Empty meat cases and grocery store shelves are the first hint most people get that the coronavirus is impacting farmers. Those who guess the laws of supply and demand are in farmers’ favor would be wrong.
COVID-19 is closing processing plants that can’t stop their workers from getting ill. Supply chains cannot switch overnight from getting milk into small cartons for schoolchildren to putting it in plastic jugs for the supermarket. Pork and beef destined for restaurant plates can’t be easily diverted into deli cases.
Nearly all commodity prices are in negative territory from a year ago, with corn down about 20%, cattle more than 30%, milk down more than one-third and hogs at nearly half what they were.
“I’m in the tractor now and just planted 11 acres while we were talking,” Illinois state Rep. Charlie Meier, R-Okawville, said this week. “If I only lose $100 an acre on this corn, it will be a miracle.”
Not planting isn’t an option, because he already locked into seed, fertilizer and chemical contracts before the pandemic. He raises grain and livestock on land farmed by his family for more than 100 years. His grandma in 1905 drove a team of mules to haul the logs for his house and barn.
He also expects to lose money on his cattle. He can usually sell quarters or halves of beef to families and have them processed within a few weeks, but now the soonest processing appointment is nine weeks away and that’s another nine weeks of feed.
But his real sympathy is with the dairy farmers. He never played sports, because there was milking to do for the first 43 years of his life.
“On a dairy farm everything is booked around the cows: weddings, funerals, parties. The cows are part of your family, like a pet. And you treat them that well because that’s your livelihood,” Meier said.
But from his childhood when his and every farm had dairy cattle, to 1985 when there were still nearly 4,000 dairy farms in Illinois, to now with fewer than 800 left and dropping fast, things can only get bleaker as a result of the virus. He said dairy farmers saw years of low milk prices, then had a few months in which they made money before the coronavirus hit, then prices dropped and his neighbors were again losing money.
“Farming is one of the most dangerous professions and has one of the highest suicide rates,” Meier said. “You’re going to see a lot of bankruptcies, just like with small business owners. You have a lot of these folks who inherited what their parents built through tough times for 80 years, and they are proud and can’t lose the family legacy. You’ll see many more bankruptcies if this thing goes into July. And suicides.”
COVID-19 relief through the federal CARES Act includes $16 billion in payments to farmers and $3 billion in commodity purchases for food aid programs. Meier has his doubts that the money will make it past food processors and into the hands of farmers, especially with markets being depressed. He saw the same dynamic with the small business loans, which he said saw 12,000 bars and restaurants applying in Illinois with 700 getting funds – and only one of those in the legislative district he represents.
Illinois Gov. J.B. Pritzker just extended the state lockdown until May 30. Chicago Mayor Lori Lightfoot said it could be well into June.
Meier said Illinois’ economy can’t wait that long. He said a regional approach is needed, meaning what’s happening in cities that are virus hot spots should not dictate what’s happening in rural communities. He noted there are a lot of smart business leaders available to help decide what can open safely, when and how.
But hiking the minimum wage in July and then potentially adding billions in extra progressive state income taxes on Illinois’ more than 100,000 small businesses will make the economic pain even worse.
Illinois Farm Bureau President Richard Guebert opposes the progressive tax for the harm it can do to the state’s 72,000 farms, arguing the only “fair tax” is one that treats everyone the same instead of imposing arbitrary government standards. Meier said the double punch of wage and tax hikes will turn Southern Illinois into a desert of bankrupt farms and shuttered storefronts.
“How are they supposed to pay bills if they are closed and then July 1 pay the higher minimum wage and by-the-way here’s a progressive tax hike. I don’t know where the money’s supposed to come from,” he said.
Farmers have always proven resilient and ultimately will survive the virus and anything state government lobs at them. There just may be fewer of them, with the results visible at a supermarket near you.