COVID-19 costs pork producers $5 billion

Legislative Watch: Pork and beef facing $18 billion in losses; requesting more CCC support; revival groups named; paycheck program runs dry.

P. Scott Shearer, Vice President

April 17, 2020

5 Min Read
Hog barns in a scenic valley
National Pork Board

U.S. pork producers are facing a financial disaster as a result of the impacts of COVID-19. This is according to a study released by the National Pork Producers Council indicating U.S. pork producers will lose over $5 billion which equates to $37 per head. Plant closings, employee absenteeism, workforce shortages in rural America, loss of foodservice, especially restaurants, and slowing of exports are impacting the industry.

NPPC President Howard "A.V." Roth says, "We are taking on water fast. Immediate action is imperative, or a lot of hog farms will go under. … Hogs are backing up on farms with nowhere to go, leaving farmers with tragic choices to make."

NPPC identified measures that would help producers including:

  • USDA purchase $1 billion of pork which would be sent to food banks;

  • Equitable direct payments to producer participants without eligibility restrictions; and

  • Increase the Small Business Administration's Economic Injury Disaster Loan program cap on qualifying businesses to those employing up to 1,500

The study was conducted by Dermott Hayes, Iowa State University, and Steve Meyer, Kerns and Associates.

A bipartisan group of legislators sent a letter to Secretary of Agriculture Sonny Perdue urging USDA assistance to pork producers. The letter was organized by Sen. John Thune (R-S.D.) and Congressman Dusty Johnson (R-S.D.).

Cattle industry faces $13.6 billion loss because of COVID-19
The coronavirus crisis will cost the U.S. cattle industry $13.6 billion according to a study by the National Cattlemen's Beef Association.

NCBA CEO Colin Woodall says, "This study confirms that cattle producers have suffered massive economic damage as a result of the COVID-19 outbreak and those losses will continue to mount for years to come, driving many producers to the brink of collapse and beyond if relief funds aren't made available soon."

The study found:

  • Revenue losses of $3.7 billion in 2020 to the cow-calf sector, equivalent to $111.91 per head for each mature breeding animal in the United States. If these damages are not offset, additional long-term damages of $4.45 billion or another $135.24 per mature breeding animal will impact the cow-calf sector in coming years.

  • Revenue losses of $2.5 billion to the U.S. stocker/backgrounding sector in 2020, equivalent to $159.98 per head.

  • Revenue losses of $3.0 billion to the U.S. cattle feeding sector in 2020, equivalent to $205.96 per head.

The study was done by a group of agricultural economists led by Derrell Peel, Oklahoma State University.

More ag groups requesting CCC support
As USDA prepares to release the first round of direct payments to producers, more and more agricultural organizations are requesting financial assistance through the Commodity Credit Corp. program because of the negative impact that the COVID-19 crisis is having on producers.

Industries requesting assistance include pork, beef, lamb, dairy, produce and specialty crops, Local and Regional Food System producers, potatoes, catfish, crawfish, renewable fuels, etc. The requests for funds far exceed the funds available.

In the first round, USDA is expected to release $15.5 billion in CCC direct payments to producers to offset the impact of the coronavirus crisis. This includes $9.5 billion earmarked in the Phase 3 economic stimulus package, plus an additional $6 billion remaining in the CCC this fiscal year. The additional $14 billion in the stimulus bill to replenish the CCC cannot be used until at least July according to USDA.

As the crisis continues, the effects on agriculture are becoming more severe with meat and poultry companies closing plants, shortage of labor, ethanol plants shutting down and dairymen dumping milk all resulting in lower commodity prices.

The Food and Agricultural Policy Research Institute at the University of Missouri this week released a preliminary analysis of the impact of the coronavirus crisis on agricultural markets. FAPRI is forecasting net farm income in 2020 at $86 billion, down 11% compared to USDA's estimate of farm earnings in 2019. The forecast does not take into account government payments that are expected anytime.

Great American Economic Revival Industry Groups named
President Trump named members to the Great American Economic Revival Industry Groups that will advise the White House on plans to reopen the economy. The members represent a cross section of the economy including agriculture, food and beverage, banking, energy, construction, labor, defense, financial services, healthcare, manufacturing, hospitality and retail.

Agriculture group members include American Farm Bureau Federation — Zippy Duvall; Sysco Corp. — Kevin Hourican; Tyson Foods Inc. — Dean Banks; Perdue Farms Inc. — Randy Day; Cargill Inc. — David MacLennan; Archer-Daniels-Midland Co. — Juan Luciano; Corteva Agriscience — Jim Collins; Tractor Supply Co. — Hal Lawton; Seaboard Corp. — Steven Bresky; Grimmway Farms — Barbara Grimm; and Mountaire Farms — Ronnie Cameron.

Food & Beverage group members include National Restaurant Association — Marvin Irby; McDonald's — Chris Kempczinski; Darden Restaurants — Gene Lee Jr.; Coca-Cola — James Quincey; PepsiCo — Ramon Laguarta; Chick-fil-A — Dan Cathy; Subway — John Chidsey; Bloomin' Brands — David Deno; YUM! Brands — David Gibbs; Papa Johns — Rob Lynch; Wendy's — Todd Penegor; Waffle House — Walt Ehmer; Starbucks — Kevin Johnson; Wolfgang Puck; Thomas Keller; Jean-Georges Vongerichten; Daniel Boulud; M Crowd Restaurant — Ray Washburne; and Jimmy John's Founder — Jimmy John Liautaud.

The complete list of the industry groups members can be found on the White House website.

Paycheck Protection Program runs out of money
Negotiations have intensified on another coronavirus aid package between the Congressional leaders and the administration with the original $350 billion in funds having run out for the Paycheck Protection Program.

The House and Senate Republican leadership are pushing for an additional $250 billion for the PPP for small businesses. Democratic leaders are requesting additional funding for state and local governments, hospitals and healthcare in addition to the additional funds for the PPP. Governors are asking Congress to immediately provide $500 billion for state governments.

Source: P. Scott Shearer, who is solely responsible for the information provided, and wholly owns the information. Informa Business Media and all its subsidiaries are not responsible for any of the content contained in this information asset.

About the Author(s)

P. Scott Shearer

Vice President, Bockorny Group, Inc.

Scott Shearer is vice president of the Bockorny Group Inc., a leading bipartisan government affairs consulting firm in Washington, D.C. With more than 30 years experience in government and corporate relations in state and national arenas, he is recognized as a leader in agricultural trade issues, having served as co-chairman of the Agricultural Coalition for U.S.-China Trade and co-chairman of the Agricultural Coalition for Trade Promotion Authority. Scott was instrumental in the passage of China Permanent Normal Trade Relations and TPA. He is past chairman of the USDA-USTR Agricultural Technical Advisory Committee for Trade in Animals and Animal Products and was a member of the USAID Food Security Advisory Committee. Prior to joining the Bockorny Group, Scott served as director of national relations for Farmland Industries Inc., as well as USDA’s Deputy Assistant Secretary for Congressional Affairs (1993-96), serving as liaison for the Secretary of Agriculture and the USDA to Congress.

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