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April 2020, Volume 26, Number 2

US: Virus, Trade, Sugar

The coronavirus increased the demand for processed food as consumers stayed home. Beef and cheese prices fell as restaurants closed, and milk prices dropped with school closures. Seven percent of US fluid milk is consumed in school lunch programs, and milk processing plants warned that they may be unable to turn milk into cheese and other products if too many of their employees got sick.

Meanwhile, sales of canned soups, pasta, and frozen foods increased, with firms from Campbell’s to Conagra reporting unprecedented demand. The price of eggs spiked in March from less than $1 per dozen in February 2020 to $3 a dozen in April 2020.

DHS included food and agriculture among the 16 sectors deemed critical to the US economy, along with healthcare, telecommunications, information technology systems, defense, transportation and logistics, energy, water and wastewater, law enforcement, and public works. Farm workers as well as workers employed in firms that produce farm inputs such as seed, equipment and fertilizer, and workers employed to pack, process, and distribute food were deemed critical and exempted from shelter in place orders.

The $2 trillion CARES Act provides $9.5 billion for farmers adversely affected by the virus, and another $14 billion for the Commodity Credit Corporation to buy surplus commodities for distribution to poor residents.

Projections. USDA projections of agriculture through 2029 foresee cash receipts from farm marketings rising from $374 billion in 2019 to $418 billion in 2029. Crops accounted for 53 percent of cash receipts in 2019, and are expected to account for 54 percent in 2029. Net farm income of $92 billion in 2019 is expected to rise to $100 billion in 2029.

The value of fruits and nuts, $30 billion in 2019, is projected to rise to $40 billion in 2029. The value of non-citrus fruits is expected to rise from $17 billion to $22 billion, of tree nuts from $10 billion to $13 billion, and of citrus from $3.5 billion to $4.5 billion. The value of fresh vegetables is projected to rise from $12 billion to $16 billion between 2019 and 2029.

US farmers have assets of $3.1 trillion and debt of $265 billion; most of the assets and debt are for real estate. The ratio of debt to assets is rising slightly to 14 percent as Midwestern farmers grapple with money-losing corn and soybean prices of about $3.60 and $9 a bushel. The US government made $28 billion in 2018-19 in payments to farmers who were harmed by the trade war with China, and bought commodities such as pork when exports fell.

Dairy. Dairy Farmers of America, the largest milk US cooperative with 14,000 members, agreed in February 2020 plans to pay $425 million for 44 milk-processing facilities of bankrupt Dean Foods. Some farmers worry that reduced competition will reduce the price they receive for milk, while others are relieved that DFA will buy their milk.

Americans are eating more dairy products, primarily in the form of yogurt and cheese rather than fluid milk. Per capita fluid milk consumption fell from 24 gallons per person per year in the mid-1990s to 17 gallons in 2018, despite 21 of the 27 US states with an official beverage naming milk. Sales of plant-based milk, almond, oat and soy, are rising as fluid milk sales decline.

One reason some consumers switch to plant-based milk is to reduce greenhouse gas emissions. Beef and dairy cows account for 10 percent of global emissions. Almond milk requires half as much water to produce a gallon as fluid milk, and generates a quarter as much emissions.

Sugar. The world produces 175 million tons of sugar a year, 45 pounds for every man, woman and child. Brazil is the largest producer, and uses 35 percent of its 29 million metric tons for sugar and converts 65 percent to ethanol. India also produces 29 million tons of sugar a year, and consumes almost all of the sugar it produces. The EU is self-sufficient in sugar, producing and consuming about 18 million tons a year.

Thailand produces 14 million tons of sugar a year, China 11 million tons, the US eight million tons, and Mexico six million tons. India consumes 29 million tons of sugar a year, the EU 18 million tons, China 16 million tons, and the US and Brazil, 11 million tons each.

About 30 percent of the world’s sugar, 54 million tons, is exported. Brazil exports 19 million tons a year, followed by Thailand, which exports 12 million tons; Cuba produces 1.4 million tons and exports 600,000 tons. Indonesia imports five million tons of sugar, followed by China’s imports of four million tons, US imports of three million ton, and 2.5 million tons each imported by Bangladesh and Algeria.