The beef cattle market has collapsed in the past two months. Milk demand is threatened by school closures. Pork prices remain stubbornly low.
The coronavirus pandemic is, unsurprisingly, hurting farmers too.
“You know what’s happened to the stock market. Cattle market’s the same,” said Tom Revier of Revier Cattle Co. near Olivia, Minn. “It’s like catching falling knives.”
Beef prices had rallied thanks to surging demand in China after swine fever devastated that country’s hog population, but the rally ended with the coronavirus outbreak. Prices are down 21% over the past two months.
Revier Cattle Co. near Olivia has been shipping some 400 cows to market each week since November but not replacing them as usual. The farm, which finishes Black Angus cattle for its own branded beef, is running about half capacity.
“When the coronavirus started, you started hearing rumblings of that, we were still buying some cattle, but we got pretty worried when it started hitting here, so we backed off bringing cattle in from out west,” Revier said. “We’ll leave them out west and then bring them in when the market clears.”
Declining beef prices are also a problem for dairy farmers, said Lucas Sjostrom, executive director of Minnesota Milk, since 10% of their income comes from selling old dairy cows for meat.
Milk prices also had rallied toward the end of 2019, but have dropped almost 20% since mid-December.
Now dairy farmers face the prospect of school closures eating into demand for milk — schools account for 8% of milk demand — and exports slowed by “backups at ports all over the world,” Sjostrom said.
“A 100-cow dairy, for example, in the middle of January might have expected, after family living, a profit of $25,000 to $30,000. Now we’re back down to levels where they will probably be not even close to making a family living,” he said. “That’s what’s changed in a month and a half.”
Pork producers haven’t been hit has hard by the coronavirus, with prices sitting about where they have for the past six months. But spring is the time of year when prices typically start to rise, said Dave Preisler, executive director of the Minnesota Pork Producers Association, and prices are not rising.
“Hog prices in China are about six times what they are here, so the demand is strong for pork. It’s just the disruptions in people movement and the whole supply chain being disrupted,” Preisler said.
He pointed out that it’s tough to predict how agricultural businesses will be affected by coronavirus. Food, after all, is not a discretionary expense.
“People still need to eat,” Preisler said. “Even if you’re going to your freezer in the basement, at some point that needs to be replenished.”