While the coronavirus’ impact to the agriculture, food and rural health care sectors is far-reaching, there may still be more to come. The Council for Agricultural Science and Technology shared these economic impacts in a recently released commentary and webinar led by four contributing authors and economists.
“I’m sure the book is not closed on COVID effects in the row crop sector,” said John Anderson, Ph.D., University of Arkansas Ag Economics and Agribusiness Department chair. “There could be some long-delayed effects as we see this chronic slowdown in demand as harvest volumes start to hit the market later this year. That’s one I think we need to stay tuned to because the major effects of this may be down the road, more related to harvest time.”
The food sector faced early disruptions as consumers’ buying patterns shifted from restaurants to grocery stores.
“There were two demand shocks at the same time going in opposite directions,” explained Jayson Lusk, Ph.D., head of Purdue University’s Ag Economics Department. “There was the near destruction of demand for food away from home, in restaurant, cafeteria settings. And then a corresponding spike, increase in demand in the grocery store setting. And that’s when we saw the peak stock up periods.”
One reason grocery stores could not be easily restocked during the peak lies in the fact that most farm products have to go through processors.
“Those processors, because of capital requirements, sometimes are not easily able to adjust from one supply chain to the other,” noted Lusk. “Or in the case of meat packing, sometimes their workers were affected so they weren’t able to run at full capacity. So, the middle of our food supply chain is more concentrated and caused some of the disruptions we’ve seen.”
While the food and agriculture supply chains have become more consolidated, which has increased efficiency, that is not without challenges.
“The whole shock, the fact that it took three or four weeks for the industry to reincorporate kind of showed to us that the food system wasn’t necessarily as resilient as what we thought,” noted Timothy Richards, Ph.D., Arizona State University Agribusiness chair. “We’ve learned through this process that efficiency doesn’t necessarily mean resilient.”
Rural health care has also not been immune to COVID-19 challenges. Even before the pandemic, 171 rural hospitals across the U.S. have closed since 2005.
“At the end of all of this, those rural communities that cannot maintain a health care system, we can’t expect those places to be competitive economically,” said Alison Davis, Ph.D., University of Kentucky. “We might expect that population will continue to decline, which would further exacerbate the problem.”
The pandemic has further stressed rural health care’s bottom line due to a significant reduction in local tax revenue as businesses were forced to close.
At the end of the day, the greater economic effects and the ability for communities, businesses and families to recover will depend on many factors.
“Overall, the (agriculture) sector should be able to weather this storm barring a return or a resurgence of COVID that compounds the effects we’ve already seen,” concluded Anderson. “That is something that is not out of the question that we need to keep an eye on.”