It is worse than you think.
A new study seeks to show detail behind COVID-19’s effect on California farms and ranches and finds the damage runs deep.
The report, available online, is produced by Davis-based ERA Economics.
With the first sentence in the executive summary, the report sets the tone: “The impact of the COVID-19 pandemic on California agricultural businesses was severe, unprecedented, and will continue to affect the industry for the coming months and years.”
The 65-page study was commissioned in part by UnitedAg, Ag Association Management Services Inc., the California Fresh Fruit Association, the California Strawberry Commission, the California Tomato Growers Association, Western Plant Health Association, and led by the California Farm Bureau Federation.
According to the report, the state’s agricultural sector has already suffered $2 billion in losses so far.
The study estimated pandemic-related losses to California farms, ranches and agricultural businesses will range between $5.9 billion and $8.6 billion this year. The study showed the greatest dollar-loss impact to dairy, $1.4 billion to $2.3 billion; grapes, $1.5 billion to $1.7 billion; and flowers and nurseries, $660 million to $740 million.
Excerpts from the report
On leafy greens rebound:
“The total annual impact of the COVID-19 pandemic depends on how quickly the food service industry recovers and begins increasing leafy greens purchases. Another wave of the virus and/or shelter-in-place orders would result in additional losses, potentially during harvest in the Central Coast production regions. The other factor affecting impact is consumer purchasing patterns. If consumers continue to purchase nonperishable items and cut back on spending during the recession, this will reduce retail demand for leafy greens.”
On packaging:
“The industry also noted changing consumer preferences for packaging. In recent years consumers and producers have preferred reduced packaging to reduce the environmental footprint; now packaging is viewed as a more hygienic and desirable attribute by consumers. The industry is adjusting to these packaging preferences. At the same time, an erosion in consumer brand loyalty has occurred as consumers are more focused on household staples and put less emphasis on specific name-brand products.”
On ag exports and the outlook
“Agricultural exports are unlikely to return to pre-pandemic levels anytime in the near future for the following reasons. First, the current slowdown in the growth of Asian economies, principally China, is already in evidence. For the first time in three decades China has not established a target growth rate for their 2020 GDP. Europe is the other large market for California produce and their economic outlook is less optimistic than China with a heavy and contentious debt in the EU and high unemployment. A second factor that will dampen the food export environment is the change in attitude towards long supply chains that the pandemic has engendered. Already, there are some comments on the need for greater proportion of homegrown supply to reduce the risk of disruption.”
Resurgence caution
“The third factor which must be considered in conjunction with the projections in this report is the effect of a resurgence of the virus in the fall. If this occurs the projections that represent the annual impact in this study are all moot, and are likely to increase. However, given the current knowledge and the progression of the pandemic coupled with the potential for improved therapy and possible vaccines these estimations of the 12-month impact by food sector are, on balance, the most likely economic outcome for California agriculture.”
