Livestock farmers warned to brace for hard times ahead

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Mitigation measures to control the spread of COVID-19 have disrupted normal livestock marketing channels and supply chains, and economists say it will get worse before it gets better.

During a Virginia Farm Bureau Federation Livestock Advisory Committee webinar in May, Michael Nepveux offered a national perspective on livestock markets and meat supply chain issues. Nepveux, an American Farm Bureau Federation economist, said restaurant closings have lowered the demand for livestock products, as Americans normally spend about 54% of their food dollars away from home. Consumer purchases of takeout and fast food have not made up for the loss.

“When you shut down that segment of the economy, of course that will cause a massive adjustment in the system,” Nepveux said, adding that he doesn’t know when people will again feel comfortable dining out. “There’s a lot of uncertainty, and that’s driving a lot of the volatility.”

He said pandemic-related panic buying, reduced packing capacity and labor issues have only intensified economic uncertainty. These combined factors have resulted in lower livestock prices as retail prices increase.

Nepveux warned farmers to brace themselves, and to expect a full-fledged economic recession later this year with a slow recovery.

“Whenever you have a recession, one of the animal proteins that does not fare as well as others is beef,” he said, noting that beef is more expensive than other proteins. This is where consumers typically cut back in hard times.

However, beef and hog slaughter plants are reopening and increasing capacity. This offers some measure of economic relief, as does the $16 billion in assistance for agriculture through the federal Coronavirus Food Assistance Program.

Mike Carpenter, manager of livestock services for the Virginia Department of Agriculture and Consumer Services, discussed Virginia livestock imports, exports and upcoming trends. He said very few livestock markets closed in Virginia, though prices are gyrating. He expressed concern about prices and consumer behavior when the industry catches up on the backlog in the production pipeline.

“That’s looming in the background,” he said. “How will that affect the market?”

         
 

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