These are uneven, unprecedented times. Social distancing for me is pretty easy as I farm alone. However, when people do show up it still seems so strange to make sure I keep 2 metres away. As we move ahead, trying to flatten the curve, our world is reeling from so many things, we never thought possible. What is up is now down or vice versa. Assumptions change constantly as they should with an invisible enemy that has killed over 16,000 Americans and 504 Canadians. Needless to say, the death projections are much higher going forward.
It is difficult on the farm, much more than I expected, and it mainly has to do with our food supply system. In the old days (pre Covid), there was always the assumption that food demand was the great constant. How many times have you heard a farmer say, people have to eat, so the world will always need farmers. However, when Covid-19 struck, we are seeing lineups at grocery stores, some empty shelves and a huge shift in consumer demand away from food consumed away from home. Add in the problems in the energy market and you’ve got agricultural commodity cash marketplaces jostled in ways we have never seen before.
In the last week, we’ve all witnessed Ontario milk being dumped unable to move into the food service market which has faced cratering demand as consumers stay home. This is happening everywhere across the great North American farm belt. Then there are food processing plants stuttering or shutting down all together because food processing workers are falling victim to Covid-19. Processing plants across the United States are faltering, creating even more supply anxiety as animals need to go to market, just like the milk. However, it’s not happening in any seamless fashion. The turnip wagon has been turned over.
Demand has shifted violently from the food service and restaurant market back to the home market. For instance, retail milk demand is way up, but milk for food service has cratered. The system cannot shift fast enough, as milk can only be stored so long and needs to be pasteurized, etc., etc. Ditto to some extent for beef, pork and the livestock sector as a whole. Consumers lining up in single file 2 metres apart, creates big lines, which are back up right into the barns and fields of North America.
Corn prices have been whacked pretty good and the outlook is somewhat like the dance band on the Titanic. Last week the USDA predicted US corn plantings to come in this year at 97 million acres. Today, the USDA released their latest WASDE report, which showed a drop-in corn usage of 375 million bushels into ethanol. Increased feed demand helped to some extent as it was increased by 150 million bushels. However, with these Covid forces unleashed combined with those big acres, corn ending stocks could easily push over 3 billion bushels in 2020/21. I think when I hit the fields tomorrow, I’ll just keep running.
A vaccine for Covid-19 would help. We could then all line up and our world would be better. We could probably jump start the economy the next day and better days would be here again. However, as all of you know, it’s not so easy. Our non-farm economy has cratered and there is no road map ahead. Trillion- and billion-dollar stimuluses from the US and Canadian government will certainly help. Central banks are printing money like crazy.
Canada’s economy lost more than a million jobs in March; a staggering figure compared to what was expected. This doesn’t take into account people who had no paid hours but were still considered to be employed. More than 17 million Americans have filed for unemployment benefits over the last four weeks. Meanwhile, money is flowing from both federal governments to pay the rent and put food on the table for many people in North America. On January 1st, 2020, we could have never imagined. The rate of change has been at lightening speed.
Back on Ontario farms, our world is harder. That’s true whether you have to dump milk, or you can’t get parts, or you are not washing your hands enough. We are essential workers as farmers working with other essential workers to produce food in an upended marketplace. Everything is not going swimmingly, especially in our food supply chain network. Getting the food from farm gate to food plate is breaking down. Government politicians are up to their forehead trying to give strategies to Canadians to stay alive.
That likely will be the hardest part, finding a way to avoid the Covid-19. Needless to say, we’re walking thru some dark times now. We had a poultry food processing plant close down last week near Brampton Ontario. Where do you think those chickens earmarked for there are going? It’s hard to believe. Food demand is changing in ways we could have never envisioned. Our government says it’ll be like this till summer and likely into next year. If that’s the case, the Canadian cheap food policy will need a little bit of attention. It’s breaking down as we know it and it is happening in real time.