Pandemic-related losses to California farms, ranches and agricultural businesses will range between $5.9 billion and $8.6 billion this year, according to an economic study released today. The analysis says the state’s agricultural sector has already suffered $2 billion in losses so far, from disrupted markets and rising production costs related to the COVID-19 outbreak.
Financial impacts of the pandemic vary widely among different parts of the agricultural economy, the study says, depending in part on how much a particular crop or commodity relies on sales to food service and how much it has been affected by shifts in retail demand and changes in costs of production and processing.
Produced by Davis-based ERA Economics, the study was commissioned by a coalition led by the California Farm Bureau Federation and including UnitedAg, Ag Association Management Services Inc., the California Fresh Fruit Association, California Strawberry Commission, California Tomato Growers Association and Western Plant Health Association.
CFBF President Jamie Johansson said the study illustrates the scope of the pandemic’s impact.
“California farmers, ranchers and their employees have continued the essential work needed to keep American families fed, but that work has come with sacrifice,” Johansson said. “The impact is being felt in rural communities throughout the state that rely on agriculture for their residents’ livelihoods. We want legislators and regulators to bear that in mind and avoid making farming even more costly and difficult in California.”
Analysts looked specifically at 15 different agricultural sectors, using data on production, exports and prices through early May, plus interviews and surveys of people and businesses. The study showed the greatest dollar-loss impact to dairy, $1.4 billion to $2.3 billion; grapes, $1.5 billion to $1.7 billion; and flowers and nurseries, $660 million to $740 million.
In addition, the report says farms, ranches and related businesses have incurred higher operating costs for measures intended to increase employee health and safety, and in the logistics required to move crops and commodities to market.
“Along with the loss of key markets due to food service disappearing overnight or flower shops and garden centers not being allowed to operate in certain areas, we now are adapting to significant increased operational costs that many California farmers will never recoup,” said Chris Zanobini, president/CEO of Ag Association Management Services.
Some crops have seen increased business activity during the pandemic, the report says, citing shelf-stable items such as rice, processed tomato products and canned fruit. But in aggregate, the study says, “the losses far outweigh the isolated benefits.”
Abrupt shifts in purchasing patterns in export and domestic markets—prompted by the constriction in restaurant and other food-service sales and a swing to retail purchases for at-home use—have affected farmers, ranchers and agricultural businesses at various points in the supply chain, the study says, ultimately resulting in farm-gate crop price impacts.
“Observing how agriculture is affected will help us orient and decisively act to create a stronger future,” UnitedAg President and CEO Kirti Mutatkar said. “The agricultural industry is not only one of the most necessary industries, but one of the most resilient.”
The full report, titled Economic Impacts of the COVID-19 Pandemic on California Agriculture, may be found at www.cfbf.com/covid-19-study.