Impact of COVID-19 on Agriculture

Misleading Report, or Maybe April Fools’

Market Intel / April 2, 2020

The ADP Employment Report for March, released April 1, indicated employment was down by a mere 27,000 jobs. That would be unbelievable even on a day we weren’t expecting to be fooled.   Instead, we’re bracing for 3.5 million people  to apply for unemployment benefits for the week ending March 28, after 3.3 million filed the week earlier.

ADP collects their data as of the 15th of the month. As recently as March 15, there were only 3,000 confirmed COVID-19 cases in the United States. Even nine days later, the president was calling for the country to re-open by Easter. Now, a little more than a week after that, we are adding over 20,000 new cases a day.

The March employment report released by the Bureau of Labor Statistics will come out later this week. As we talked about in last month’s Market Intel on that report, the data for all BLS employment reports are collected the week of the 12th of the month, so don’t be surprised if the BLS report also shows limited employment declines.

Clearly, the data is not keeping up with current conditions. Unemployment claims, a more timely source, show we have lost at least 6 million jobs since the middle of March, and we’ll quite probably lose many more over the next few weeks.

If anything, these reports indicate how fast conditions are shifting under our feet. It won’t be until we get the April employment report – and all the unemployment claims data between now and then – that we will begin to understand the magnitude of the hit we are taking.

Contact:
Bob Young
President
Agricultural Prospects
bob@agriculturalprospects.com
 

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In March, USDA announced more than $12 billion for the Pandemic Assistance for Producers program that expanded assistance to farmers and ranchers who previously did not qualify for COVID-19 aid and added additional funds for those who needed it. This was appropriated to USDA as part of the $900 billion Consolidated Appropriations Act passed at the end of 2020. Implementation Imminent On June 15, a USDA update indicated that the required rule-making for $6 billion of the funds has been completed and implementation of the associated programs will occur in the next 60 days. The funding is not new money and is part of discretionary funding dedicated to USDA from the 2020 Consolidated Appropriations Act. This money will be associated with new or modified existing programs; specific details about how the money will be distributed are still not available. These programs largely target the gaps created for producers who were left out of previous rounds of assistance.

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High meat prices are certainly raising eyebrows in grocery stores and restaurants and around family dinner tables. The biggest culprit here is robust beef and pork demand, which is pushing wholesale beef and pork prices to historic levels.

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