Ag Alert Update: Speakers outline COVID-19 impact on California farms

By Kevin Hecteman
California Farm Bureau President Jamie Johansson, upper right, makes a point during a virtual town hall meeting to discuss the economic effects of the COVID-19 pandemic. Other participants included Roland Fumasi of Rabobank, top center; bottom row, left to right, Assemblymember Susan Eggman, Daniel Kowalski of CoBank and Daniel Sumner of UC Davis.

The damage done to California agriculture in just a few weeks may take years to overcome.

"As we go in now and we start to see the numbers coming out, we begin to realize that there really is no one in agriculture who will remain untouched by the events of the past six or seven weeks," California Farm Bureau Federation President Jamie Johansson said during a virtual town hall Monday that focused on the economic impact of the COVID-19 emergency and resulting shelter-in-place orders.

The online town hall was hosted by the chairs of the state Assembly and Senate agricultural committees, Assemblymember Susan Eggman, D-Stockton, and Sen. Cathleen Galgiani, D-Stockton.

Much of California's agricultural production goes to food service, one of the hardest-hit sectors as restaurants closed or limited their operations.

"Many of us woke up and our markets were gone overnight," Johansson said. "You take away a million meals a day in a restaurant situation nationally, and there's going to be dramatic impact."

One of those effects is a shift in diets and buying habits.

Roland Fumasi, a vice president and senior analyst at Rabobank, said the pandemic-related surge in retail sales has leaned toward products in the middle of the store—nonperishable goods, in other words.

"When you think of the perimeter of the store, you think dairy, you think animal protein, you think fresh produce," Fumasi said. "Those are the cornerstones of California agriculture."

He documented in detail the pandemic's effect on commodity prices, including hits of 50% to the prices of fluid milk and cheese and 60% in butter. Beef prices have dropped 22% below their pre-pandemic levels, he added, noting that 59% of beef production goes to food service.

On the fresh-produce side, retail sales have been skewed upward by rising demand for potatoes and sweet potatoes.

Packaged salad, Fumasi noted, "better represents the core of vegetable production in California," because sales are closely tied to food service. Sales of packaged salads were off nearly 30% the week ending March 29, compared to the same week a year ago, he said, and remained down more than 20% as of April 12.

He said California fruit and vegetable farmers served by Rabobank have lost anywhere from 50% to 85% of their food-service markets.

Daniel Kowalski, vice president of the Knowledge Exchange Division for the cooperative lender CoBank, said agriculture "will have to endure a one-two punch here."

"We're going to have to get through the worst of the COVID shutdown impacts, and then we're going to have to crawl our way out of a slow economic recovery," Kowalski said.

Before the pandemic, Americans were spending half their food budgets on eating out, he said, echoing Fumasi's point that shoppers are now stocking up on nonperishables.

"Our diet has shifted an awful lot in just a very short period of time," Kowalski said.

"The damage to California agriculture will be determined by how long COVID-19 impacts our way of life, and that time period will be longer if there are multiple peaks in the number of cases, as there was with SARS in 2003 and the Spanish flu in 1918," he added.

Daniel Sumner, a professor of agricultural economics at the University of California, Davis, said one of the challenges in responding to the pandemic's market disruption is the sheer number of commodities California produces. An expansion of the food stamp program may be needed, he said.

"It's much easier to get money to the consumers and let them buy the food than to activate government programs to actually distribute food, which is really complicated," Sumner said.

Johansson noted that CFBF and the American Farm Bureau Federation have been talking to the U.S. Department of Agriculture about a voucher program that would help connect food banks with farmers who can help fill their specific needs.

Other issues affecting California farmers and ranchers include a strong dollar, decreased export demand and rising unemployment, Fumasi said. The timing of the pandemic isn't helping, either, he noted.

"What you typically have in the highly perishable products is that we have some ability to estimate what demand is going to look like tomorrow and next week," Fumasi said. "We've got a lot of historical data that supports that. That's all changed. We have very sporadic buying patterns at retail that makes it very challenging, especially for these products that really have to be harvested on a daily basis and then shipped directly to market."

Even so, Sumner said that although Americans have a lot to worry about, the food supply is not one of them.

"It's a sign of the strength of our food system that we don't have a big warehouse behind every supermarket," he said.

(Kevin Hecteman is an assistant editor of Ag Alert. He may be contacted at khecteman@cfbf.com.)

 

 

 

Permission for use is granted, however, credit must be made to the California Farm Bureau Federation when reprinting this item.




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