ASTA's Virtual Policy & Leadership Development Conference Starts With An Economic Outlook Of The Seed Industry Session

Alexandria, VA (May 19, 2020) – The first session of the American Seed Trade Association’s (ASTA) Virtual Policy & Leadership Development Conference was held May 19 featuring presentations about the economic outlook of the seed industry.

American Farm Bureau Federation Chief Economist John Newton spoke about the impact the coronavirus pandemic is having on agriculture and the farm economy and what has been done since early March to help farmers across the country.

“We’ve been engaged since the beginning with all the various challenges that have impacted agricultural producers,” Newton says. “Since that point in time, our challenges have been significant.”

Farm labor. One of the first issues that arose was related to visas and ensuring producers have access to farm labor, Netwon says.

“We want to make sure farmers have access to an adequate supply of labor as they harvest winter crops and plant spring crops,” he says.

Economic impact. Newton says the agricultural sector had already been trying to rebound from a multi-year downturn in the farm economy prior to the start of the coronavirus pandemic. He thinks progress was being made, particularly related to several key trade issues.

“We thought we had been rounding third base and coming into home in terms of restoring lost demand in our export markets,” Newton says. “We knew we would have a large crop in 2020 with acres that were lost last year coming back online. At the outset of 2020, we thought it would be a race between supply and demand with commodity prices turning the corner.”

While the current economic downturn has been severe and difficult, Newton points out it is still very different than what was experienced during the 1980s. Net cash income, for example, he notes was down 45% over 8 years in the 1980s, while it is currently down 29%.

Newton says stronger land values and historically low interest rates have helped the current situation from being worse.

“In mid-March, the world changed as coronavirus cases accelerated and peaked in early April,” Newton says. “We have flattened the curve to some extent, but we’re still seeing a spike in new cases across the country. That has impacted agriculture.”

Impact on Crops

In addition to discussing the impact of the coronavirus on the restaurant and livestock industry, Newton says cotton and corn producers have seen some impacts.

Cotton sales. Newton notes in-store clothing sales fell 90% between February and April, impacting the cotton industry, while online sales have remained robust.

“We have seen the impact of stay at home for demand on many products,” he says. “In-store sales have declined quite dramatically.”

Ethanol demand. Corn producers have also been impacted as Newton explains stay at home orders have impacted the demand for gasoline, resulting in a sharp drop in ethanol prices. With the drop, he says ethanol plants have either idled capacity or closed.

“We need to see driving pick back up,” Newton says. “We are still several weeks, if not months, away from seeing ethanol demand back to where it was. The impact of the decline in ethanol demand has really hit corn hard. When 30-40% of the corn crop is chewed up by ethanol every year and when you take processing capacity offline and demand for corn falls, it becomes concerning.”

Reopening Businesses

As businesses start to reopen, Newton says worker safety is critically important.

“We have to take it slow,” Newton says. “Haste in reopening the economy and doing things too fast can be risky until there is a vaccine.”

Following Newton’s presentation, Seth Meyer, associate director of the Food & Agricultural Policy Research Institute (FAPRI) at the University of Missouri, discussed the impact of COVID-19 on the farm economy, including issues such as farm income, cash receipts, and commodity prices.

Meyer says uncertainty in the farm economy is likely to continue, particularly related to trade and food purchases.

“The length and breadth of COVID impacts will tip the scales,” Meyer says. “It’s a difficult spot for demand the rest of the year.”

Upcoming Sessions

A series of weekly sessions are being held online through July 16 after the ASTA's conference that was to be held in June in Indianapolis, IN was canceled due to the COVID-19 crisis, says session moderator Jane DeMarchi, ASTA vice president government and regulatory affairs.

“We are disappointed to cancel the live event in Indianapolis, but we are glad to be with you in this way,” ASTA First Vice Chair John Latham, president of Latham Hi-Tech Seeds, Alexander, IA, said during the webinar. “ASTA is working hard to promote the seed industry. We can’t wait to get together again.”

Registration for the sessions is now open. For more information, go to the ASTA website.

The next session is scheduled for 2-3 p.m. ET Tuesday, June 2 featuring another economic outlook perspective from Steve Lutz, senior vice president for insights and innovation at Category Partners. Lutz will give the produce perspective on the economic road ahead and what the seed industry needs to prepare for.

As with the first session, this presentation will look at the impact current events and policies are having on the agricultural economy and provide insights into the future outlook for U.S. and global markets.

Written by Chris Lusvardi, Seed Today editor