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July 2020, Volume 26, Number 3

US Ag, Trade

Covid-19 led to simultaneous shortages of meat and surpluses of milk and eggs in March-April 2020, as closed restaurants and other food service outlets closed, eliminating markets for farmers and processors. There were local efforts to redirect surplus commodities to retailers and the poor, and USDA promised to spend $300 million a month on vegetables, fruit and milk to donate to food banks.

Food supplies returned to normal in May-June 2020. USDA announced several programs to assist farmers, so that net farm income in 2020 may be higher than the $88 billion in 2019. A third of the expected $100 billion in net farm income in 2020 could be federal government support.

About 80 percent of US milk is marketed under 11 Federal Milk Marketing Orders that base farm prices on the final use of the milk, fluid, dry milk products, or butter and cheese. Milk prices reflect the three C?s of commodity, component, and class. Dairy processors report the quantity and value of the dairy products they manufacture, and USDA uses these data to determine the price of fluid milk and milk products. For example, milk used for butter can be valued by the butterfat component of the milk used to make it. Class four milk is used for butter and milk powder.

USDA predicted that farmers would produce 15 billion bushels of corn from 92 million acres, an average of almost 180 bushels an acre.

The closure of restaurants and bars reduced plantings of the hops used in beer. Instead of a record 60,000 acres in 2020, breweries advised growers to plant no more than 55,000 acres of hops. Most hops are grown in Oregon and Washington and sold under long-term contracts to brewers, but 20 to 30 percent of hops are grown without a contracted buyer.