This is reposted from CCOF, CalCAN coalition member. Click here to view the original post. CCOF compiled this overview based on agricultural and market research and qualitative data from a sample of CCOF producers, processors, and businesses (30 chapter leaders and 192 survey responses). Please let CCOF know if they have missed your experience at email@example.com.
When COVID-19 struck, farmers were already facing significant challenges. Low prices combined with rising production costs, labor shortages, and climate change impacts resulted in 58 percent of California’s farms operating with net losses in 2017. Today, organic farmers and businesses are working around the clock to adjust to new conditions.
How are organic farmers and businesses being impacted by COVID-19?
On the Farm
- Farmers are navigating rapid change on many fronts, including changes in demand and the closure of sales outlets, pivoting business models and safety protocols, and difficulties planning ahead for an economic recession where diminished consumer spending power may change future demand for organic products.
- A worsening labor shortage creates added stress and uncertainty for all farmers.
- Businesses are incurring additional costs as they implement new practices to protect worker health and safety. Many have struggled to acquire personal protective equipment (PPE). Some are providing hazard pay to their workers.
- Many farms are investing in new marketing systems and infrastructure. Farmers bear the risk that these investments may not be financially viable if consumer demand changes post-COVID. For example, there is uncertainty whether the overwhelming demand for CSAs will be sustained.
- Fluctuating crop prices deepen economic insecurity. Reimbursement from food banks and federal relief programs cover only a portion of production costs, and many are excluded from accessing federal relief aid.
Throughout the Supply Chain
- Packing, Storage, and Processing Facilities
- We have not heard of major disruptions at certified organic packing and storage facilities; however, growers report that if their organic packing houses were to close due to safety concerns, they would be left without a certified facility to pack and store their products.
- Some handler/processor operations have shut down completely while other operations are expanding production due to demand.
- Special Challenges for Livestock Producers
- Preexisting shortages of USDA meat processing facilities combined with closures of large meat plants have created severe bottlenecks at facilities that remain open, with small and midsize producers most heavily impacted.
- Some organic dairy producers, especially operations that are vertically integrated with their own processing facilities, have avoided major disruptions. We have heard that sourcing organic butter is challenging and that there is a short supply of organic milk in stores.
- In general, sales to food service outlets, including wholesale, restaurants, and institutions like schools, are down significantly, while retail, direct-to-consumer, and online sales are up.
- Businesses primarily selling into food service markets are experiencing the most severe disruptions in sales because stay at home orders have closed many restaurants and institutions.
- Businesses with diverse sales outlets benefit from the ability to increase sales to retail, direct-to-consumer, and online outlets, which helps offset losses from diminished food service sales.
- Businesses that market directly to consumers are experiencing fewer disruptions in their sales. E-commerce sales, including online stores and subscription models like CSA boxes and meal kit delivery programs, are seeing large increases in demand. On-farm sales, including farm stands and on-farm pick-up, are increasing. Some farmers’ markets temporarily closed and reopened with social distancing policies, some are experiencing significant drops in attendance, and still other farmers’ markets are seeing an uptick in sales. U-pick operations have mostly ceased.
- Businesses with longer supply chains have seen some interruptions due to challenges with transporting and distributing their products. Some operations are providing hazard pay to their truck drivers.
- International sales experienced disruptions early in the pandemic while businesses and transportation across the globe adjusted to new safety protocols.
- The wine industry, which relies heavily on tourism and tasting rooms, has seen a significant drop in business and widespread layoffs.
The Organic Sector
- Staple items, including dairy, eggs, bread, pasta, and rice are expected to see increased growth in 2020 because of COVID-19 stay at home guidelines.
- During the COVID-19 quarantine in March and April 2020, consumer pantry-loading buying behavior pushed general retail sales to all-time highs. Consumers also bought more organic produce than ever before, with significant increases over the previous year.
- During this time, organic produce sales also outpaced the dollar and volume growth rate of conventional produce. According to data gathered by Neilsen, in March, the volume of organic sales surged 25.8 percent while conventional increased 22 percent. In April, the volume of organic sales increased 10 percent compared to 7.7 percent for conventional produce. This data is consistent with the decades-long trend of organic produce sales outperforming conventional sales, which continued in the first quarter of 2020 prior to the start of the COVID-19 quarantine.
- The total economic cost of the coronavirus outbreak on local and regional food systems—which organic producers sell into at higher rates than conventional producers—could end up totaling $1.3 billion between March and May of this year, according to a new analysis by researchers at Colorado State University and the University of Missouri.