RMFU President Responds to Senator Bennet’s Call For COVID-19 Impact on Ag
Dear Senator Bennet,
Thank you for your recent call to learn how the continually evolving COVID-19 situation is impacting agriculture from producer to consumer. These are trying times for all of us and no one is immune for some form of disruption. Given the hectic pace on Capitol Hill, I also appreciate the opportunity to share with you what we are hearing from the people who are managing daily challenges and changes.
Here are observations offered by members we’ve visited with during the past few days.
Commodity Prices & Demand• Wheat prices seem steady because of current demand, but corn prices have plummeted.
• Ethanol production is important to provide stability for the market, but we’re hearing that many ethanol plants are shutting down. As you know, oil refiners and ethanol producers already have been at odds on market share. Due to a 40-plus percent drop in gasoline usage we have seen a tremendous amount of pressure on the industry and, in turn, corn farmers. NFU was working through the latest stimulus bill to get funds from CCC to reimburse ethanol and biodiesel plants for a portion of their feedstock costs. CCC is slated to get $14 billion, so we are now shifting advocacy focus to USDA to get these funds delivered. Last week the government gave ethanol plants and distillers the authority to shift to making hand sanitizer. Many are doing so as they are making more money producing this product than for fuel. However, there are some logistical issues with the manufacturing, bottling, and supply chain. Some plants have moved in this direction and others are exploring the idea. There still are hurdles to allow the widespread production and distribution. Currently, ethanol plants add a denaturant, so people won’t drink the alcohol (ethanol). The industry is looking to have this mandate suspended for a period of time so commercial companies can proceed, although the FDA is pushing back a bit.
• Beef demand is high at the retail level, yet few if any ranchers are seeing any increase unless they sell directly to consumers or retail stores where they can negotiate their own prices.
• The following Politico article spells out many of the concerns those in rural parts of the U.S. are facing: https://www.politico.com/news/2020/03/26/rural-areas-coroanvirus-economy-149218
• There was a recent hold-up in H2A applications, which contributed to the uncertainty of the season. Thankfully, the State Department has relieved some of these concerns over the last 24 hours. This provides a good argument for why H-2A visas should be three years so agriculture employers don’t have to wonder if they’ll have workers during a crisis like this. Many producers using H-2A are worried their labor force will be 10-25% short this year. They are nervous to count on newly unemployed people in the existing labor pool as these people will likely leave as soon as their old jobs reopen. There are also concerns around the minimum wage rate for H-2A workers, something that should be addressed in a future relief or immigration reform package.
Anxiety & Stress
• Access to behavioral health and access to unemployment benefits are valid concerns for our members. Our members find filing is frustrating because offices are too busy, and the websites keep crashing.
• Access to behavioral health, recognizing and coping with stress, anxiety and depression for rural residents will likely be of good value as the long-term effects of the virus play out.
• Health care providers and rural hospitals are stretching their already thin abilities and resources to deal with COVID-19. This uncertainty and struggle is adding significantly to the stress that could eventually snowball.
• We request future consideration and additional funds authorized to cover mediation costs.
Banking & Farm Income
• A representative from Alpine Bank told us the banking sector will remain strong because they are required to have a certain amount of liquidity in reserves.
• Former RMFU board member and retired banker Steve Nein farms and ranches in northeast Colorado. He said his former bank’s portfolio is 80% ag loans and any defaults will cause significant problems.
• Off-farm jobs are extremely important to farming and ranching families. Under-employment and unemployment are beginning to have an impact on families and are adding to economic uncertainty and stress.
• Many farm families rely on someone in the family with a job in town for health benefits, and if that person is let go during this time, they may lose vital health insurance coverage. Support in maintaining affordable and reliable health coverage is critical during this time.
• Many growers who serve local markets are changing from restaurant deliveries to grocery and direct sales.
• The changing customer demand is both taxing ordering and inventory systems and driving upgrades to accommodate his new business model.
• Distribution, infrastructure, and cold storage issues are longtime and evolving challenges.
• It would be helpful to have funding to develop and launch new market channels, such as online ordering and home delivery.
• The cost of home delivery for individuals (more trips and time) is much more than delivery to restaurants, which might be a hurdle for some producers.
• It will be critical to open restaurants as soon as it is both practical and possible, especially in rural areas.
Livestock Prices & Access to Slaughter
• Wholesale beef prices are skyrocketing but producers are seeing cattle prices plummet. One member says he loses $200-260/head each week he takes a load of cattle to market.
• Cattle futures are down, but boxed beef prices are up.
• Wholesale and grocery paying 20% more in the last 4 days, cattle prices down 11% since January.
• Employees at meatpacking plants, though considered essential, are also vulnerable during this time.
