{"id":1241,"date":"2020-05-14T18:39:16","date_gmt":"2020-05-14T18:39:16","guid":{"rendered":"https:\/\/agrilife.org\/agnewsandviews\/?p=1241"},"modified":"2020-05-14T18:39:16","modified_gmt":"2020-05-14T18:39:16","slug":"texas-agricultural-losses-from-covid-19","status":"publish","type":"post","link":"https:\/\/agrilife.org\/agnewsandviews\/2020\/05\/14\/texas-agricultural-losses-from-covid-19\/","title":{"rendered":"Texas’ Agricultural Losses from COVID-19"},"content":{"rendered":"
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New report estimates Texas\u2019 agricultural losses from pandemic could be $6-8 billion<\/h1>\n

Some agricultural producers in the state could see losses up to 40%<\/h2>\n<\/header>\n
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The agricultural production challenges related to the COVID-19 pandemic include supply chain issues, labor shortages, instability in agricultural commodities markets and a major change in where people are spending their food dollars. (Texas A&M AgriLife Extension Service photo)<\/figcaption><\/figure>\n

The\u00a0Agricultural and Food Policy Center<\/a>\u00a0at Texas A&M University has released a new report showing the economic impact the COVID-19 pandemic has had on production agriculture in Texas.<\/p>\n

Since the beginning of the pandemic many agricultural commodity prices have dropped 20% to 30%, according to the report. Many Texas producers have already experienced losses, and if prices do not recover soon for livestock and prior to row crop harvest, they could easily see losses in the range of $6 billion to $8 billion \u2013 down 27% to 36% overall.<\/p>\n

\u201cOur goal in producing the\u00a0COVID-19 Economic Impact to Texas Agriculture<\/a>\u00a0report was to frame agricultural issues related to the COVID-19 pandemic, as well as provide insights and discussion on how various production agriculture commodities in Texas were affected,\u201d said Joe Outlaw, Ph.D.,\u00a0Texas A&M AgriLife Extension Service<\/a>\u00a0agricultural economist and co-director of the center.<\/p>\n

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Empty shelves in grocery stores throughout Texas have been a common sight due to supply and demand issues and disruptions in the food and agriculture value chain. (Texas A&M AgriLife photo by Susan Himes)<\/figcaption><\/figure>\n<\/div>\n

Outlaw said Texas is an important agricultural state, ranking only behind California and Iowa in terms of cash receipts from the sales of agricultural commodities.<\/p>\n

\u201cIn 2018, those agricultural receipts totaled about $22 billion,\u201d he said.<\/p>\n

Some of the factors affecting agricultural production include supply chain issues, labor shortages and instability in agricultural commodities markets, as well as the general change in where people are now spending their food dollars due to COVID-19-related restrictions.<\/p>\n

\u201cThe COVID-19 pandemic has had a negative impact on the food production and supply and has also exposed many longtime vulnerabilities across the food and agriculture value chain,\u201d said Patrick J. Stover, Ph.D., vice chancellor of Texas A&M AgriLife, dean of the\u00a0College of Agriculture and Life Sciences<\/a>\u00a0and director of\u00a0Texas A&M AgriLife Research<\/a>, College Station. \u201cThis has had a profound and far-reaching impact on those front-line farmers we depend on to meet our needs for food and nutrition.\u201d<\/p>\n

Shutting down schools and restaurants to dine-in customers has led to a dramatic shift in food purchasing and has affected agricultural supply chains for many food products, the report noted. Thus far, the effects have been particularly troublesome for producers of livestock, fruits and vegetables and dairy products, including milk. It also noted many retail clothing outlets around the world have been closed as well, and that has dramatically decreased the demand for cotton, Texas\u2019 largest cash crop.<\/p>\n

The Texas agricultural commodities most affected by the COVID-19 pandemic thus far are weaned calves, stocker calves, feeder steers, sheep and goats, fruits and vegetables, and dairy products.<\/p>\n

\u201cThese commodities are currently selling at substantially lower prices than prior to the pandemic,\u201d Outlaw said. \u201cAgricultural producers marketing products now are losing money, and if this pandemic persists, there may be even greater losses than what we have currently estimated.\u201d<\/p>\n

Row crops<\/strong><\/h3>\n
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Row crop producers have seen depressed prices for many of their crops, especially corn, cotton, sorghum and soybeans. (Texas A&M AgriLife Extension Service photo)<\/figcaption><\/figure>\n<\/div>\n

The report notes row crops such as corn, cotton, wheat, sorghum, rice and soybeans have been especially hard hit.<\/p>\n

\u201cFarmers are going into this crop year with crop insurance price elections that are lower than in the past two years,\u201d Outlaw said.\u00a0\u201cThis means farmers could lose 20% to 30% of their crops before getting any benefit from insurance.\u201d<\/p>\n

He said row crops in Texas are either planted and growing in most regions or are about to be planted in the northern part of the state.<\/p>\n

\u201cThe only losses row crop farmers would currently be incurring are from the sale of 2019 crops from storage,\u201d Outlaw said. \u201cAnd while Texas producers typically do not store commodities this far into the marketing year, many continue to work through carryover stocks from the 2019 crop year.\u201d<\/p>\n

