The market disruptions that have occurred in response to the COVID-19 pandemic could persist even after the shelter in place orders are rescinded. As officials weigh the options for systematically reopening sectors of the economy the agricultural industry will have difficult decisions that will need to be made in the face of tremendous uncertainty.
“The difficulty going forward will be the fact that we have such disrupted supply chains and markets that producers who are making decisions now about what to plant and how much to plant have no way of really predicting whether the market that they think will be there in 90 days, or 120 days, or 150 days, will actually be there,” said Dave Puglia, President and CEO of Western Growers. “And if it is there, what the offering price will be for their product.”
Market disruptions have already caused significant losses for the agricultural industry whether it be through having to plow produce back into the ground or dumping milk that cannot be processed fast enough. The unprecedented shift in market demand has created a multitude of issues for the supply chain struggling to adapt its infrastructure. Some agricultural commodities have been impacted more than others in the wake of the drastically altered markets.
“Lemons, lettuce, other vegetables like broccoli, cabbage, and cauliflower have been hit pretty hard in the winter production areas,” Puglia noted. “Those were hit extremely hard. Bell peppers have been hit as well. I think we’re still assessing the other commodities that are going to take a hit going forward.”
The U.S. Department of Agriculture has taken action in an effort to relieve some of the pressure put on farmers and ranchers. Congress has authorized several stimulus packages in an attempt to keep the agricultural industry solvent, with billions of dollars being infused into the ag economy.
“We’re not out of it by any stretch. We have this disrupted marketplace that is operating in a very chaotic way that will last for probably months more,” said Puglia. “That just points to the need for federal assistance to help this industry bridge through this time because there’s no way that any farmer could have foreseen a complete shutdown of basically half of the market with the loss of the foodservice sector.”