Arkansas agriculture producers expected to see a nice recovery in 2020 after a bruising trade war with China, but the COVID-19 pandemic has tested the agricultural business model.
Another wet spring this year has also hampered farmers’ ability to plant their crops.
“For the past couple of years, we have been at the tip of the spear on so many things,” said farmer Derek Haigwood of Newport. “To use the cliche, a rising tide floats all boats. Well, a falling tide sinks all boats also. As it plays out, that instability is what is hard to deal with.”
One agricultural segment significantly suffering from the ripple effects of the pandemic is livestock. Cattle, pigs and chickens are still being raised and fattened, but virus outbreaks in processing plants have dramatically reduced production levels.
And cattle ranchers are finding that the backlog has dropped beef prices as much as 35% from a year ago. Travis Justice, chief economist with the Arkansas Farm Bureau, predicts the pandemic will eventually cost the Arkansas cattle industry $100 million.
Half of America’s beef is processed to sell to restaurants, and when they closed, demand for beef from grocery stores soared. The meatpacking plants, struggling to stay open with workers out with the illness, couldn’t keep up with the supply, so many ranchers found themselves with herds of cattle they couldn’t sell at a profit or even a break-even price.
Ranchers such as Nathan Crouch of Newark decided to try to temporarily store their cattle somewhere in hopes the market would right itself after a short delay. The problem is so many ranchers had the same idea that cattle storage facilities quickly ran out of room.
“The market just totally crashed,” said Crouch, a co-owner of Black River Cattle Co. “Instead of selling them, we thought we would just keep them in the feed yard and kick the can. This thing was bound to blow over in a week or two.
“We kept kicking the can because we thought it would get better. When you get out in the feed yard, the fat lady had already sung at that point. It’s like a chicken coming out of the chicken house: It has to go to the packing house.”
Cattle growth can be managed, but chickens and pigs have a hard deadline for butchering, experts said. When livestock gets too big or too old, the quality of meat drops significantly, as does its value, putting livestock ranchers in a time crunch.
One of the beneficiaries of the upheaval is beef sellers. The huge supply of cattle drove down the prices for ranchers, but the strong demand for grocery-store hamburgers and steaks drove up the prices at the cash register.
Another beneficiary has been independent butchers. Crouch said his mother called him asking for a cow to stock the freezer but her butcher couldn’t fit her into his schedule until the spring of 2021.
Gary Kemper, the manager of Siloam Springs Processing, said he has increased the weekly output from 18 cows and hogs to 30. He doesn’t have any openings for butchering for the next 10 months.
“It’s not just in Arkansas, it’s nationwide; everyone is just booked to the max,” Kemper said. “I’m not trying to run off business but I’m swamped.”
The Arkansas wine industry has also suffered during the pandemic because it bridges categories affected by the business upheaval: agriculture and tourism.
Audrey House, owner of Chateau Aux Arc in Altus, relies on tourism and drive-up traffic to generate approximately 96% of her revenue. April and May are traditionally big months for her, generating as much as $75,000 in revenue in those two months. The pandemic knocked April’s revenue down to $5,000 this year.
State law prohibits House and other wine producers from shipping to customers unless they ordered on-site. She self-distributes her wine to a variety of locations in the state. She said the pandemic’s effects showed the need for federal legislation that would allow wine producers to “service their customers” by allowing, among other things, online ordering and shipping.
“We have an opportunity here to make things right on a federal level, freeing the market for producers like us,” said House, who chairs the Arkansas Wine Producers Council. “We are absolutely going to die on the vine.”
The lack of sales means her storage vats are full of wine from last year’s crop and she can’t spend money she doesn’t have on cultivating her vines for this year’s crop — particularly since there’s no place to store it anyway.
“There is no need for me to spend $35,000 I do not have because I’ve had to close my doors,” House said. “Why do you need to grow fruit when your tanks are full and you can’t open your doors? It makes you reevaluate your business model.”
“We have an opportunity here to make things right on a federal level, freeing the market for producers like us. We are absolutely going to die on the vine.” – Audrey House, owner of Chateau Aux Arc
Haigwood’s family farm devotes 9,000 acres to crops such as soybeans, rice and corn, none of which have been planted yet because of the wet weather. Haigwood said he usually has his crops in the ground by the end of May.
The pandemic’s effects have been felt in crops like these as well. Exports have been slowed by reduced operations at ports because of the virus, and the massive decrease in gas prices pulverized the corn market, which is dependent on ethanol demand.
Haigwood, the director of the United Soybean Board and the past chair of the U.S. Soybean Export Council, said he still hasn’t sold most of his 2019 crop because of falling prices. He has the capacity to store his crop for better times, but not all Arkansas farmers are so fortunate.
“It is so hard to make a decision,” Haigwood said. “If you turn on the news and see what is happening, you will just be scared to death. The weather forecast is against us. The instability of the economy and trade is against us. You just have to do what you know to do.
“The fallout on this is going to have such a long ripple effect. It is something we are going to have to deal with for so long. It’s discouraging.”