For all of you working on farms and ranches, you realize that the important work of producing food and feeding people never stops. It’s the same pattern for those in our packing plants, our truckers, our food workers and everyone along the supply chain from farm to fork.
So, it was with a big sigh of relief when the Trump administration labeled agriculture as a “critical industry,” allowing farms, ranches and businesses who transport, process, package and prepare food to keep going — despite ongoing concerns about coronavirus or COVID-19.
The declaration came by way of the Department of Homeland Security, which extended the designation to the entire food and agriculture production system. The Department of Transportation’s Federal Motor Carrier Safety Administration had already lifted hours of service restrictions for livestock transport.
“Food is essential all year round, but in the face of a pandemic it is critical the shelves remain stocked and supplies remain plentiful. America’s farmers and ranchers, and those on the front lines in the food service industry are doing their part,” Ag Secretary Sonny Perdue said.
To underscore the importance of our food system, a new report — commissioned by 21 food and agriculture groups — aims to quantify the critical role that food and agriculture industries play in the everyday life of Americans. The full report is available at www.FeedingTheEconomy.com
“Recent events are testing the resiliency of our agriculture and food system. This research helps shore up something we already knew: Food and agriculture is critical to all Americans and the economic prosperity of our country,” said National Association of State Departments of Agriculture (NASDA) CEO Dr. Barb Glenn.
The economic impact study shows that one-fifth of the nation’s economy and one-fourth of American jobs are linked to the food and agriculture sectors, either directly or indirectly. Additionally, the analysis broke down the food and agriculture sectors’ economic impact by state and congressional district. Here are the key findings:
- Total Jobs: 46,856,444
- Total Wages: $2.27 trillion
- Total Taxes: $885.29 billion
- Exports: $148.4 billion
- Total Food and Industry Economic Impact: $7.63 trillion
To measure the total economic impact of the sectors, the analysis also includes the indirect and induced economic activity surrounding these industries, which captures upstream and downstream activity. For example, when a farm equipment retailer hires new employees because farmers are buying more tractors, experts consider the new salaries as an indirect impact. Similarly, when a retail associate spends her paycheck, an induced economic impact occurs. “Together, these impacts have a multiplier effect on the already formidable direct impact of food and agriculture,” the authors noted.
That’s not to say that some parts of the supply chain have experienced trouble keeping up as consumers rushed to grocers and other retail outlets. During this period of uncertainty, consumers have been hoarding toilet paper and other paper products. In addition, basics like milk, eggs and flour are in high demand.
On the retail level, “dairy products are flying off the shelf and retailers are anecdotally telling us they’ve never had sales as high as what they currently have,” explained Mary Ledman, global dairy strategist for Rabobank.
“So, we actually have more milk flowing into fluid rather than cheese, butter and powder in the near term — which is good news because it’s less milk going into powder,” she says. “However, in the longer term (6 to 12 weeks out), the question is: do people have enough dairy in the refrigerator and will the run on milk continue?" She says that some of these consumption trends will be determined by how parents shop when their children are out of school.
“We know that children drink more milk at home than when they go to restaurants and, in this period of more health consciousness, dairy packs a lot of nutrition,” she added.
One of the major challenges for farmers, as well as food and beverage companies, is trying to move their products that had been slotted for food service and restaurants into other channels.
“Regrettably, the report also shows the substantial economic impact of our nation's restaurants and their related businesses being virtually shut down by the need for social distancing,” noted John Bode, president & CEO of the Corn Refiners Association.
Fruit and vegetable farmers and their distributors are losing billions of dollars as restaurants and other buyers shut down and the government needs to step in, according to a plea from the industry that traditionally shies away from government assistance.
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The United Fresh Produce Association is asking Congress and USDA to, among other things, set up a $5 billion fund to pay food service distributors who took possession of fresh fruits and vegetables, but now cannot sell them or pay back the farmers who grew them.
Separately, United Fresh is asking USDA to allow food service distributors to disperse current produce inventories immediately through federal feeding programs.
“While some are using retail channels to utilize their current supplies, most inventory (is) currently sitting and waiting for a ‘customer’” United Fresh said in a letter to Perdue.
United Fresh also says schools should be allowed to use funding through the Fresh Fruit and Vegetable Program to provide pre-packed boxes of fresh produce to families that need the produce.
There’s also an ongoing concern about labor — especially if workers in processing plants get sick or can’t make it to work.
The National Pork Producers Council is worried about worker shortages at both farms and processing plants, due in part to school closures.
“The specter of market-ready hogs with nowhere to go is a nightmare for every pork producer in the nation,” said NPPC President Howard “A.V.” Roth, a Wisconsin farmer.
But for now, “people need to know we've got plenty of food in this country,” says Julie Anna Potts, president and CEO of the North American Meat Institute. She says her members, which include packers and processors, are seeing this “incredible upward retail demand” even as the food service demand has gone down.
“It's not one for one (replacement) for sure. They are trying to ramp extra production for meeting the retail orders that are going up and up and up.”
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