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US agriculture: Can it handle coronavirus, labor shortages and panic buying?

Source: USATODAY.COM | April 4, 2020

Restaurants have been shuttered for weeks. Farms have been struggling with labor shortages for years. And grocery stores have been running out of bread, meat and eggs.

So what does that all mean for the national food supply during the COVID-19 pandemic?

The short answer is that U.S. agriculture is strong enough to handle it, with farmers still farming and no major shortages in sight, experts say. But because consumers recently have changed the way they buy and consume food, various snags in the food supply chain have led to disruptions, including truckloads of raspberries getting turned back from market and dairy businesses dumping thousands of gallons of milk.

“There will be enough food produced on the farm,” said Zippy Duvall, president of the American Farm Bureau Federation. But “there’s a lot of things that happen to the food before it gets to the consumer, whether it be in processing or transportation. If this thing was to get worse, what problems come along with that? None of us really know.”

Panic-buying and stockpiling by consumers have cleared supermarket shelves of certain foods in the meantime, creating the appearance of a problem. But those shelves are soon restocked, and the frenzy is expected to subside as supply chains adjust and home refrigerators run out of room.

The pandemic still has different ways it could impact food prices and dinner tables across the U.S., which imports only about 15% of its overall food supply.

The drastic reduction in restaurant dining could lead to cheaper butter while also putting some farms in financial despair. Unpredictable consumer shopping surges could cause more produce trucks to be delayed or redirected at a loss. The virus also could infect scores of farmworkers, adding to a series of concerns from farm to table.

Labor shortages in the fields

This problem preceded the pandemic but could get tangled up by it even more. Temporary foreign visa workers made up 20% of the country’s farm workforce, with most coming from Mexico, according to the American Farm Bureau Federation. Approximately 250,000 of these workers were approved to work in the U.S. in 2019.

But then when the coronavirus outbreak flared in March, the U.S. suspended routine immigrant and nonimmigrant visa processing services, raising concerns from American farms about being cut off from this labor supply. After hearing these concerns, the U.S. State Department since has eased requirements for these workers, much to the relief of farmers, who say they need their specialized help.

“Even with those 250,000, we still don’t have all our jobs filled, so we really need to have those 250,000,” Duvall told USA TODAY.

Duvall said he is hopeful that the loosening of restrictions will help meet farms’ labor needs. So is Carolyn O’Donnell, spokeswoman for the California Strawberry Commission, which represents more than 400 strawberry farmers, shippers and processors.

“Labor is always a concern for strawberries,” O’Donnell said. “They are hand-planted, hand-weeded, hand-picked and hand-packed.”

At the same time, there’s a pandemic on the loose.

What if the farmworkers get sick?

Farms in California will have about 20,000 workers in the fields in the coming weeks picking berries for Driscoll’s, the world’s largest berry supplier. What if 15% of them get sick?

“You just won’t be able to pick the whole crop,” said Soren Bjorn, president of Driscoll’s of the Americas.

Bjorn told USA TODAY his company has planned for such worst-case scenarios and has worked with partner farms to mitigate this risk by breaking up workers into groups of 10 instead of 30, staggering breaks and adding hand-washing stations, among other measures.

Prevention efforts still vary by farm. Many farmworkers also are undocumented, poor and not likely to stay home if sick because they need the money.

“Not all, but most of the companies are not taking the necessary precautions, such as informing the workers about what COVID-19 is and the basic kind of protocols they should be following to take care of their health,” said Arcenio Lopez, executive director of the Mixteco/Indígena Community Organizing Project, which supports indigenous migrant communities in California’s Central Coast.

In theory, the cratering economy could lead to a larger labor supply, helping fill any farm  labor shortages. But these are specialized jobs that not everybody wants even if they’re unemployed.

“There just aren’t a lot of people out there who are going take these jobs,” Bjorn said. “There will be some… But if you have a very large outbreak, of 15 or 20% of the population, there won’t be a way to back-fill that.”

Even if farm workers are young and might not get sick, the risk of a workforce reduction still looms over farms and their crops.

“The food supply for our nation is planted already, and if you have no way to harvest your crop, you not only lose the opportunity to supply consumers now, you begin to reduce the overall quantity and availability of food in the future,” said Hector Lujan, CEO of Reiter Affiliated Cos., which grows Driscoll’s berries in the U.S. and Mexico.

