COVID crunch

A thriving, sixth-generation beef and grain farm finds itself suddenly thrust into survival mode this spring as COVID-19 cases at processing plants slammed the doors shut on its market.

“We went from an expansion to sheer survival overnight,” said Liz Cresap of her family’s farm in Champaign County in east central Illinois.

Their feedlot operation markets about 700 cattle a year from the farm at White Heath to the packing plants. The problem is they have cattle ready for market now and no processors are taking them, she said April 28.

On the same day, President Donald Trump ordered meat plants to stay open by invoking the Defense Production Act. It is too soon to know what difference this will make for farmers like the Cresaps with cattle ready now.

“It is good news but it will take time for the action to have an effect,” she said adding that the bottleneck will likely still last weeks or months.

The Cresaps bring in calves at 600 to 800 pounds and feed them to between 1,300 and 1,500 pounds.

“My husband (William) is talking to cattle buyers multiple times a day,” Cresap said of the stress to find a place for the cattle. “We have market-ready cattle and no place to go.”

Poultry and swine farmers have had to euthanize their animals with no place to take them.

“You pray for those folks and pray that you never have to do that,” Cresap said.

It’s not only where to market the cattle, it is also a matter of what to feed them.

“There are so many facets you have to worry about,” she said.

Generally their feed comes from distillers dried grains, a byproduct of ethanol production, but ethanol plants have closed or are running at lower capacity as another victim of COVID-19. So the Cresaps are working with a feed consultant to find another feed source and adjust the rations.

Time crunch tightens

The Cresap farm shipped cattle out about two weeks before the pandemic struck processing plants hard.

“It was getting really difficult,” she said, but they had good relationships and got the cattle to market.

Processing is the bottleneck, she said. There are only about four large packers that have all the control.

“We always knew that was a problem,” she said. Now it has been brought to vivid light and something has to be done, she said.

Some smaller livestock operations have been able to provide meat for individual sales. Cresap said they can sell five head that way, but it doesn’t help much when there’s still a few hundred standing in a lot.

The cash flow dilemma is kicking in. Feed costs and other expenses keep coming, but none of the market-ready cattle are bringing in income. Further, there is no room for the next batch of cattle on the farm now.

“There is no playbook for this,” Cresap said.

The Cresaps sold some cattle and shipped on May 1. It will help their cattle and cash flow on the farm. But they sold at $88/cwt. which is at a loss.

“That is better than zero,” she said. “It’s a relief we won’t have to euthanize them.”

Most bids were between $70 to $100/cwt.

Bearing the brunt

“Unfortunately, livestock producers are bearing the full brunt of this,” said University of Illinois agricultural professor Gary Schnitkey. “There isn’t anything I can say that will make this situation any better. We have the perfect case for FSA emergency loans.”

Rich Ritter, senior vice president at Flanagan State Bank in central Illinois, is also hearing heartbreaking stories from farmers knocked off their feet by the current situation.

“I personally believe this is tougher than the 1970s. Tougher than any time in my life,” said Ritter who has been working in ag lending for 35 years.

As their banker, Ritter was working with the Cresap family on their four-year expansion plan, which included new buildings and environmental improvements. Suddenly he is talking to them and other farmers about survival.

“He has told us our operation has always found a way and we will again,” Cresap said.

Corn and soybean growers also have questions about profitability in the current climate, Schnitkey said.

One small change some crop farmers could still make this year is to switch some acres on marginal land from corn to soybeans. It’s not a switch to a more profitable crop, but rather to one that may lose less on that particular acreage, he said.

Some things may change between now and harvest, but Schnitkey said losses are likely for 2019 crops and major losses for 2020 are possible.

“I don’t think the aid coming out of Washington is enough, particularly for livestock,” said Schnitkey.

Ritter said it is essential to know breakeven now. When people figure out their return on investment, they often forget to include family living costs, term payments (on land and equipment) and income tax.

All considered, the five-year average (from 2014 to 2018) cost of production for corn is $3.95/bu., but the average price farmers sell at is $3.52. With the pandemic’s impact, those numbers won’t likely improve soon.

Ritter advises farmers to keep communicating with lenders through this period as they analyze costs and adapt where possible.

Off-farm help

While they worry about processing cattle, planting of soybeans and corn is underway on the Cresap farm. Son, Ben, 16, is helping with the field work and daughter Sarah, 11, is pitching in where she can.

“It has brought us closer together,” Cresap said.

She said they are lucky she has off-farm income, but her part-time job has also been affected by COVID-19. She has worked at the Bellflower Feed Mill for 20 years, most of them with her father before he retired.

But the feed mill, which supplies feed for 4-H projects and show animals, has also been hit by the uncertainty the pandemic has brought. People aren’t buying animals while they wait to see if more county fairs and shows will be canceled.

Still the family perseveres.

“We will be alright. We may just not be where we thought we wanted to be,” she said.

She likens it to driving a car in the dark when the headlights only allow you to see a little way ahead, but you know you will make it to your destination.

“Our faith gets us through,” she said.

Phyllis Coulter is Northern Illinois field editor, writing for Illinois Farmer Today, Iowa Farmer Today and Missouri Farmer Today.