Local farmers worried about long-term effects of lowered prices due to the coronavirus

While concerns over the coronavirus have not yet halted work on farms, farmers across southeast Iowa are concerned about the impact the global pandemic is having on agriculture markets and related industries.

Washington hog farmer Bob McConnell said the recent closing of the Tyson Foods, Inc. plant in Columbus Junction due to a COVID-19 outbreak makes him concerned about what additional packaging-plant closings will do to the livestock industry.

'[The Tyson Plant] is where I sell all my hogs. It hit at a decent time where I don't have a lot of animals going there,” McConnell said about how the closing affected him. The hog farmer explained he was able to shift a load of his livestock to another plant in Waterloo but was asked to drive it up at 1 a.m.

'That's the time they gave me and I have to take it. I have a load next week and don't know where it's going yet,” McConnell added.

Livestock farmers without set contracts with plants rely on plants remaining open to sell and make money. Additional closing would add to downward pressure on prices, McConnell explained.

Currently, there is enough meat in cold storage 'to take care of everything,” McConnell said, but closing down plants would not only mean livestock farmers would be taking a financial hit, it would also mean farmers would have no place to transport their animals.

'Turkey, chicken and hog farmers - you're in a mess if you can't move your stuff,” McConnell said. While he's not sure what that would mean in the long-term, McConnell said the worst case scenario is that farmers would be looking at euthanizing animals for space.

McConnell added April is usually a big contract month for hogs, which usually help farmers cover their risk moving into the next year. The lowered market prices will have long-lasting effects for hog farmers who are trying to make deals.

The hog farmer also explained the futures market, which 'are predictive of what we are going to get paid” and which plants rely on to protect their profits, has dropped a significant amount in the Chicago Mercantile Exchange. The markets are further complicated by the fact that futures and cash prices are not currently in sync.

'It's not quite chaos but it's approaching that. The futures market is not lining up with the cast market and it only has several more days left to come in line and people are really questioning whether that system is going to hold true because we're in such an unusual situation,” McConnell added.

Pat Swanson, who runs a soybean, corn and cattle farm in Ottumwa with her husband, Don, and brother-in-law, Bill, said in addition to the potential of plants and packing facilities temporarily suspending services, market prices for their products is also a major area for concern.

'There's a demand for beef, but prices aren't showing that. They've gone down significantly on cattle right now, which is making us a little nervous,” Swanson said.

Currently, their farm is calving and are hoping to continue feeding their calves until prices improve.

For soybean and corn farmers, being able to sell their product is how they pay for inputs for the following year, Swanson explained.

'Grain prices are very, very low right now compared to what they've been the last few years. Last year, with the trade wars, we had no idea it could get much worse. Farmers are struggling to pay for bills. We're in good shape. We have our seed already delivered to our farm and as soon as the weather turns around, we'll hopefully get in the fields and be able to start planting our corn and produce,” Swanson explained.

The grain farmer also said decrease in demand for other products like ethanol also affect agriculture.

'People aren't driving as much, which brings prices down and can be hard on ethanol plants. We sell our corn to an ethanol plant. If they slow down production because there's no demand, it'll hurt the market even more,” she said. Swanson added that she's heard there are ethanol plants in Iowa 'sitting idle” because there is nowhere for the ethanol to go, meaning processing has halted completely.

Like McConnel and Swanson, Roger Wuthrich, a grain farmer from Bloomfield, who loads up his seed from his dealer every day, said he's concerned about related agriculture industry shutdowns as well.

'We don't stock all of our seed on the farm, which this year, might be the case,” Wuthrich said. Should his dealer close for business, he will have to begin looking for another source for seeds.

'A lot of businesses have closed. To do business with dealers and stuff, those places have changed. You can't just walk in there, you have to take precautions,” he added about doing business with equipment dealers and fertilizer dealers.

But in addition to seeds, the grain farmer is wondering how trucking and shipping will be affected.

'If things quit moving and we can't get grain moved, prices will continue to go down. You can only hold grain for so long,” Wuthrich added.

Still, with all the uncertainty around markets and prices, Wuthrich said his farm 'is full speed ahead.”

'Everything is the same. We're just hoping the prices come back up,” Wuthrich added.