COVID-19 has North American farmers worried so they are asking their respective federal governments for cash.
Almost three-quarters of farmers taking part in recent surveys in Saskatchewan and the United States said they fear the pandemic will hurt their incomes.
“Farmers need cash to be able to get their crop in the ground this spring, and after the brutal last couple of years we’ve dealt with, reduced cash flow could really break people,” Todd Lewis, president of the Agricultural Producers Association (APAS), said in a news release April 6. “So far, the government’s COVID-19 support to farmers has been to increase our access to loans, but going into even more debt isn’t the answer. Just look south of the border, where agriculture has received huge subsidies for years. Canadian farmers can’t compete with that, especially not during a global crisis like this. If agriculture is essential for the Canadian economy, it’s time for governments to directly invest in our farmers.”
APAS is running a weekly online survey to track how COVID-19 is affecting farmers.
More than 70 per cent of farmers who responded to APAS’s survey said they expected the crisis to result in reduced commodity prices, lower revenue, and reduced cash flow.
Close to half expect they may not be able to pay their bills.
Fifty-three per cent indicated they needed help now with cash flow.
Seventy-four per cent of respondents to Purdue University’s March Ag Economy Barometer survey said they were either “fairly worried” (34 per cent) or “very worried” (40 per cent) about COVID-19’s impact on their farm’s profits in 2020.
Why it matters: Lower earnings the last few years, followed by ‘the harvest from hell’ last fall were already weighing on farmers. And farmers fear COVID-19 could hurt them too.
COVID-19 hasn’t had a big impact on most Canadian farmers yet, J.P. Gervais, FCC’s chief agricultural economist, told reporters during a telephone news conference April 3.
Exceptions include cattle and corn prices. However, many Canadian farmers have seen lower revenues the past couple of years, trade disruptions, disappointing yields in 2019, a difficult harvest last fall and delayed grain shipments by rail earlier this crop year.
But there’s still room for optimism, especially if farmers harvest a good crop.
“To me it’s not out of the question from a pricing standpoint that we have a good year,” Gervais said.
But Gervais also agrees COVID-19 causes a lot of uncertainty and price volatility. His advice? Lock in prices when possible and make use of business risk management programs.
Cash flow will be important for many, he said. Last month the federal government announced 2018 cash advances would be deferred six months and FCC would have $5 billion more to help farmers with cash flow this spring for inputs and loan deferrals.
“The COVID situation is just another log on the fire so to speak, another straw that breaks the camel’s back,” Lewis said.
“Where there is uncertainty you just naturally think there’s going to be wa drop in prices.”
What is real is the billions of dollars in government subsidies to American farmers to offset lower commodities prices due to the U.S.-China trade war, Lewis said. Those subsidies undermine world prices and hurt Canadian farmers, he said.
American farmers are set to get billions more. Congress has budgeted $23.3 billion to compensate American agriculture in COVID-19 compensation. It’s part of the U.S. government’s US$2-trillion coronavirus aid program.
“I think we do need a cash injection similar to what our United States neighbours have been getting,” Lewis said. “It’s getting pretty hard to compete against our American counterparts on things like machinery (at auctions). We’re fighting with a 70-cent dollar… A lot of good equipment is leaving Canada and going down to the United States.”
Meanwhile, China has dramatically cut Canadian canola imports since March 2019. It’s widely believed the move is aimed at punishing Canada for its December 2018 arrest of Meng Wanzhou, vice-president of Chinese technology firm Huawei, at the United States’ request.
“Canada and the rest of the economy has traded merrily away with China and canola producers have borne the brunt of it,” Lewis said.
The APAS survey showed farmers have lots of other worries.
Forty-five per cent of respondents reported a delay in the delivery and sale of farm production — mostly when delivering to elevators and feedlots because of new physical distancing rules.
Livestock farmers are concerned about fewer buyers at livestock auctions and reduced on-farm purchases of breeding stock.
Seventy-one per cent of respondents expect future delays in sales and deliveries.
“Producers are anticipating increasing issues in the supply chain as more workers are unable to work because of the virus, and as commodity prices decline, making it uneconomical to continue the movement of product,” APAS said on its website.
“We haven’t seen that yet,” Lewis said. “I think probably more inputs are on farm this time of year than there has been in previous years because farmers just want to physically have their hands on the product. That’s good news. We really haven’t heard many complaints from retailers or farmers of real shortage.”
Since people need to eat, Lewis hopes Canadian food exports will continue. Canada’s strong reputation for food quality should help keep borders open, he said.
In the meantime, farmers need to help fight COVID-19, Lewis said. That means physically distancing when interacting with suppliers and buyers.
“We always talk about ‘science based’ when it comes to farm chemicals and food, so just listen to what the scientists and doctors are telling us and follow those rules. It’s serious.”