The coronavirus pandemic’s perfect storm of consumer restrictions and impacts on staffing at processing plants have led to dramatic impacts in many corners of the Delaware farm industry.
As restaurants, schools, large employers and event venues either voluntarily closed or were forced to by the state, food processors were left without consumers for bulk-sized products and the challenge of potentially converting processing lines to home-consumer-sized products overnight.
Meanwhile, processers have also been hit by declining workforces, as workers are either infected by the virus, quarantined out of precaution, forced to stay home to care for children or other dependents affected by the state’s closures, and some just scared to go into higher-risk workplaces.
With fewer workers to process crops and animals and fewer production lines capable of creating the needed size of products, Delaware farmers are often left with hard choices of what to do with their cultivated bounties.
Poultry industry hit by virus
The Delmarva region’s poultry industry employs more than 20,000 people and produces an economic impact of more than $3 billion, but as the coronavirus has spreads quickly in its Sussex County base, the industry has seen troubles.
Major employers like Perdue and Mountaire Farms have reported positive COVID-19 cases in their facilities and both, along with Allen Harim, are working with the state to test their workforces closely. The consequence of those concerns, and otherwise unrelated societal impacts such as parents being forced to stay home to care for children out of school or child care, have depleted workforces in poultry plants.
At the same time, the closure of restaurants and other large commercial consumers forced processing to virtually shut down bulk packaging of chicken. Processing was converted to home-sizing when able, but many plants have not changed over due to the associated cost and uncertainty surrounding the length of the lockdown.
“This was a dramatic change that came in just a matter of days and companies have had to adjust,” said Holly Porter, executive director of Delmarva Poultry Industry, an industry association.
Recently, Allen Harim informed its contract poultry farmers that its plant workforce has fallen to 50% of its normal operations amid the pandemic’s impact.
While it reportedly tried to reduce the number of eggs set, that move won’t yield lower chicken totals until May. With not enough workers to process chickens at its Sussex County plants and chicken houses full of tens of thousands of growing chickens, Allen Harim notified its farmers that it would begin “depopulating flocks,” or slaughtering the chickens without processing them for consumption.
The depopulation totaled nearly 2 million chickens, for which the farmers were “fairly compensated,” according to an April 8 letter from the company posted on social media.
Although the poultry industry is used to depopulating to prevent outbreaks of avian flu among its flocks, the current scenario of healthy birds grown to size but without an avenue to market has forced companies into uncharted territory, Porter said.
“These are extraordinary times that are calling for some of the last ditch, most extraordinary measures,” she added.
Porter noted that many of Delaware’s poultry companies are trying to rebolster their workforces by offering incentives like expanded paid sick leave, hourly wage increases and even free chicken to take home. They have also increased safety precautions, including frequent cleaning, distribution of personal protective equipment and even erecting plastic barriers between employees.
“All of them are hiring, and they’re streamlining their hiring processes with many of them doing the interviews by phone,” she noted.
As processing of birds slows at plants, however, the national weighted average price for boilers, or chickens grown for consumption rather than egg laying, has fallen to 50 cents a pound, as of April 17, according to the U.S. Department of Agriculture. That’s about half of the weighted average from a year ago, and the USDA now expects estimated broiler production volumes to fall over 2020 as well.
Crop farmers face falling prices
Although Delaware’s two largest cash crops, corn and soybeans, have largely been able to avoid the fate that some other vegetables have across the country because their planting seasons are just getting underway, crop farmers have not avoided the financial strain.
Richard Wilkins, president of the Delaware Farm Bureau, noted that farmers who hold onto harvested grains to sell throughout the year are facing falling commodity prices among decreased demand and pent up supply. As of April 22, corn was selling at $3.18 per bushel, down roughly 20% from the start of the year, while soybean was down about 11% to $8.35 per bushel.
Corn’s commodity price is impacted in part by falling oil prices amid declining transportation in the pandemic as it is made into ethanol, and by declining human and animal consumption, Wilkins said.
“It’s really not a good situation for any of our farmers to be contending with,” he said, noting farmers still looking to sell 2019’s crop have to weigh the risk of holding off until prices rise, potentially risking greater losses in the meantime.
Like poultry, the state’s vegetable crop has also been impacted by processing issues related to a shortage in home-consumption–sized cans, Wilkins said.
“They’ve got equipment sitting idle that normally would have been used to make bigger cans, and then trying to run at full speed the other equipment to try to keep up with demand for smaller cans,” he said.
Some of Delaware’s smaller crops, primarily strawberries and asparagus, have also been affected by the closure of farmers markets, Wilkins said, noting there is some rising criticism of why such markets are closed while grocery stores are open amid the pandemic. Farmers of those perishable fruits and vegetables have had to quickly coordinate with those offering farm-to-table curbside sales, but Wilkins said that demand likely won’t exhaust all the supply.
“These farmers are very nervous. They don’t know what to do,” he said.
–By Jacob Owens
jowens@delawarebusinesstimes.com
