Report: COVID damage to Iowa ag will top $6B per year

The legality of Iowa’s controversial “ag gag” law, designed to block undercover investigations at agricultural facilities, could soon be decided by a federal judge. (Photo by Scott Olson/Getty Images)

An Iowa State University center in a new report estimates that the COVID-19 pandemic will cost Iowa’s largest agricultural industries at least $6.3 billion per year.

Here’s a breakdown of the projected annual losses by the Center for Agricultural and Rural Development

— Ethanol: $2.5 billion

— Hogs: $2.1 billion

— Corn: $788 million

— Fed cattle: $658 million

— Soybeans: $213 million

— Calves and feeder cattle: $34 million

Researchers Dermot Hayes, Chad Hart, Keri Jacobs, Lee Schulz and John Crespi said the situation is evolving and those figures could change. But they are the best assessment they can give now, they said. 

The pandemic has brought an economic disaster that is hard to compare to any threats in history, the authors wrote. “The large scale destruction of farmland and processing facilities in the southern United States during the Civil War and the dust bowl on the Great Plains in the 1930s may be the closest analogies,” the authors noted.

Some of the damages will be addressed by the federal CARES Act, which provides an estimated $49 billion in aid to agriculture.

The report notes that the social distancing needed to contain one of the world’s most threatening pandemics on record has also hurt industries. 

“These policies appear to work in reducing the rate of infection, but they severely curtail economic output and restrict demand,” the authors wrote. “They also force significant changes in the ways people obtain and use basic goods and services.”

For example, biofuels are taking a direct hit from the loss of demand as people stay home, the authors noted. U.S. fuel use per person has hit a 50-year low. The Energy Information Agency predicts demand will continue to fall through the second quarter, the report said. 

There has been related trouble elsewhere. “The idling of some ethanol plants and the slowdown at others not only reduces ethanol production, it also limits the supply of distillers grains, a major livestock feed component. For some livestock producers, this has translated into higher distillers grains prices as supplies are small, and for some producers, no longer available. As distillers grains have disappeared from the feed ration, livestock producers must replace the energy and protein previously provided by distillers grains. Thus, livestock producers are shifting their feed rations to replace distillers grains with other available feed ingredients, typically soybean meal (for protein) and corn (for energy),” the report indicated. That means spending more in some cases.

While U.S. residents typically consume half their food away from home, because of the virus they now have been encouraged to stay home and use limited carryout options. That has left grocery stores with surpluses of some items and shortages of others, the authors noted.

The report notes that despite some questions about price-gouging among food providers, an early look at beef and pork retail prices did not show a significant change after the pandemic hit. The authors plan to continue that assessment with more sophisticated tools as the pandemic continues.