Texas’ agricultural losses from pandemic could reach $8 billion
The Agricultural and Food Policy Center at Texas A&M University has released a new report showing the economic impact the COVID-19 pandemic has had on production agriculture in Texas.
Since the beginning of the pandemic many agricultural commodity prices have dropped 20 percent to 30 percent, according to the report. Many Texas producers have already experienced losses, and if prices do not recover soon for livestock and prior to row crop harvest, they could easily see losses in the range of $6 billion to $8 billion – down 27 percent to 36 percent overall.
“Our goal in producing the COVID-19 Economic Impact to Texas Agriculture report was to frame agricultural issues related to the COVID-19 pandemic, as well as provide insights and discussion on how various production agriculture commodities in Texas were affected,” said Joe Outlaw, Texas A&M AgriLife Extension Service agricultural economist and co-director of the center. He is a professor in the Department of Agricultural Economics, College of Agriculture and Life Sciences.
Outlaw said Texas is an important agricultural state, ranking only behind California and Iowa in terms of cash receipts from the sales of agricultural commodities.
“In 2018, those agricultural receipts totaled about $22 billion,” he said.
Some of the factors affecting agricultural production include supply chain issues, labor shortages and instability in agricultural commodities markets, as well as the general change in where people are now spending their food dollars due to COVID-19-related restrictions.
“The COVID-19 pandemic has had a negative impact on the food production and supply and has also exposed many longtime vulnerabilities across the food and agriculture value chain,” said Patrick J. Stover, vice chancellor of Texas A&M AgriLife, dean of the College of Agriculture and Life Sciences and director of Texas A&M AgriLife Research, College Station. “This has had a profound and far-reaching impact on those front-line farmers we depend on to meet our needs for food and nutrition.”
Shutting down schools and restaurants to dine-in customers has led to a dramatic shift in food purchasing and has affected agricultural supply chains for many food products, the report noted. Thus far, the effects have been particularly troublesome for producers of livestock, fruits and vegetables and dairy products, including milk. It also noted many retail clothing outlets around the world have been closed as well, and that has dramatically decreased the demand for cotton, Texas’ largest cash crop.
The Texas agricultural commodities most affected by the COVID-19 pandemic thus far are weaned calves, stocker calves, feeder steers, sheep and goats, fruits and vegetables, and dairy products.
“These commodities are currently selling at substantially lower prices than prior to the pandemic,” Outlaw said. “Agricultural producers marketing products now are losing money, and if this pandemic persists, there may be even greater losses than what we have currently estimated.”
The report notes:
- Row crops such as corn, cotton, wheat, sorghum, rice and soybeans have been especially hard hit.
- If COVID-19 issues persist, Texas fruit and vegetable producers could be left without outlets for their highly perishable products and ultimately could lose over $397 million.
- As the fifth-largest milk-producing state in the United States., the shift from restaurants to grocery store sales has hit the Texas dairy industry especially hard.
- Futures and cash prices of stocker cattle, feeder cattle and calf prices have dropped dramatically as the societal impacts of COVID-19 took hold.
- The federal government has responded with a series of three stimulus or relief acts agricultural producers may benefit from — the most useful likely being the Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act.