by Tiverton 

 

The impact of COVID-19 on the agricultural community has leaked into farm financing. According to economists, the total amount of non-real estate farm loans has been limited. While the total non-real estate loan volumes grew 15 percent since last year, loan volumes were still less than the last three years, and the number of new loans declined.

 

What This Means for Ag Loans: Due to subdued volumes of operating loans, lending has slowed. While some larger loans were distributed (specifically to livestock farms), smaller loan numbers offset the fewer loans of greater sum. 

 

Over the past two decades, loan volumes at the largest banks have trended upward, but the pace of growth has fallen below trend for the past four quarters. This could be due to the risk associated with farm investment or better government financial support.

 

While the pandemic has caused much financial uncertainty for the ag industry, market analysts are hopeful that conditions for some agricultural commodities could improve by the end of the year.

 

Learn More: Ag Lending Update: Fewer Loans Issued to Farmers Limit Lending Activity

The last six months have greatly impacted dairy farms. With shoppers being limited on their milk purchases during the quarantine period and a 50% demand reduction at restaurants, farmers found themselves forced to dump good milk. About 10% of the milk produced had nowhere to be delivered, causing farmers to discard excess productions and cut their losses.

The Loss: According to New York dairy farmer Chris Noble, the price of milk before the effects of COVID-19 was around $18 to $20 per hundredweight. During the peak of the pandemic, prices dropped to about $10 to $11. CEO of International Dairy Foods Association (IDFA) Michael Dykes says that the dairy industry saw a $10 billion loss. The price of milk has since come up, though the industry has not fully recovered.

The Rebuilding: Thanks to federal stimulus funds, many dairy farmers received helpful aid during their profit losses. Some states have also provided additional programs to reimburse farmers for dumped milk. Some processors began delivering milk directly to retailers instead of restaurants, helping to increase their sales. Now, dairy farmers are seeing a 10% increase in retail sales as more people are home more often, increasing the retail demand for milk.

The dairy industry continues to face uncertainty with many restaurants still shut down or not at full capacity. Farmers are hopeful as prices increase, remaining positive and actively pursuing new ways to thrive.

Learn More: From Dumping Dairy to Improved Prices, How Dairy Produced a Rapid Recovery from COVID-19

by Tiverton 

Farmers are growing more concerned about their market access as a result of COVID-19 than their financial situation, a Purdue University poll shows. 45 percent of producers said their ability to network and connect with the ag community is the primary concern after COVID — a percentage which increased from August to September.

 

What’s Been Impacted: The ability for farmers to connect with other producers and agricultural professionals has been altered due to the pandemic. This prohibition on traditional networking has caused the ag community to resort to digital presentations, though producers have shown little interest in a remote format thus far. Producers have expressed that a lack of interaction with other attendees is one key downfall of webinars.

 

How Farmers are Responding: Though few farmers have been interested in virtual farm shows and online networking events up until now, a growing number of farmers have agreed to trying these marketing methods going forward. Originally, only 1 in 5 respondents of the Purdue poll attended a virtual conference, but as the culture has adapted to the requirements of a pandemic, so will farmers. Now, 44% of ag professionals say they are interested in online sessions for the upcoming seasons.

Learn More: With Harvest at Hand, Farmers’ Coronavirus Thoughts Turn to Marketing