The effects of COVID-19 will likely keep farm prices under pressure for the entire 2020-21 marketing year, agricultural economists say.

Early estimates indicate a $20 billion drop in farm income due to COVID-19, said John Anderson, chairman of the Department of Agricultural Economics and Agribusiness at the University of Kentucky.

Anderson spoke as part of a panel of economists through the Council for Agricultural Science and Technology, based in Ames, Iowa.

Anderson said it remains to be seen how well $16 billion in federal emergency compensation funding lines up with decreases across ag sectors.

Farm profitability will likely be stressed in 2020, following years of relatively low returns, he said, adding that financing will likely remain available to most producers.

However, subsequent waves of COVID-19 could change the financial picture, Anderson said.

The council released a paper, written by 31 authors, about the economic impacts of COVID-19 on food and agricultural markets, including:

• The supply chain: Fresh produce shippers tend to commit either to the foodservice channel or the retail channel, as packaging, logistics, distributors, contracts and transportation methods can be different.

A demand shock and supply inflexibility created stress in the supply chain, according to the paper.

Timothy Richards, chairman of the school of agribusiness at Arizona State University, foresees a more flexible fresh-produce supply chain in which industry best practices will include fully interoperable packing lines, greater use of technology and more flexible distribution relationships.

• Grocery shopping online versus shopping in stores: “We are now … measured in terms of online penetration rates, where we expected to be in 10 years,” Richards said.

Rural health: The entire emergency health care system was already in crisis even before the quarantine, said Alison Davis, executive director of the Community and Economic Development Initiative of Kentucky, a research center at the University of Kentucky.

Revenues are declining in rural areas where populations and economic bases are declining, leading to shortages of workers, particularly paramedics and emergency medical technicians. This, paired with the opioid crisis, has led to services closing or reducing their hours.

”If a farmer has an accident and it takes twice as long for the ambulance to reach that farm, it greatly increases the risk of death or permanent disability,” Davis said. “If an individual has a stroke and the one ambulance in a rural community is already out for a run in another county, the person will die.”

Both urban and rural hospitals furloughed workers. Urban hospitals have come close to returning to normal capacity, but rural hospitals have not yet, Davis said. Rural areas are beginning to see increased infection rates, she said.

• Row crops: The quarantine caused “unambiguously negative” effects, coming as farmers expected increased demand, particularly with new opportunities in China, Anderson said.

“That’s one I think we need to stay tuned to, because the major effects of this might actually be down the road, more related to harvest time,” he said.

• Livestock: Processing plant disruptions created constraints on livestock harvest, particularly for cattle, which created a backlog in feedlots that will take months to work through, Anderson said.

The 10 largest U.S. packing plants slaughter 63% of all cattle, and the 15 largest packing plants slaughter 59% of all hogs.

“If any one of these plants is closed down for any reason, it’s large enough to have significant disruptions in the entire supply chain, and that’s what we saw,” said Jayson Lusk, agricultural economist at Purdue University.

• Forestry and wood products: Pulp wood demand has surged due to paper demand.

But paper demand is likely to suffer from the shift to at-home work with electronic communications.

The saw timber market took a sharp downturn, with logging crews in the Southeast seeing work reductions ranging from 30% to 60%.

Recovery will depend on the performance of the housing market, Anderson said.

To see the report, go to https://www.cast-science.org/wp-content/uploads/2020/06/QTA2020-3-COVID-Impacts.pdf