Video: Sarah Curry and Jay Rempe on Nebraska COVID-19 Ag Impact
News Release from the Platte Institute
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Report Details Impacts of COVID-19 on Agriculture Economy
LINCOLN, NEB. – Today, the Platte Institute and the Nebraska Farm Bureau released a joint policy brief examining the economic disruptions from COVID-19 on Nebraska’s agriculture sector. The brief details the challenges the industry faced prior to and during the one-two punch brought on by the pandemic, as well as the ongoing uncertainties agriculture faces in its wake.
Authored by Platte Institute Policy Director Sarah Curry and Nebraska Farm Bureau Senior Economist Jay Rempe, the brief examines the complications for the agriculture economy caused by the pandemic but also the importance of Nebraska’s agriculture, business, education, and elected leaders working strategically to assure Nebraska’s agriculture sector is on the proper path for growth in a post-COVID-19 world.
“Nebraska’s crop and livestock producers have been on a roller coaster ride over the past decade regarding farm income. The agriculture economy was already on the downside and weakened when COVID-19 hit,” said Curry.
The report details the first COVD-19 blow in mid-March with the shutdown of the hospitality, restaurant, and institutional food service sector and the stay-at-home orders. Almost overnight, demand for food in these sectors, which accounted for 54 percent of the food consumed pre-COVID-19, went missing. Supply chains were ill-equipped to deal with the shutdown leaving agriculture producers with diminished markets. The stay-at-home orders furthered the difficulties as less travel meant less fuel consumed leading to the idling and slowdown of ethanol production.
“The immediate impact was that corn producers lost a key ethanol market and livestock producers lost a key feed source in ethanol by-products. The chaos in supply chains, the destruction of demand, and general uncertainty caused commodity prices to spiral downward,” said Rempe.
The second punch came in April, with the disruptions of meat processing facilities due to employee health concerns. Between complete shutdowns, reduced operations, and slower speeds, the processing facilities were operating between 60-70 percent of capacity at one point. Livestock prices plunged. Analysis released in June by Nebraska Farm Bureau suggested Nebraska’s agriculture economy could face nearly $3.7 billion in losses in 2020 due to COVID-19 if economic conditions did not improve.
“Agriculture was among the hardest hit sectors of our economy and as a result was among the sectors eligible for federal assistance. The report takes a closer look at the programs and engagement of agriculture in the federal assistance programs through the passage of the CARES Act,” said Curry. “To understand the magnitude of COVID-19’s impact, estimates suggest as much as 35-50 percent of the state’s net farm income this year could come from federal assistance due to COVID-19.”
The report also explores the scope and role of regulations on agriculture’s ability to respond to the pandemic.
“Agriculture is one of the most heavily regulated industries, with more than 20,000 restrictions imposed on agriculture at the federal level and additional regulations at the state level. There were some positive and proactive regulatory changes to help reduce the regulatory burden during the pandemic. The flexibility and waiver of some of those regulations provides a perfect case study for the possibility of future permanent regulatory reforms,” said Curry.
“There’s a great deal of uncertainty surrounding Nebraska’s agriculture sector and what the future holds. A large variable will be the duration and magnitude of the effects of COVID-19 on the economy. Will economic growth affect world trade that is so critical to Nebraska? Will China abide by purchase agreements signed earlier this year? Will markets regain their strength to offset a future drop in federal assistance? Right now, there are a lot more questions than answers,” said Rempe.
With those uncertainties, the report points to opportunities for Nebraska to be the epicenter of global food production, including advantages in natural resources, infrastructure, educational systems, and people.
“Nebraska leaders should think strategically on how we can marshal these advantages in a post-COVID-19 world. That means a more thorough examination of our policies regarding regulations, infrastructure, tax policy, innovation, and others to assure Nebraska is on the proper path for growth,” said Rempe.
The Nebraska Farm Bureau is a grassroots, state-wide organization dedicated to supporting farm and ranch families and working for the benefit of all Nebraskans through a wide variety of educational, service, and advocacy efforts. More than 58,000 families across Nebraska are Farm Bureau members, working together to achieve rural and urban prosperity as agriculture is a key fuel to Nebraska’s economy. For more information about Nebraska Farm Bureau and agriculture, visit www.nefb.org.
The Platte Institute advances policies that remove barriers to growth and opportunity in Nebraska. More media resources are available at PlatteInstitute.org/Media.