Editorial: Feds must provide clarity on aid as coronavirus hits ag sector

Source: By Omaha World Herald Editorial Board • Posted: Monday, May 25, 2020

Midlands agricultural producers have faced huge challenges in recent years. Ag prices have stagnated well below the sky-high levels of 2012-13. Last year brought catastrophic flooding and other weather challenges disrupting production. Now COVID-19 has crashed onto the scene, choking off ethanol demand, disrupting meat processing and stifling export opportunities.

The $16 billion in federal aid announced this week can provide a bit of short-term relief. With luck, so can the resumption of significant sales to China. But at present, agricultural leaders in Nebraska and Iowa are blunt in describing the scale of the problems.

“From top to bottom, commodities across the board are experiencing significant downward pressure, and our members are dealing with a tremendous amount of uncertainty,” Nebraska Farm Bureau President Steve Nelson told The World-Herald. Since the start of the virus outbreak, “farmers have watched as prices for cattle have fallen by as much as 25% and pigs as much as 50%. Nebraska farmers have also experienced double-digit declines in the prices they receive for corn, soybeans and wheat.”

A new report by Iowa State University ag economists offers a similarly sobering appraisal: “The COVID-19 pandemic is something the United States has never experienced in its history. The large-scale destruction of farmland and processing facilities in the Southern United States during the Civil War and the Dust Bowl on the Great Plains in the 1930s may be the closest analogies.”

Making projections amid the present uncertainty is tricky, but the Farm Bureau currently estimates that losses for Nebraska’s corn and soybean producers could total $1.2 billion this year, down 14% from 2018. For the state’s cattle sector: a loss of $823 million, or 10% below 2018 revenues. Pork, a loss of $124 million, down 15%. Wheat, a slight increase of $4.1 million, up 2%.

Nebraska’s ethanol sector, currently operating at 41% capacity, could see losses topping $2 billion.

The Iowa State report lists these estimated losses for that state’s ag sector: $2.9 billion for ethanol, $2.1 billion for hogs, $788 million for corn, $658 million for fed cattle, $213 million for soybeans and $34 million for calves and feeder cattle.

The Trump administration’s announcement of $16 billion in COVID-19 aid to ag producers is welcome, but federal officials have much work to do in straightening out the confusion over the fund disbursement.

It would be a major help on the trade front if demand in China rebounds, though its purchases of U.S. ag exports for the first quarter of 2020 were only 37% of its pledged amount. European countries, meanwhile, are sending a negative signal with their efforts to buy domestic, stifling U.S. export opportunities.

Once again, Midlands ag producers find it necessary to manage their way out of yet another market crisis. It’s one more burden, this time due to the COVID-19 emergency.