He said while all row crops are affected, wheat and rice may fare somewhat better due to their being consumer staples.<\/p>\n

Outlaw said risk management strategies, crop insurance and farm bill program provisions will play a key role in providing relief for depressed prices, but absent additional aid, the financial stress producers were already facing is likely to grow significantly.<\/p>\n

\u201cRow crop producers are now being asked to take on a lot of risk to grow crops that very well may lose them a lot of money,\u201d Outlaw said.<\/p>\n

For Texas row crop agriculture, the most immediate and visible impact is on commodity market prices, he said, but effects can reasonably be expected to ripple through the industry supply chain from production inputs to retail consumers.<\/p>\n

Livestock and dairy\u00a0<\/strong><\/h3>\n
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As the fifth-largest milk-producing state in the U.S., the shift from restaurants to grocery store sales has hit the Texas dairy industry especially hard. (Texas A&M AgriLife Extension Service photo by Kay Ledbetter)<\/figcaption><\/figure>\n<\/div>\n

Many of the losses related to livestock are a result of shifting demand from food consumed away from home to food consumed at home.\u00a0Processing plant closures also threaten to drive prices paid to producers even lower in the wake of reduced demand. At the same time, retail prices are increasing due to reduced supply.<\/p>\n

\u201cWhile a lot of losses have yet to materialize, for those producers marketing now, including dairy products, which are marketed daily, the pain is immediate,\u201d Outlaw said.<\/p>\n

Texas is the fifth- largest milk-producing state in the U.S., and the shift from restaurants to grocery store sales has hit the industry especially hard. A large share of milk products, including cheese and butter and other products, goes through food service outlets and with the loss of those outlets, milk processing quickly found themselves with more milk than they could sell as finished products.<\/p>\n

On the livestock side, the report notes both futures and cash prices of stocker cattle, feeder cattle and calf prices have dropped dramatically as the societal impacts of COVID-19 took hold.<\/p>\n

\u201cStocker cattle producers are facing significant price losses as calves purchased in the autumn, long before the COVID-19 pandemic, have been selling at much lower prices. The impacts of COVID-19 on individual ranches will depend on the production system but will eventually accrue to all cow-calf producers.\u201d<\/p>\n

The COVID-19 pandemic has created substantial economic losses across all livestock agriculture, Outlaw said. This impact will be felt over the course of the year as sales occur, production responds to financial losses and more long-term economic effects become apparent.<\/p>\n

Specialty crops<\/h3>\n
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Due in large part to their being highly perishable, specialty crops, which include many fruits and vegetables, have been hit hard by the COVID-19 pandemic. (Texas A&M AgriLife Communications photos by Kay Ledbetter)<\/figcaption><\/figure>\n<\/div>\n

Similar to livestock, many of the losses in specialty crops\u2014primarily composed of fruits and vegetables\u2014are related to shifting demand.<\/p>\n

\u201cThe specialty crop sector has been one of the hardest-hit sectors of agriculture due to the COVID-19 pandemic,\u201d Outlaw said. \u201cMost fruits and vegetables are consumed fresh and are highly perishable, and as a result of the COVID-19 pandemic, the closure of most restaurants and schools has caused a major reduction in demand.\u201d<\/p>\n

He noted while the reduction in demand in some areas has translated to higher demand at grocery stores, different packaging requirements, changes in volume demanded, altered consumer purchasing habits and overall uncertainty are all having a negative effect on produce prices\u2014mainly at the farmgate level.<\/p>\n

If COVID-19 issues persist, Texas fruit and vegetable producers could be left without outlets for their highly perishable products and ultimately could lose over $397 million.<\/p>\n

Financial relief for farmers and ranchers<\/strong><\/h3>\n

The report also notes the federal government has responded with a series of three stimulus or relief acts agricultural producers may benefit from \u2014 the most useful likely being the Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act. Along with authorizing additional funding for the U.S. Department of Agriculture so it may provide direct assistance to agricultural producers, the CARES Act established the Payroll Protection Program.<\/p>\n

A detailed description of all three legislative responses can be found in the \u201cInitial COVID-19 Response for Agricultural Producers<\/a>\u201d publication recently issued by the Agricultural and Food Policy Center.<\/p>\n

\u201cWhile farmers and ranchers are grateful for the assistance the federal government is providing, many of their financial difficulties are immediate, and if not quickly addressed could have long-term negative effects on much of the state\u2019s agricultural production,\u201d Outlaw said.<\/p>\n

How Texas A&M AgriLife is helping<\/strong><\/h3>\n

Along with providing useful information on federal relief provisions from which agricultural producers may benefit, Texas A&M AgriLife has provided online trainings for its statewide network of agents and for government officials and others involved in disaster response.<\/p>\n

Collaborating with Gov. Greg Abbott, AgriLife is\u00a0working to help local officials\u00a0<\/a>understand, acquire and administer federal assistance available to help their communities recover from the COVID-19 pandemic, particularly through the CARES Act.<\/p>\n

Additionally, AgriLife Extension presented a webinar called \u201cOn the Line with AgriLife<\/a>: Paycheck Protection Program and CARES Act Information for Agricultural Entities and Small Businesses\u201d to inform and assist those wanting to know about federal relief for COVID-19.<\/p>\n<\/div>\n