Planting of corn and soybeans across the Quad-Cities region is happening faster than a year ago.
Mike Zecher, president of the Mercer County Farm Bureau, said he is a few days away from all of his soybean crops being planted and he is hoping for more sun to help his corn grow out of the ground. The seasonally low temperatures this month have led to a slower growth pace, but that can be made up as weather warms for the summer.
And while it hasn't been as wet of a spring 2019, recent rainfall hasn't helped.
“We need some heat," he said. "We’re looking for nice, warm sunny days to get this crop going, to really get this crop the full potential it can have.”
DeAnne Bloomberg, director of issues management at the Illinois Farm Bureau, said 83% of corn and 59% of soybeans have been planted in the Land of Lincoln, citing weekly U.S. Department of Agriculture stats.
“Really for the most part, farmers were feeling really good about the year, in comparison to last year, until the last week of rains,” she said.
But the ag sector is dealing with difficulties brought on by COVID-19, the new coronavirus that has only compounded financial hardships on farms after two years of trade wars. The pandemic wiped out what had been renewed optimism after a series of new trade deals were inked between the U.S. and Japan, a new North American trade deal between the U.S., Mexico and Canada, and the first phase of a new trade agreement between America and China.
“Prices have definitely taken it on the chin since the pandemic hit," Zecher said. "We were just seeing some light at the end of the tunnel in regards to some of the trade deals.”
The hit taken on by hog and cattle farmers extends to those who grow corn and soybeans, as those two crops go into feed for livestock. Add in the decreased demand for ethanol as gasoline prices plummeted in recent weeks and people are driving less as some employees are allowed to work from home.
“It’s been on numerous fronts. The ag commodity prices are really dismal right now,” Zecher said.
Mike Paustian, who raises pigs in Walcott and is president of the Iowa Pork Producers Association, said the aid package is a positive development.
“I’m hoping it will help some family farms survive until things can get better so I think it’s a good step in the right direction. It’s certainly not going to make anyone whole … every little bit helps and this will certainly help stop some of the bleeding,” he said.
And while most meat processing facilities have reopened in the Midwest, Paustian said those facilities have yet to get back up to 100% capacity. In fact, they may not with social distancing and other mitigation steps taken for the workspaces of employees at the large facilities.
“With the total amount of pigs that are backed up, it’s going to take months to get back through this so we’re still going to be in a tight spot and producers are still going to be having to worry about what they’re going to do with their pigs,” he said.
Paustian estimates there are 600,000 hogs backed up in Iowa alone. That means farmers are having to alter the formula of their feed to hogs to attempt to slow the eventual weight gain.
“Farmers are going to continue to struggle with this even though most of the plants have reopened. I’m just trying to make sure we keep informing people of what’s going on so that they understand farmers are still facing some tough decisions going forward. It’s going to be a while before things get back to normal on the farms.”
But there is renewed hope after a farmer aid package was unveiled Tuesday by U.S. President Donald Trump. That was part of the Coronavirus Aid, Relief, and Economic Security Act, or CARES.
The program, formally called the U.S. Department of Agriculture’s Coronavirus Food Assistance Program, will give $16 billion in direct payments to farmers on a range of commodities, such as corn, meat, soybeans, fruits, nuts, vegetables and other goods.
Dave Swenson, an economist and professor at Iowa State University, said the $16 billion is for the entire country and it is too early to know how much of that financial relief will go to Iowa farmers.
“This is a program that nicely extends to all farmers," Swenson said. "For the most part, government programs really specialize in assisting commodity crops so in this case it really broadens the base of assistance than what was oftentimes the case in previous legislation. It is not targeted to any specific sector.”
This is in addition to ag programs involving the buying up of goods and donating processed food to local food banks. Both Illinois and Iowa have those programs in place for pork.
Aid packages are only temporary, and farmers continue to need a place to send crops, which goes back to those trade deals. China has so far not made progress on its promise to increase its purchase of American goods, including ag commodities, as part of that phase one deal.
“The pandemic disrupted (China’s) entire economy and very well provided them an excuse to actually delay any kind of purchases under the auspices of phase one. And if you look at a little bit of a longer view, it could very well be in China’s interest to simply run out the clock on this administration and take their chances with things changing in November,” Swenson said.
Also at play is China having increased its soybean purchases from Brazil while the trade war with the United States was occurring, meaning that the U.S. still has to recover that lost market share.
“It’s probably going to take a long time for the (U.S.) soybean export market to reclaim the sales levels that it had to China prior to the trade war,” Swenson said.
And that gets back to what farmers had said in summer 2018 as the trade war began: “Trade, not aid.”
Economists at Iowa State University projected a $2 billion hit to the hog sector of Iowa’s agriculture last month. Last week, Dermot Hayes, an economics professor at Iowa State, said the price for processed meat has improved since that study, but not for animals going into processing facilities.
That means farmers aren’t making as much money per animal.
“There is one opportunity for hope, and that is if China actually buys what they promised to buy, prices would recover,” Hayes said last week.
The Center for Strategic and International Studies projected recently that China will only import a combined $57 billion this year. But Hayes said there is optimism that China is ramping up its purchases of American goods.
“Remember the duties we put on China that started the trade war, the metal duties? We still have those on, and they still have duties on our products. Yet the only hope is for China to buy more of our stuff,” Hayes said.
“It’s ridiculous that we have duties on steel because it has caused them to put duties on our agriculture, and they’re our only hope of getting back to positive prices. And I don’t think many people realize those duties are still being charged.”
Zecher said Wednesday he had yet to see the details on the Coronavirus Food Assistance Program, but was encouraged by it.
“It’s a help, not the cure. While we’re very grateful to get the assistance, we would still really like to fix the demand situation and just get our prices back to the point of being self-sufficient without needing the government,” Zecher said.
Bloomberg, citing the American Farm Bureau, said China would need to import $22 billion of American goods in the fourth quarter of 2020 to meet the phase one goals.
“We are grateful for the support from the federal government. It’s a known fact farmers would rather get their profits from the marketplace, but this pandemic has rocked our world and everyone’s. But there will be changes; it will have a long tail,” she said.
“I only hope we can continue to provide some new opportunities out there as we move through these times. I don’t know what they are, but generations of farm families have been through past struggles, and we’ll get through it.”
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