging out there,” he said. “Are the fryers and dehydrators going to need everything they have contracted?”
On top of that uncertainty, Koompin had his contracted acreage for potatoes cut by 50 percent for the 2020 growing season.
“That’s huge. It means we will plant … 500 fewer acres than we did last year,” he said. “It’s a big deal.”
The outbreak has affected Idaho’s barely industry as well.
A lot of barley grown in Idaho, the nation’s top barley producing state, is turned into malt that ends up being used in beer brewing plants in Mexico. That nation considered brewing as a non-essential business so breweries there were shut down, which has impacted the delivery of Idaho malt to Mexico.
Idaho farmers who grow malt barley have contracts with malt houses to move the barley there on certain dates. But because of the slowdown in transporting malt to Mexico, “less of that barley is being stored at the malt houses and more on the farm right now,” said Wilder. “Everything is just backed up and the industry is working through those challenges.”
Most of Idaho’s barley is grown for malt but some is used for human food or animal feed.
Four percent of Idaho’s barley production is exported for food and feed, primarily to Asia, and there have been some slowdowns in those markets as well, Wilder said.
Idaho food barley acres could decrease somewhat this year as a result, she said.
Dry beans are one of the agricultural industry’s few bright spots right now and bean prices are doing well, said Parma farmer Mike Goodson.
“Open market bean prices are good right now,” he said. “I think beans are going to be kind of a bright spot.”
But because nobody knows how long the virus outbreak will last and what it’s impact will be, Goodson is also paying extra attention this year to finding ways to trim input costs as much as possible, just in case the virus catches up with bean prices.
“I’m just trying to make better decisions about input costs because the whole thing is, nobody knows for sure what’s going to happen,” Goodson said. “That’s what keeps me up at night more than anything is the uncertainty.”
Henggeler Packing Co., based in Fruitland and one of Idaho’s largest fruit companies, has not been negatively affected by the outbreak, yet.
“Luckily for us, the pandemic hit at a time of the year when we had sold all our fruit,” said field manager Chad Henggeler. “We’re not in the marketplace right now. That is a positive for us.”
But he is concerned about how the virus outbreak might impact the company’s 2020 crop of apples, peaches, plums, cherries and other fruit.
“We’re hoping things get back to normal this summer and that we don’t have a recurrence this fall,” Henggeler said. “There is a little bit of concern that if this persists into the fall, where does our commodity fit into this new market?”
Things haven’t changed on a day-to-day basis for Flory because he farms in a sparsely populated area.
“What virus?” he jokes. “There has been no impact here in northcentral Idaho. There is plenty of social distancing.”
His biggest worry is the transportation industry, which is critical to get the wheat Flory and other Idaho producers grow to national and international markets.
“My concern is that the transportation industry could have a high level of absenteeism because of the virus,” he said. “That could cause the industry some pain but that hasn’t happened yet.”
In the midst of all the concern and uncertainty, farmers and ranchers continue to move forward with their normal plans to produce food.
“The farming part is happening. The producers are farming like normal and all the businesses that support farmers are open,” Wilder said. “It’s just that there is a lot of uncertainty in the markets domestically and globally because there is not commerce happening the way it normally is.”
And while farmers are moving ahead, at the same time they are doing what they can to prevent spread of the virus.
“I think it’s a balancing act of being concerned about the virus and doing what we can to prevent it from spreading but yet at the same time still producing food,” Goodson said.
Henggeler officials are making sure the company’s employees follow all the recommended preventative measures such as hand washing and workers in the orchard are asked not to sit too close together during their lunch break.
“We are taking all of those recommended precautions that we can,” Henggeler said.
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