The full scope of economic impacts of COVID-19 is impossible to predict. For Idaho agricultural industries, however, the impact hits harder at the stock market than it does at the grocery store.
“It’s definitely having an impact on our industry. Our futures markets have taken quite a hit in the last few weeks. We have some limits, as far as the amount of decline you can hit in a day, and we’ve hit that rate pretty drastically for a while,” said Cameron Mulroney, vice president of the Idaho Cattle Association. “We have seen a little surge back here on the futures market in the past few days. The funny thing is, if you go and look at the supermarket, it’s in high demand.”
Stocks have plummeted since COVID-19 hit the U.S. In a matter of weeks, the U.S. surged from fewer than 1,000 cases to more than 40,000. As of March 24, at least 50 cases had been confirmed in the Gem State. Idaho’s biggest industries, most in agriculture, are not trading as well as some might like. However, like with most economic downturns, agriculture is able to weather the storm better than other trade-dependent sectors.
“The guys that are trying to hedge their products through the futures market, it’s affecting them significantly,” Mulroney said. “The live cattle, we haven’t seen as many move. You know, we aren’t taking them to town because we can’t afford to take that hit on them.”
The issue for Idaho cattle is that when they’re sold, there’s a certain price per pound depending on the value of cattle at that time. In the past few weeks, Mulroney said, that value plummeted.
“The guys that are trying to hedge their products through the futures market, it’s affecting them significantly,” he said. “The live cattle, we aren’t seen as many move. You know, we aren’t taking them to town because we can’t afford to take that hit on them. … If you were budgeting, you know, say 65 cents [per pound] on a whole cow and she only brought 50, that’s all part of a guy’s bottom line.”
This doesn’t just create a temporary issue for Idaho ranchers, Mulroney said. That is, in part, because those who sell cattle wholesale often get one paycheck a year from their big sell. If the price per pound is down, that paycheck could be significantly lower.
“It’s going to hurt those guys, there are guys that are already feeling that,” he said.
Live cattle are a bit more forgiving than crops that have a shorter shelf life, but like other agricultural products, they must be harvested at a certain point; and for so many, the infrastructure of the cattle trade depends on the ability to sell at certain points in time.
“Guys just aren’t taking them in because of the price decline. If this is a prolonged scenario, then it could affect more,” he said.
On the other side of Idaho’s bovine trade, dairy is currently stable. Like beef, the demand on the consumer side has stayed constant, even grown, but predicting the impacts to the greater market isn’t possible at this time, said Kristi Spence, the vice president of marketing at Dairy West.
“Some of that is really going to be seen, there’s a little bit of a lag in demand in going overseas,” she said. “We’ll continue to see what the financial implications are for this for dairy farmers.”
Currently, the supply is safe. Plants are producing milk at the levels that it normally would, and the consumer demand for dairy is still there.
“At retail, there’s been an uptick in purchasing, it’s so hard to put it how that plays out long term,” Spence said. “I know a lot of schools are really working hard to deliver meals to kids who need those meals, and milk is a part of that.”
While it’s impossible to foresee the impacts, Spence doesn’t anticipate it affecting milk quality or quantity.
What may explain the fall in stock prices for agriculture is not necessarily tied to consumer need at all; rather, it’s bundled with other commodities in the market.
According to a Bloomberg News report, gasoline futures hit a near all time low, falling 32% with plummeting demand for gasoline on the consumer end. Oil is one of the major commodities that impacts the value of other stocks. If trends continue, at-the-pump prices could drop as low as $1.50 by mid-April, according to the news report.
“Wheat prices are being affected by the overall economic slowdown, you’ve probably followed the price of oil. Oil is one of the primary commodities and it dropped pretty dramatically here a week and a half ago,” said Blaine Jacobson, the executive director of the Idaho Wheat Commission. “A lot of investors, a lot of brokerages have what’s called a basket of commodities. As a key commodity like oil goes down, it drags a lot of other commodities with it.”
For many who work in stock exchange-dependent industries, the sky is falling. That’s not the case for agriculture, Jacobson said. In fact, Idaho just inked one of the biggest trade deals it ever has to ship wheat to China.
The Idaho Wheat Commission announced on March 20 that China had agreed to purchase 12.5 million bushels of red wheat. This is the largest purchase made by China since tarrifs were imposed in 2018 as a retaliation measure.
“You know, agriculture as an industry is in a fortunate position because agriculture goes on despite what is happening in the world around it,” Jacobson said.