Why restaurants being closed makes butter cost less

In 2018, food away from home accounted for about 54% of the $1.7 trillion in U.S. spending on food, according to the U.S. Department of Agriculture. In the age of COVID-19, the seismic shift from dining out to dining in already has rippled through dairy industry, creating a situation in which there is too much butter from the farms and not enough bread in the stores.

On the one hand, the surge in demand for some food products at retail stores can be accommodated, in part, because restaurants are no longer are using as much supply.

On the other hand, some products “just don’t transition well into the retail space” from restaurants, said John Newton, chief economist at the American Farm Bureau Federation. “A good example of that is butter. Much more butter is used in restaurants and bakeries than what people use at home. So you’ve seen spot market prices for butter and cheese fall pretty sharply since this started.”

The price per pound of Grade AA butter has dropped from $1.86 on March 6 to $1.28 April 3, according to the Chicago Mercantile Exchange. The drop might not lead to lower prices at the grocery store anytime soon because retailers might not immediately pass that reduction to consumers.

But the pandemic already has stressed dairy businesses, forcing some in Wisconsin to discard thousands of gallons of milk after school and restaurant closures disrupted supply chains and wiped out a big chunk of the demand for dairy.

“It’s such a terrible thing,” said Julie Sweney, spokeswoman for the FarmFirst Dairy Cooperative in Wisconsin. “We’re hopeful we’re able to secure some emergency measures that will help support dairy farmers through this time.”

The cost of food without a steady paycheck

While meat is in high demand from consumers now, the falling futures market for meat has concerned farmers, said Newton, the economist. This is based on expectations of a shell-shocked economy and depressed demand because of lost jobs leaving consumers without enough money.

“The 2008 financial crisis showed us what can happen when reduced income and uncertainty make people spend less and result in shrinking demand,” said a report on COVID-19 by the Food and Agriculture Organization of the United Nations. “Sales declined. So did production.”

This, in turn, could lead to a shift of what farms produce and what kind of food consumers eat. Much will depend on how well the recent economic stimulus package works from Congress, with some Americans soon getting one-time checks of $1,200.

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If that’s not enough to sustain the purchasing power of laid-off workers, “then people may have to start saving on food and shift to cheaper and potentially less healthy foods,” said Rob Vos, director of the Markets, Trade and Institutions Division of the International Food Policy Research Institute.

Specialty farms that supplied upscale restaurants with local, organic food also may suffer because of restaurant closings.

“Any product that is on the fancy end will have more reduced demand,” said Dan Sumner, director of the University of California Agricultural Issues Center. “That always happens in a recession and when there is uncertainty.”

Access and delays

Some local governments, including in San Diego, shut down farmers’ markets in March, but others have classified them as essential businesses during the pandemic, helping keep commerce flowing from farm to table. These are open-air alternatives to supermarkets, with the usual precautions emphasized, including social distancing and washing the produce, although there is no evidence that supports the transmission of COVID-19 by food.

Hoarding still has been prevalent but is expected to subside. Many are open for business in California and elsewhere.

“Our meat was selling out in an hour and a half at all these markets,” said Gail Hayden, director of the California Farmers’ Markets Association. “There’s no shortages, just overbuying, and then there’s a lag filling up the supplies in the traditional system.”

This also happened with a recent order of more than 10 truckloads of Driscoll’s raspberries. The customer canceled at the last minute after getting too backed up with other produce, Bjorn said. He said retailers had pushed produce down their priority lists in an effort to get other high-demand products back on the shelves, including toilet paper, Bjorn said.

Fruit wasn’t getting to the stores in time as a result, and some of it spoiled in the delay. In this case, Driscoll’s fresh raspberries got redirected into becoming frozen raspberries, causing Driscoll’s and its partner farms to get only 20 cents on the dollar in return.

Bjorn is hopeful these kinks are smoothing out as consumers develop more regular shopping patterns. Other questions remain, such as whether customers are willing to buy what they normally buy at peak berry supply in May.

Supply shortages won’t be the issue then either.

“The food supply chain is remarkably resilient and effective,” Sumner wrote in an email. “Sure there are little inconveniences. But the basics are in great shape.”