The Coronavirus and Potential Impacts on the Agricultural Economy
This update was developed by Dr. Nick Piggott, NC State Extension specialist and professor in Agricultural and Resource Economics.
The impacts of the coronavirus on the U.S. and North Carolina agricultural economies are unfolding and fluid, so it is going to take time for agricultural economists to measure the full impacts. The purpose of this brief is to outline four significant concerns and questions I foresee for the U.S. and North Carolina agricultural economies with what we know presently for policymakers, legislators and decision-makers to consider as they respond to the crisis.
- Farming will likely be unprofitable in 2020 with most commodity prices currently tanking to double-digit percentage losses since the crisis began.
- Can the agricultural supply chain function at capacity given that processing of meats, poultry and produce are labor-intensive, which makes social distancing difficult and means workers could contract and spread the coronavirus, forcing processing plant shutdowns?
- Can the agricultural supply chain transform to support how Americans are now consuming food due to stay-at-home and social distancing rules?
- A significant spike in unemployment and loss of income will shift and change the demand for food. Some Americans will spend less on food due to having less disposable income, and they will change their preferences to less expensive basic foodstuffs for at-home consumption.
In sum, the impact of the novel coronavirus takes the agricultural economy to uncharted waters. The most significant concerns are profitability for farmers, with most commodity prices tanking double-digit percentage points, and the supply chain resiliency to stay online while transforming to support the different way Americans are now consuming food.
Finally, the significant spike in unemployment and loss of income will shift and change the demand for food, influencing the profitability of agriculture at the farm gate. As the situation is fluid and changes are happening daily, other concerns and questions with be forthcoming.