COVID-19 has beaten up on virtually everything, including global trade. But so far, it has landed only a few glancing blows to agriculture.
Numerous factors go into the ups and downs of ag commerce, including supply, demand, production, weather and geopolitical issues. But the movement of U.S. farm goods has fared well this year, with some exceptions.
“For most of the products that we market overseas, COVID really hasn’t had an effect,
except one — ethanol,” said Ryan LeGrand, president and chief executive officer of the U.S. Grains Council. “In the United States and overseas as well, ethanol exports have fallen off.”
Many sectors have been impacted due to the drastic drop-off in automotive traffic. The sharp decrease in demand for gasoline has hurt ethanol demand as well.
“Late spring through early summer, the numbers were down,” LeGrand said.
Despite that, sales of corn are booming.
“If you look at corn exports, we are way ahead of years past,” he said. “We are near record highs for this time of year. Last week’s numbers show that corn sales are at almost 29 million metric tons for the crop year we’re in (beginning Sept. 1). In the same period last year we had less than 11 million tons sold.”
Some grain sales have been affected indirectly. That’s because the sharp increase in shipments of consumer goods from Asia to the United States this fall following various lockdowns are keeping some grains on the Western shores.
The high demand for shipping containers is squeezing out some soybean exports, according to Mike Steenhoek, executive director of the Soy Transportation Coalition. Going into the Christmas season, international freight companies are prioritizing shipment of consumer goods to the United States.
Most soybean products are shipped in bulk, but about 8% exported by the U.S. are transported in containers, and there is a shortage of the metal crates.
“The whole pressure right now is on moving product in these steel rectangles,” Steenhoek said. “Earlier this year we had a real widespread curtailment of global shipping due to the pandemic. As the worldwide economy has rebounded, there has been all this pent-up demand that we’re trying to catch up on now.”
That means more competition for the empty containers after they are unloaded in the United States. Even though the freight companies could refill the containers with soybeans, meal, dried distillers grains and other ag goods bound for Asia, it often isn’t worth it to make a trip to a terminal to load them.
“The owners of the containers, which are ocean carrying companies, say we can’t allow these containers be driven 100 miles away even though we’d make money on that back movement,” Steenhoek said.
“They’d rather just send those back empty because you make almost all your money on the front-haul movement transporting Nike shoes and electronics from Asia to the United States….
“We have been clearly on a transition to e-commerce. This has unexpectedly surged due to COVID. They’re using more steel boxes than before. That has provided additional pressure.” And this time of year always brings a surge of shipping because of the upcoming Christmas season, he said.
The hit to the hospitality industry has hit other grain sales. The closing of bars and restaurants around the world has led to a reduced demand for crops grown by Canadian farmer John Kowalchuk. Kowalchuk discussed his plight during an international video conference on COVID and trade organized by Bayer.
“On my farm we’ve been hearing from different buyers about the reduced use of malt barley because sporting events and bars and restaurants have been shut down,” said Kowalchuk who grows seven different grains in rotation on his central Alberta farm. “I’ve heard only 70% of malt barley will be accepted this year. It’s a shock to us, but expected.”
Heike Axmann, who works in supply chain development at Wageningen University in The Netherlands, said the pandemic is exposing some vulnerabilities.
“Many of our food supply systems are very specialized,” she said at the Bayer event. “Hotels and cafeterias have real difficulties. In the developed world, food supply has been reduced due to sudden border closings. You can imagine that our food system is at risk in the circumstances we are facing.”
Meanwhile, Latin America is holding its own, despite dependence on tourism in many quarters. Manuel Otero, director general of the Inter-American Institute for Cooperation on Agriculture, said in the Bayer meeting that exports over the past six months increased nearly 7% over the same period in 2019.
“With a few exceptions, the countries in our continent have avoided protectionist measures,” Otero said. “At the same time we have promoted inter- regional trade. But we see long-term trends of food insecurity because of COVID-19.”
Transportation systems have held up well to handle rising exports. Significant maintenance and repairs to locks along the Illinois River were completed recently, providing smooth sailing for barges with agricultural and other goods heading to the Port of New Orleans.
“Overall, the bulk rail and barge systems are working very well,” Steenhoek said. “We were worried about storms but they didn’t hit the New Orleans area. We’re having really healthy volumes of exports. Overall, the supply chain is working pretty well.”