By Dwight Roberts

USRPA President & CEO

During this change in our lifestyles brought upon the world as a result of COVID-19, we are learning and will learn many new habits and activities, some still ahead of us all. We are not accustomed to losing our sense of freedom which may be the reason some people have yet to come to terms with the seriousness of the virus and its effect on any country’s way of life. 

Just over a week ago I drove out to a much more remote area of West Texas to physically escape the initial onset of toilet paper and food panic of the big city. As I followed the news on the internet, social media, email, mobile phone, and television reality set in on where we are all headed, as best we can all understand. 

While driving across ranch and farm land my wife made a good point. “You really learn who and what is essential in this battle against the virus.” It is not about Hollywood movies, movie stars, reality shows, the NBA, March Madness, Major League Baseball, Olympics and so forth. This virus does not discriminate by race or class. The real essentials are doctors, nurses, scientists, first responders of all aspects of health and security, on-line educators and teachers, utility workers, etc., and last but not least farmers and all of agriculture who are producing food. 

This is spring planting time and farmers are either in the fields or in route along with the vital support from the allied agricultural businesses required in order to have food on the supermarket shelves here and abroad. Normally the weather and the market prices are the biggest risks for farmers but today COVID-19 has become a third risk. 

During the past week I have spoken with rice farmers and companies not only in the U.S. but throughout the Western Hemisphere- agriculture is the same everywhere. Farmers and processors are doing the best they can to keep the food supply chain moving. It isn’t easy in any country. I know we will all learn more about ourselves, our country and our world. I only hope that when this ordeal has ended, the world might be a little kinder, a little smarter, a little more honest, a little less polluted with a lot more love of our fellow earth citizens.

Thought you might enjoy this article from Politico where a number of known smart thinkers give their thoughts on the expected new trends ahead of us.

The coronavirus pandemic has taken on a life of its own and has dominated both the news cycles as well as the marketplace for several weeks now. As businesses close their doors in an effort at containment, the rice market continues to move forward as always. A complication in this business-as-usual trend is the inability to get accurate information in a timely fashion. This is injecting additional uncertainty into an already volatile market. Additionally, traditional suppliers and supply chains are being impacted by the closures (both domestically and abroad) which has lead to a constant flux within the industry as a whole. 

Within the traditional market indicators, export sales were significantly increased for the week as compared to last week and the multi-week average. Overseas buyers are anxious to acquire sufficient inventories to cover their markets until new crop harvest, largely in the name of food security. This buying tendency is compounded with the closure of both India and Vietnam over pandemic concerns. Eliminating those sources of rice has sufficiently stimulated the market that many countries are going outside of traditional trading partners in an effort to secure rice in volume. 

Vessel loadings were also much stronger, an indication that not only are sales being made but that shipments are much more prompt than is normally the case. Asian benchmark pricing has generally been stronger over the week, although it has become increasingly more difficult to interpret those numbers. The normal exchange rate matrix is still in place as a price mover, as is the general market fundamentals in Southeast Asia (specifically the Thai drought conditions). With India and Vietnam stepping back from the international scene for an undetermined period of time, other Asian origins will undoubtedly see a much stronger price response over the coming weeks. The impacts of this will be twofold: some degree of panic buying will set in and artificially inflate the pricing in those origins still open for business; and the spread between Asian and U.S. origins will narrow to the point where U.S. will be a much more viable source of rice. 

With a large anticipated new crop domestically, this should translate into a more favorable pricing scenario for the U.S. producer at harvest time. USDA increased its world market price estimate this week moderately, but further increases can realistically be expected in the coming weeks. 

Domestically, growers have been continuing with their operations much has they have done for years. Apprehension is very high regarding the outlook for new crop but fortunately critical inputs such as fertilizer and chemicals have not been significantly disrupted to date. Texas and Louisiana have planting well under way, with some areas already establishing a good stand of rice. The Delta remains wet but growers in those areas still have some time before planting gets behind schedule. The price disparity between inputs and outflows are being well noted by producers who have a difficult time understanding why fuel prices have not fallen apace with the crude oil and why old crop inventories (few though they are) have not increased proportionately price-wise with demand. 

