USA TODAY International Edition
Iowa farmers try to hang on through pandemic
DES MOINES, Iowa – Tim Bardole says his grandfather held onto the family farm through the Great Depression. His father shepherded it through the 1980s farm crisis.
Now, Bardole is hoping to keep it intact through a third calamity: the COVID- 19 pandemic.
“My family has been farming here for over 100 years. ... I don’t want to be the one to screw up,” said Bardole, whose farm is near Rippey in central Iowa. “I think a lot of farmers feel the same.”
The coronavirus has caused an agricultural tsunami that’s ripped through Iowa and the nation. Markets have been disrupted as schools, restaurants and hotels have shuttered, and meatpacking plants are slowing or closing as about 10,500 workers – including 1,650 in Iowa – have tested positive for COVID- 19.
Prices have tumbled for Iowa corn, soybeans, pork, beef, milk and eggs. And demand for ethanol, which consumes much of Iowa’s annual corn crop, has plummeted along with oil consumption, as Americans have put the brakes on travel.
“At the current prices, you’re losing money everywhere,” said Bardole, president of the Iowa Soybean Association board.
The economic toll could reach nearly $ 7 billion this year for Iowa farmers, a 20% cut in livestock and grain producers’ revenue, said Chad Hart, an Iowa State University agriculture economist who has studied COVID- 19’ s impact.
Ryan Cox, an agricultural lender at CBI Bank & Trust in Muscatine, said some farmers likely have exhausted their options to restructure debt after several years of low prices.
“There will be some farms that won’t survive, and that’s the sad reality,” Cox said.
Toll is financial – and emotional
U. S. corn prices have dropped about 15% since March when COVID- 19 cases began spreading across the nation. Soybean prices have fallen 8%, hog prices are down 33%, and cattle prices have dipped 21%.
Iowa is especially vulnerable to the economic hit. The state produces the most corn, hogs and eggs in the nation, and it ranks second in soybeans and seventh in cattle. Iowa also is the largest producer of ethanol and biodiesel.
Iowa Agriculture Secretary Mike Naig said the impact on farmers is emotional as well as financial. With meat processing capacity cut by 38%, Iowa producers “each week, for several weeks” face destroying as many as 200,000 pigs that can’t be moved to packing plants, he said.
Already, some Iowa producers are culling small pigs, Naig said, and getting “closer and closer to widespread depopulation,” potentially putting down market- ready hogs that can weigh about 300 pounds.
Farmers are “throwing away eggs and dumping milk,” given the loss of commercial food service markets, he said. “It’s very stressful. Our livestock producers raise animals – they feed them, take care of them – and they go to a good and important use,” feeding families.
Naig has asked the U. S. Department of Agriculture to compensate Iowa producers for the animals they must destroy. He said he also may ask the federal government to help Iowa farmers euthanize the animals.
With the financial stress mounting, Jim Greif, who farms in northeast Iowa, said he’s talked with his lender about deferring some principal payments on his debt for a year. Other farmers he’s talked with are doing the same.
“The bank I work with has been proactive, getting some stuff down now,” Greif said, adding: “The banks realize they have a problem, and they want to make sure it’s not a big problem like the ‘ 80s.”
With ethanol: ‘ We’ve never seen a drop- off like this’
In Iowa, about 60% of the corn crop goes into making ethanol, a process that also creates corn oil and a high- protein byproduct that’s fed to livestock, said Monte Shaw, president of the Iowa Renewable Fuels Association.
But about half of both Iowa and U. S. ethanol production is down, with plants throttling back because many Americans are working from home and cutting trips.
“We’ve been through fire before, but this is the biggest challenge we’ve had to face,” Shaw said.
James Mintert, a Purdue University agricultural economist, echoed that assessment.
“We occasionally see some plants temporarily slow down or shut down, but we’ve never had a drop- off like this,” Mintert said. “This is the worst it’s been and the most widespread it’s ever been.”
Trade wars and exemptions for oil refiners, which limited requirements to blend ethanol into the nation’s fuel supply, already had cut demand for ethanol for about two years.
“My biggest concern is that the industry didn’t have a lot of cash at the start of this,” Shaw said. “If there’s not some sort of cash infusion, you’ll probably see some bankruptcies.”
The ethanol and biodiesel industry has asked for federal assistance, a request the federal Agriculture Department has rejected. Iowa State University estimates the state’s ethanol industry will lose nearly $ 2.6 billion this year.
“I’m extremely concerned about ethanol, and the long- term impact it will have on corn demand,” said Cox of CBI Bank & Trust.
After ethanol, livestock is the biggest user of corn, Hart said, and they’re both in trouble.
Iowa State estimates pork producers in the state will lose $ 2 billion this year, and cattle producers will see a $ 692 million reduction in revenue. Animals are backing up on farms as meatpacking workers sickened and 22 plants nationwide closed at least temporarily at some point during the pandemic.
Even as large plants reopen, they will be unable to process the same number of pigs and cattle, said Will Sawyer, a protein analyst at CoBank.
Sawyer estimates that U. S. producers will euthanize as many as 7 million pigs in the second quarter, valued at nearly $ 700 million.
‘ Things looked like they were turning around’
With soybean prices around $ 7.85 a bushel, Bardole said he could lose about $ 100 an acre, based on his average yields. With corn prices close to $ 3, he could see a loss of about $ 130 an acre.
“That’s if an elevator will buy them,” said Bardole, who farms about 2,500 acres with his father, brother and son.
U. S. farmers have struggled since 2013 with falling income, a situation that worsened with multinational trade wars that began in 2018 and prompted the Trump administration to provide them $ 28 billion to offset lost export markets.
This year looked promising, with a new U. S. trade agreement with Mexico and Canada, and China pledging to buy $ 80 billion more in farm goods over two years. But China’s U. S. farm purchases so far have lagged behind those in other recent years.
“Things really looked like they were turning around,” Bardole said. “We thought prices would get back where we needed them. COVID- 19 has thrown a monkey wrench into it. It looks different now than in January, and it will look different this fall. Who knows now if it will be better or worse.”
The USDA plans to provide another $ 16 billion to farmers to help offset COVID- 19- related losses, and will buy $ 3 billion in dairy, produce and meat. Agriculture groups and Midwestern congressional leaders say farmers also need to be included in the next package of U. S. business assistance.