Federal assistance allowed most farmers to emerge from the year relatively unscathed
By Chris Lamphere
Cadillac News
LeROY, Mich. (AP) — With 2020 in the rearview mirror, farmers throughout the country are feeling an anxious mixture of optimism, uncertainty, apprehension and relief heading into 2021.
The one-two punch of the COVID-19 crisis and ongoing international trade disputes crippled commodity markets and left many farmers in an extremely vulnerable position. Fortunately, assistance from the federal government allowed most farmers to emerge from the year relatively unscathed, the Cadillac News reports.
“The government money helped a lot,” said Amy Martin, whose family runs a 1,500-acre, 450-cow dairy farm near LeRoy called Gingrinch Meadows. “The virus darn near put us all out of business.”
At the beginning of 2020, Martin said dairy prices were on the rebound, rising to around $16 per hundred-weight, which is about break-even for the farm’s bottom line but still significantly better than what they had been dealing with the previous several years.
When the coronavirus reached the states, however, demand for commodities such as milk and beef plummeted as restaurants, schools and factories closed overnight. Dairy prices dropped to around $10-$11 per hundred-weight.
“And we had nothing to pull from our reserves to cover this emergency because we had been draining our reserves for the past two or three years,” Martin said. “We all were in that situation. The direct payments brought us all back to break even — just enough to survive. It would have been a pretty big crisis if they didn’t.”
If it hadn’t been for the assistance, Martin said it’s likely they would have had to either close down or take out a sizeable loan to remain in business.
Osceola County beef cattle farmer Jerry Lindquist said what made 2020 all the more difficult for farmers to deal with was its sheer unpredictability.
“There was no clear cut direction,” said Lindquist, who is secretary of the Michigan Forage Council. “Changes (in market dynamics) that usually happen in the span of two or three years were happening in two or three months ... it had an impact on all markets and all crops.”
Lindquist said weather conditions were mercifully dull in 2020, seesawing between too wet and too dry, and ultimately resulting a “mixed-bag” year with average crop yields for most major crops, including grain, hay and soybeans.
Even with the cooperation of Mother Nature, however, Lindquist said farmers would have been “hurt significantly” if not for the assistance from the government when markets bottomed out.
The Associated press reports that farmers are expected to receive $46.5 billion from the government, the largest direct-to-farm payment ever. That includes $32.4 billion in assistance through coronavirus pandemic relief food assistance and Paycheck Protection Program payments to farmers.
Additional support comes from more traditional revenue loss programs due to low commodity prices, compensation for trade disruptions resulting from tariff battles and conservation programs assistance. Federal court bankruptcy data indicates 433 U.S. farms filed for reorganization as of Sept. 30, down from 454 during the same period the previous year. Overall, net farm income in the United States is expected to increase 43% from 2019 to $119.6 billion, the USDA estimated. Farmers will see the highest level of net farm income, a broad measure of profitability, since 2013, the agency said.
While markets aren’t looking great compared to this time last year, Lindquist said they’re showing signs of rebound and many farmers are optimistic about 2021.
Other farmers, including Martin, aren’t so sure that this year will much better than 2020.
“I just have no idea what to expect,” Martin said. “But I think it’s going to be a tough year no matter what. Everything is so shaky right now.”
Michigan Farm Bureau notes that there are several key issues in 2021 that farmers and the general public should keep their eyes on.
— Government payments are likely to tumble from 2020 records but remain historically high. Commodity prices are starting the year off on a good note, but keep an eye on expenses, which are likely to rise as well.
— In recent months, anecdotal observations of farmland values and cash rental rates suggest “bidding up’ activity is already underway. How will this affect farmland value and rents moving forward?
— While it took until late summer to materialize, China has returned as a major buyer of U.S. agriculture goods. While certainly good news, the question on everyone’s mind for 2021 is “What’s next?’ Phase 1 was signed as a stepping stone toward a more comprehensive agreement. Of course, COVID-19 pushed trade negotiations to the backburner, and now there is a new administration.
— For at least the first six months of 2021, COVID-19 cases and the progress will be front-of-mind. Will cases surge such that more social distancing efforts are necessary? Will the vaccinations provide coverage, leading to fewer cases and more economic and social activity in time for summer?
— The progression COVID019 will be telling in how the economy starts to recover. Later in 2021, the longer-term effects will start to be evident. What consumer patterns have shifted more permanently? What businesses will close for good? How many companies will continue to work remotely?
— Prevented planting has been the other big factor that limited U.S. production in 2019 and 2020. Heading into 2021, all eyes will be on spring planting conditions and the tight ending stock situations. While the market will likely incentivize producers to plant, Mother Nature bats last and is not swayed by the markets. If U.S. (or global) production appears to falter, markets will likely send prices significantly higher to ration demand.
— Present La Nina conditions prevail, but will they hang around into the summer growing seasons? It’s no secret that dry and drought conditions persist throughout much of the Great Plains, and even into the traditional Corn Belt. How will this translate into 2021 production? It’s (probably) way too early to tell.
— With a new administration in the White House and the Senate majority coming down to the vice president breaking any ties, how will the new landscape alter the priorities in D.C. in 2021?
— A year like 2020 seemed to turn the dial down on global tensions, especially in the hotspots of Iran and North Korea. As the world potentially emerges from COVID and economic contractions, will global tensions rebuild?