In the futures market, the open contracts on the board have begun to converge more to the market fundamentals and away from the violent moves noted in the financial indices. The spread between new crop and old crop contracts continues to reflect the expectation of stronger acreage, while the price increases in new crop contracts are consistent with a higher anticipated demand at harvest. 

While the market is still at the mercy of its larger cousins, rice has begun to find its own way. There are several important reports to be aware of on the horizon. The first being the Prospective Planting Report, released at the end of the month. This will give the market a first glimpse into the acreage mix for the year and will initiate a market adjustment at that time. The next report of note will be the April WASDE which will incorporate the findings from the planting report and should give the market a better handle on what the projected new crop balance sheet may look like.  

Of course, all attention has been focused on COVID COVID COVID COVID COVID!

DC has issued a temporary closure of the on-site operation of all non-essential businesses and prohibition of larger gatherings of 10 or more people. The Cornerstone office in Washington, D.C. is closed until April 24, 2020 or further notice. USDA has authorized telework for telework-eligible employees beginning on Tuesday, March 17, 2020 through Friday, April 3, 2020.

Up on the Hill, the Senate late Wednesday, March 25, 2020, unanimously passed H.R. 748, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, by a vote of 96-0 after a delay over unemployment insurance benefits in the bill. The $2 trillion spending bill is in response to the coronavirus pandemic and is the largest economic relief legislation in the country's history. The bill encompasses policy proposals ranging from cash for individuals to aid for hospitals to loans for businesses both large and small. The Senate is recessing and will not return until April 20, Majority Leader Mitch McConnell (R-Ky.) announced late Wednesday night.

House Majority Leader Steny Hoyer (D-Md.) said the chamber would consider the measure Friday, March 27 ^th , and President Donald Trump has said he would immediately sign it into law.

The CARES Act includes many provisions focused on agriculture and rural America. USDA had requested $50 billion in spending authority under the Commodity Credit Corp. to cover all the impacts of the COVID-19 pandemic as well as provide a possible new round of Market Facilitation Program payments. The Cares Act/COVID III provides $14 billion to replenish the CCC, plus an additional $9.5 billion to cover pandemic impacts – specifically including livestock, specialty crops and local food systems. Other agriculture/rural America provisions include marketing loan extensions from three months to a full year and an additional $450 million for commodity assistance to food banks.

A more detailed summary of the CARES Act is included below.

USDA has an information and contact webpage available for producers at https://www.usda.gov/ . USDA has been closely following developments in agriculture. On the transportation front, concerned that state and local travel restrictions could disrupt “essential services” such as inspecting meat and grain or delivering commodities, USDA is asking employees and contractors to carry a new federal directive and ID. On the H-2a labor front USDA has information available for producers https://www.farmers.gov/manage/h2a .  

We spoke to farmers from throughout the US this week to see the impact and difficulties in farming during the COVID-19 Pandemic.

Overall, the ag industry seems to have been doing a great job with keeping supply lines and services open and available. Seed, chemical and fertilizer businesses have been working hard to make sure their warehouses are fully stocked and have encouraged their customers to order early and have a supply in storage. In Louisiana, Texas, and Missouri where planting has started, a lot of farmers have made sure their own storehouses are well stocked. There have been no reported delays for seed and chemicals and for the most part everyone feels confident their representatives are staying ahead of the situation. Ag agencies, water suppliers and most of the agricultural community seem to be adapting well, as one farmer said, “it’s business as usual, with the exception of daycare and schools.” 

As far as health safety – rural areas aren’t experiencing the same restrictions as more populated areas but overall, everyone seems to be taking extra precautions. Those with compromised immune systems have stayed home and essential businesses are being proactive in sanitizing and keeping crowds at a minimum, including having a limited number of patrons in stores at one time. 

A potential problem for some farmers might lie in the workforce they rely on during the planting and harvest season. In Louisiana and Texas, crawfish sales have plummeted since the order for social distancing has taken effect but farmers who hired help on H-2a visas still anticipate needing help during harvest. A hard decision to make is whether to send help home now, knowing they won’t be able to come back for the year or keep them on the payroll with not enough work until harvest. Some farmers are looking to hire local help from high school or college students who are home for the semester as well.

Agriculture is the backbone of our economy, and we are thankful for the strong work ethic these families and communities have, bringing food as they say, from farm to our tables.