By former USDA Secretary John R. Block.
Let’s start with some good news. Russia, Saudi Arabia, the U.S. and other oil producing countries agreed to cut production by 10% – about 11 million barrels. That should give us a modest lift in fuel prices which should help the price of ethanol and corn. My judgement – don’t expect a big boost until we start driving our cars and flying our planes. Congress has authorized $16 billion in farm aid. President Trump said he is “lighting a fire under USDA to get payments out.” “We are going to be working with small farmers, the cattlemen, all the producers.” That’s the end of the good news.
One of our nation’s priorities is to keep the food flowing but because of the coronavirus we are facing some serious disruptions. Just last Sunday, Smithfield Foods closed down its pork processing plant in Sioux Falls, South Dakota. That plant is no small thing. They employ 3700 workers, processing 130 million food servings per week. They buy pigs from 550 independent farms. Why did they close? They have 300 employees with coronavirus. Producers that send their hogs to Sioux Falls will have to go someplace else now. But other processing plants already have too many pigs. I know because on my farm in Illinois it is getting more difficult to find a timely market. Prices for market pigs have crashed 30% in the last few weeks.
Beef cattle prices took a big dive also. An important beef processing plant in Greeley, Colorado just closed yesterday. The chicken business is facing some of the same problems. We can’t keep the food supply chain moving unless we are able to address the labor supply and that means deal with the virus. I didn’t even mention the thousands of gallons of milk that are being dumped. Schools and restaurants are closed.
I hope we are getting close to the point where we can go back to work. In the EU, Spain, Italy, Austria and Denmark are preparing to start. We took for granted a normal economy that worked. I’m afraid it won’t be normal anytime soon.
John Block was Secretary of the U.S. Department of Agriculture from 1981-1985, where he played a key role in the development of the 1985 Farm Bill. If you would like to review his radio shows going back more than 20 years, just go online to www.johnblockreports.com.
