By Kate Cimini/CalMatters
Amid the coronavirus pandemic, few industries have been quite as essential to the nation as agriculture.
From pickers crouching for nine hours a day to scoop up strawberries to CEOs making handshake deals to keep their companies afloat, hundreds of thousands of workers are feeding America. But, in many ways, the pandemic is forcing farmers to reevaluate how they do business.
Across California, nearly 60% of farmers have lost significant revenue, washing their milk down drains, beefing their dairy cows and ploughing under their lettuce and other crops, according to surveys carried out by the California Farm Bureau Federation and the Monterey County Office of Agriculture.
As a result, industry leaders say they expect to see shifts in the way growers do business. One priority will be finding new markets for their products, such as farm boxes sold directly to consumers.
The pandemic “has changed the food supply chain for our country in ways we could never have imagined before in terms of restaurants and schools being closed, “ said U.S. Rep. Jim Costa (D-Calif.), who is a Central Valley almond farmer. “In the last 30 years, we’ve developed a complicated supply chain…This is a new wrinkle.
“We’re in uncharted waters. Those that adapt are the ones that are able to succeed.”
Half of growers said they lost income
Produce agriculture is dominated by large companies that handle cooling, packing and shipping of produce. They contract with smaller farmers to provide a certain amount of pallets or cartons of berries, lettuce or carrots; those, in turn, are harvested and packaged by farmworkers.
Their labor keeps the farms running, but where food goes after it has left pickers’ hands is a complicated web, weaving through packing houses, cooling plants, refrigerated trucks, planes, CSAs, the foodservice industry and grocery store shelves.
And farmers have lost income as different avenues of revenue have been shut down or cut off. California’s $50 billion farming industry has taken a significant hit.
More than half of growers surveyed by the California Farm Bureau Federation said that they had lost customers or sales due to COVID-19. In addition, nearly half said they or someone in their immediate family had lost income from an off-farm job.
Nearly 60% of the farmers attributed losses to the pandemic as shelter-at-home orders closed customers’ businesses, farmers’ markets shut down and international customers canceled orders over health concerns. Of the respondents, 24% also said they had to furlough, lay off or terminate workers, primarily due to the downturn in orders.
“Many thousands of tons of good produce were lost,” said Western Growers’ Association President Dave Puglia. Although a lot of the produce went to food banks, still more was ploughed under or sent to landfill.
“I’ve heard a lot of people saying, ‘That’s good food, how can you let it go to waste?’” Puglia said. “We’re trying, but the infrastructure can’t handle that quickly, especially with cooling requirements.”
In Texas, home to a $22-billion agricultural industry, Texas A&M University researchers estimated farmers could lose between $6 and $8 billion due to the pandemic.
Across the U.S., farmers will lose $20 billion in net income this year, according to an updated economics report published last month by the Food and Agricultural Policy Research Institute at the University of Missouri.
Produce growers alone could lose as much as $4 billion, they say. And the Salinas Valley, nicknamed the Salad Bowl of the World, is likely to see a large chunk of its 2020 revenue disappear.
“We’re looking at a situation with a lot sharper – or very big decline in farm income relative to what had been expected,” Patrick Westhoff, the director of Food and Agricultural Policy Institute said. “It’s a much tougher time for farmers than we would have guessed a few months ago.”
The decline in consumer spending will suppress demand for farm products, forcing prices down, the report predicts. Revenues for “other” crops — such as fruits, vegetables and nursery crops — are expected to decline $4 billion in 2020, and drop another $1.6 billion in 2021, the April report estimates.
Monterey County Agricultural Commissioner Henry Gonzales oversees an $8-billion industry on the Central Coast of California. While the diversity of crops grown in the Salinas Valley is a strength, and farmers have already begun to sow new crops in anticipation of a “normal” season, Gonzales feared losses to growers in his region alone would cut deep.
“Ag generates $4.5 billion annually in the county,” said Gonzales. “Then, with the multiplier effect, there’s another $4 billion generated. Just from the multiplier effect, with the losses in the county from the pandemic, it’s going to multiply that loss.”
‘Price-takers, not price-makers’
Farmers that come through this will need to diversify their sales portfolios with buyers across different industries, such as grocery stores, foodservice and CSAs.
“Farmers are price-takers, not price-makers,” Costa said. “For farmers, COVID-19 is another new uncontrollable factor that they’ve never had to deal with before.”
Farmers have been dealing with added expenses in providing personal protective equipment, increased safety measurements such as additional bathrooms or more frequent trips to transport smaller crews of workers. They’ve also lost money while the market dwindled, and only now are some companies launching new products to bridge the gap between product and demand.
“We are looking at our assortment of products and anticipating the needs for the future, not just today,” Scott Grabau, president of Salinas-based lettuce giant Tanimura & Antle said in a statement provided to The Californian. “It is not a question of ‘if we continue to plant the same number of acres,’ it is a question of ‘what do we plant in our acres.’
“It is not in our nature to quit and 38 years of operating a successful company is not by accident,” he wrote.
Tanimura & Antle, which farms more than 36,000 acres annually, recently launched HarvestSelect, a mixed box of produce for direct purchase by consumers. According to California Farm Bureau Federation President Jamie Johansson, many growers are exploring or have launched similar products or CSAs.
Johansson, who was elected to his position in 2017, is an olive farmer and olive oil producer. He worries about the likely loss of small farmers and consolidation under larger companies.
“What the future of farming looks like is going to depend on what kind of California am I living in right now,” said Johansson. “We’re looking at a $450 million deficit…that’s an epic deficit.”
Johansson reflected on the 2011 state deficit, which resulted in more than $30 million in cuts to agricultural programs. Simultaneously, he said, he recalled a study that showed regulatory costs per field have increased 600 to 700% and forced consolidation on farmers who otherwise would not have survived.
This time around, he said, diversification of locations could be key to survival.
“I think everyone’s going to be looking at diversifying their operations,” said Johansson. “Do you want to have a farm in multiple places in California just to kind of hedge your bets? It’s not to become a monopoly, but just simply to protect yourself and at least survive for another year.”
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