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Pandemic, trade dominate experts’ agricultural outlook

Issue Date: November 4, 2020
By Dennis Pollock

The COVID-19 pandemic took center stage in a keynote address for the 39th Annual Agribusiness Management Conference, presented online by Fresno State University.

Rural America is now being hit especially hard by the pandemic, said Dan Kowalski, economist and vice president of the CoBank Knowledge Exchange research division. CoBank is a national cooperative bank serving industries across rural America.

"The third wave is here," Kowalski said, adding that the inability by Congress to arrive at an economic relief package could prove troublesome in the weeks ahead.

He said although 51% of jobs lost during the pandemic have been recovered, more than a third of job losses have become permanent and state unemployment benefits are expiring for many.

"Stimulus funds supported the recovery through September," Kowalski said, "but those struggling are now more on their own."

The Coronavirus Aid, Relief, and Economic Security Act, passed by Congress with overwhelming, bipartisan support and signed into law by President Trump in March, provided over $2 trillion in economic relief. But Kowalski said 42% of those stimulus funds have been spent by the recipients; 31% was used to pay down debt and only 27% was saved.

As the holidays approach, Kowalski noted changes in how people are spending their money. For example, less is being spent on going out to dinner, entertainment or travel.

"We're buying more 'stuff' because our activities are restricted," Kowalski said. "We're consuming more goods."

During the holiday season, he said he expects people to buy differently from past years, avoiding purchases such as clothing and spending more on toys, electronics and cookware that can be used in the home.

Kowalski predicted "a really slow" fourth quarter of 2020. If stimulus aid is delayed until the first quarter of 2021, he said the fourth quarter gross domestic product could slump.

He said food inflation remains high: "Increases in grocery prices are moderating, but fast-food prices are still rising."

Kowalski said farm prices have bounced back, and the price index is up 27% since a June low. Although farm income in 2020 will likely be the fifth highest in 50 years, 2021 is a concern, he said, predicting farm income will come down.

He said more than half of payments from the second round of the Coronavirus Food Assistance Program will go to commodities that include corn, soybeans and wheat, and another 28% will go to livestock.

Joining the keynoter for the presentation were speakers who looked at the impacts of the trade dispute with China and the status of the pistachio and fruit businesses.

In assessing the trade dispute with China, Stephen Devadoss, a professor of agricultural and applied economics at Texas Tech University, said China and the U.S. have endured billions of dollars in losses, "clearly illustrating the self-destructive economic consequence of protectionist policies."

He said China loses because the higher prices resulting from the tariffs harm consumers more it helps producers. Meanwhile, the U.S. suffers losses due to lower prices, which hurt producers more than they benefit consumers.

U.S. cotton producers have lost $52.6 million because of Chinese tariffs, Devadoss said, and almond-industry values have dropped by some $68.7 million because of Chinese retaliatory tariffs.

Richard Matoian, president of Fresno-based American Pistachio Growers, said 2020 is expected to be an "on" year in the crop's alternate-bearing cycle, hitting a record 1 billion pounds in California.

He said there has been a decrease in shipments to the European Union due to the lower crop in 2019. Exports to the Middle East and Africa have grown during the past few years; Canada and Mexico remain stable markets.

Despite the trade dispute, Matoian said pistachio exports to China and Hong Kong have fared fairly well, because Iran, a major competitor, had a crop disaster.

Serhat Asci, an assistant professor of agricultural business at Fresno State, described how the California fruit business is faring with challenges in water availability, immigration policies, trade disruptions and employment regulations.

He estimated there has been at least a 2.4% decline in total land dedicated to fruit farming in California. In 2015, research found the fallowing of more than 36,000 acres of orchards and vines, much of that due to long-term drought and declining water allocations.

Implementation of the Sustainable Groundwater Management Act is expected to lead to further declines in harvested acreage for tree fruits and vines in the San Joaquin Valley.

Other challenges include invasive pests, plus employment regulations and rising minimum wages Asci estimated would increase costs for California fruit farmers by $390 million per year.

(Dennis Pollock is a reporter in Fresno. He may be contacted at

Permission for use is granted, however, credit must be made to the California Farm Bureau Federation when reprinting this item.

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