COVID-19 roils the ag economy


Kent Thiesse

Editor’s note: This is the second part in our series on the state of ag as we round the corner into 2021. Previously, we asked regional ag banking experts about the trends they saw this past year. Up next: the weather, low commodity prices and what’s ahead in 2021. 

 

Kent Thiesse, senior vice president/senior ag loan officer, MinnStar Bank, Lake Crystal, Minn.: “All parts of agriculture were impacted by COVID-19; however, the greatest impact was probably on the livestock and dairy industry. Not only the disruptions at the processing plants, but the change in consumer eating habits that resulted from the closure and slow-down of restaurants, fast food services and school lunch programs. … In many cases, farm families were also impacted by a reduction or loss of off-farm employment by one or both spouses, similar to non-farm families. The children of farm families had their normal school routine and activities altered and their daily lives were impacted.”

 

Powell Becker

Powell Becker, branch president Stockman Bank, Stanford, Mont.: “Farmers and ranchers are very resilient and used to adversity. Everything has been affected to some degree, whether it is mentally or physically. Markets have definitely been impacted by packing plant shutdowns. CFAP 1.0 and CFAP 2.0 have been a blessing for our producers. These funds could be the difference for producers being profitable or not.”

 

Darla Sikora

Darla Sikora, senior vice president/ag loan officer, Citizens State Bank of Loyal, Wis.: “CFAP has been a huge and welcome relief for our farmers. The funds came in at a very appropriate time, not long after commodity prices dropped and spring cropping costs were reaching their peak. Just recently, round two of the CFAP assisted with fall harvest and other farm operating expenses. CFAP funds in great part alleviated the need for farmers to have to come to the bank to borrow more money to help them through 2020. The SBA Paycheck Protection Program has also been an assist to many of our farm accounts with the aid it provided toward farm payroll.” 

 

Eric Fawcett

Eric Fawcett, president, Bippus State Bank, Huntington, Ind.: “Farmers have taken advantage of the CFAP and that has helped offset some of the loss in grain price that agriculture has seen. Obviously, the pandemic has caused widespread supply disruption of agricultural products which has caused certain areas of agriculture to suffer. A good example is the hog and veal industry. With packing plants shutting down due to the virus, this drove the market price of pork and veal down. One area where farmers have benefited is the interest rates for borrowing. The Fed has basically slashed rates to all-time lows, so many farmers have taken advantage of refinancing.” 

 

Ryan Cox

Ryan Cox, vice president/ag banking manager, CBI Bank & Trust, Muscatine, Iowa: “The pandemic continues to have a negative impact on the four main commodities produced in our area, being corn, soybeans, hogs and cattle. The main driver of that is a decline in demand related to the general economic downturn. The delays in both hog and cattle slaughter also impacted area producers. The CFAP program has helped offset some of those financial losses, but probably hasn’t covered all of the losses that are directly related to COVID-19.”  

 

Shan Hanespresident and CEO, Heartland Tri-State Bank, Elkhart, Kan.:Farmers feed the world. So, as a worldwide pandemic swept across the globe, both supply and demand faced many obstacles. We had producers ready to ship cattle to the packer when the packer was forced to close. The cattle price dropped $20/cwt overnight. That change alone caused an unavoidable $200/hd loss for those producers. 

Shan Hanes

Other commodity prices were already at or below breakeven, so there was no margin for error this year. As restaurants closed, demand decreased as well. … CFAP money literally paid bills left over from a lack of wheat harvest, cattle price disruption, and higher expenses due to inability to obtain certain inputs. CFAP allowed farmers to pay bills to local businesses which allowed them to keep their doors open as well. As economists will state, a dollar will turn over eight times in a local community. CFAP dollars saved not only farm producers but also small businesses that supply those farmers and employees of both the farmers and businesses.”



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