• A large packing house closure would be disastrous for cattle prices and for that hometown community.
• We need more local options including small and medium slaughterhouses to mitigate risk and create fair competition. An injection of funds into existing small plants to increase capacity would make a big long-term difference.
• This overall situation in the meat supply chain clearly calls for reopening or continuing antitrust investigations focusing on the meatpacking monopolies and subsequent concerns of collusion and price fixing.
• We believe regulatory relief for inspection of meat products is warranted as a shortage of federal inspectors may lead to a supply chain disruption. One possible solution worth considering is to allow state inspectors to stand in during this time.
Childcare & Education
• Many parents who are now working from home are also caring for children who are either being home schooled or whose daycare facilities have closed.
• Connectivity is extremely important for students who are now home schooling. Many students now have access to laptops and/or tablets provided by their school, but many rural students lack access to quality or affordable high-speed internet access. Broadband limitations in rural areas has long been a concern. Today, that concern has become a hard reality.
• School shutdowns have made it harder to feed low-income students who rely on schools for subsidized meals. Districts face extra challenges in trying to feed rural school children due to wide distances between their homes and meal pickup sites.
• Rural communities and older demographics go together, which with less access to health care, which brings significant concerns for this pandemic.
• Health care, too, is limited due to rural broadband deficiencies
• The lower and less diversified tax base across rural areas means it is difficult and daunting for people to simply solve their own problems.
• As mentioned, there is growing strain among financial lenders.
• Currently SNAP and other benefit cards cannot be used for online grocery pickup and delivery options, which only exposes the poor, disabled, elderly, working families, and children to the virus. These individuals can’t pay bills online and they have to withdraw the money through cash back options at the store to access the funds for in-person payments. That can’t be done when stores are closed, and everything is moved online. Colorado is not one of the very few states piloting SNAP online, and USDA has recently said it is not going to re-consider expanding the pilot program. There is one delivery pilot participant in Colorado (Bondadosa), but USDA is not planning on expanding that pilot at this time. There are hunger mitigation advocacy groups in Colorado working with farms/farm stands/farmers markets/CSAs to get more creative about accepting SNAP and Double-Up Food Bucks while using social distancing just because they can process manual vouchers and have a few other options, but there are currently no other options for large retailers.
Essential Workers & Critical Workforce
• Department of Homeland Security guidance, which includes agriculture as part of the critical/essential workforce, is good and appreciated but it also creates some vulnerability for food manufacturing/processing workers.
Food Safety & Materials
• Food packaging is in short supply. Paper shortages are pushing box orders way out and other bags and packages are behind on production. Factories are increasing production, but it’s possible shippers and distributors will run out of packaging before they run out of product.
• Because of the swift and unanticipated ripple effect of COVID-19, many farms and ranches do not have appropriate or adequate personnel protection equipment for employees. Providing federal funds to assist with securing this equipment seems like a logical, common sense measure to keep agriculture workers safe and assure consumers of an equally safe supply of food.
• Many rural electric cooperatives are concerned about a reduction in power for much of 2020. This is based on Italy’s energy loss during COVID-19, which is roughly 18% due to reduction in industry activity and a decrease in power demand.
• Oil production across the state is down as well, and many of our members rely on oil and natural gas royalties for secondary income.
• The surge in local and direct food sales has been good; however, we need to keep a keen eye on the future. Buying patterns will shift when this situation slows and ultimately ends, and this situation could get much worse for producers. We don’t want producers planting more than they can sell when the summer months roll around.
We believe the Coronavirus Aid, Relief, and Economic Security (CARES) Act makes important and immediate steps to confront the most urgent issues that we as a country face today. In the coming weeks, we will learn more about the additional needs of our rural health care system, farmers, ranchers, and their communities, and we look forward to sharing them with you as they surface.
As you requested, we will monitor how these programs are being implemented to gauge if resources indeed are going equitably to those in need, and if there are unforeseen barriers in accessing these programs. We look forward to working with you to find hopeful solutions and employ positive actions.
Again, my personal thanks to you for your tireless efforts to help the families who make their living farming and ranching and supporting their hometown communities that depend on agriculture.
President of Rocky Mountain Farmers Union
Rocky Mountain Farmers Union is a progressive, grassroots organization founded in 1907. RMFU represents family farmers and ranchers in Wyoming, Colorado, and New Mexico. RMFU is dedicated to sustaining our rural communities, to wise stewardship and use of natural resources, and to the protection of our safe, secure food supply. RMFU supports its goals through education and legislation, as well as by encouraging the cooperative model for mutual economic benefit. Learn more and become an RMFU member online at https://www.rmfu.org/