Michigan Farmers Cope with Rising Demand, Prices Due to COVID-19

Escalated consumer purchases of many basic grocery items in response to COVID-19 emergency orders that temporarily closed Michigan restaurants for dine-in service has taxed the logistical food supply chain throughout the state, according to a new report from the Michigan Farm Bureau.
Farmers are dealing with rising demand and prices due to COVID-19. // Stock photo

Escalated consumer purchases of many basic grocery items in response to COVID-19 emergency orders that temporarily closed Michigan restaurants for dine-in service has taxed the logistical food supply chain throughout the state, according to a new report from the Michigan Farm Bureau.

While restaurants are still open for pick-up and delivery orders, the closing of dining establishments has forced the food processing industry to expand hours of operation and redirect product processing and packaging that would normally have been destined to food service establishments as bulk goods to consumer-friendly packaged products, says Carl Bednarski, president of the Michigan Farm Bureau in Lansing.

According to John McNamara, vice president of government affairs for the Michigan Restaurant and Lodging Association in Lansing, restaurants normally provide 51 percent of the meals consumed on a daily basis. Based on 2018 figures, Michigan is home to 16,543 eating and drinking establishments, with $17.9 billion in estimated sales, according to the National Restaurants Association.

“It’s important Michigan take the necessary steps to protect public health, but we also realize the importance of supporting local retail, eateries, and stores,” says Gary McDowell, director of Michigan Department of Agriculture and Rural Development (MDARD).

“You can still get your favorite foods, just in a different way than before, as we work together to reduce the spread,” McDowell continued. “I urge you to continue to support your area businesses, who are often the foundation of our local communities, by buying gift certificates for later use, getting take-out or delivery.”

Bednarski says the dramatic shift in consumer food-purchasing habits and consumption has caused a temporary price increase at the retail level for many basic household grocery staples, including eggs, dairy, and meats.

Longer-term Bednarski expects the price pendulum to swing in the opposite direction, at least at the farm-level.

“We’re already hearing market forecasts calling for significant price declines in literally every major commodity sector of U.S. agriculture,” Bednarski says. “Market analysts are predicting that a COVID-19-induced recession will cause producer pay-price declines of 20 percent in dairy and 30 percent to 40 percent declines in pork and beef products, for example.”

Michigan Beef Industry Commission (MBIC)

One of the commodities affected is Michigan’s beef industry, where consumer purchasing power remains strong, says George Quackenbush, executive director of the Michigan Cattlemen’s Association and MBIC.

“We are seeing retail demand and boxed beef prices increasing, yet the COVID-19 panic has resulted in a free-fall for cattle markets with cash prices steadily decreasing,” Quackenbush says.

Due to this disparity, Quackenbush notes the organization is requesting that the packing industry “act in good faith” and participate in the cash market with “bids based on the increased cutout value rather than the futures, as well as increased participation in the Fed Cattle Exchange to provide further confidence to the producer segment of our industry.”

“Beef demand will be supported as long as the consumer remains optimistic,” he says. “With the volatile global landscape, we find ourselves in, forecasting long-term demand and pricing is nearly impossible. Presently, the industry is focused on ensuring markets remain open and product continues flowing to the channels.”

National Milk Producers Federation (NMPF)

Clay Detlefsen, senior vice president of regulatory and environmental affairs for NMPF, says shortages of consumer staples in grocery stores strained by responses to coronavirus-related restrictions should begin easing, as soon as within a week.

“There is plenty of food in this country. There is no food shortage,” says Detlefsen, in an NMPF podcast. “We have a bit of a distribution problem caused largely by consumers, in essence, over-consuming.”

NMPF President and CEO Jim Mulhern says U.S. dairy farmers continue operating, and they understand the importance of steady production.

“Dairy supplies aren’t experiencing production interruptions at this time, and dairy farmers and processors will continue to do what they do best: produce safe, quality products every day for consumers,” Mulhern says. “We’re working with all aspects of the dairy supply chain to ensure dairy products get to everyone who needs them and that — as has always been true — dairy will remain something consumers can count on.”

Michigan Allied Poultry Industries (MAPI)

Michigan’s poultry industry is improvising amid the spread of the virus, according to Allison Brink, executive director of the west Michigan-based MAPI.

“Many farms are seeing increased orders from retailers, as grocery stores struggle to keep eggs, turkey, and chicken on their shelves, while others who serve mainly foodservice and restaurants are seeing decreased orders,” Brink says. “Regardless of the situation, our farmers are still farming. Hens are still laying eggs, turkeys, and broilers need to be fed, and every day Michigan’s family poultry farmers are working together to supply consumers with healthy, locally produced proteins.”

Michigan Pork Producers Association (MPPA)

While current demand for pork product continues to be good, Mary Kelpinski, CEO of the MPPA, says producers and processors alike are on high alert to make sure essential functions across the pork supply chain are maintained.

“Pigs and basic ingredients for feed supplies are shipped on a daily basis — any disruptions could really compromise the pork industry,” Kelpinski says. “We need to make sure feed trucks, livestock haulers, supply deliveries aren’t disrupted.”

Labor availability, both on-farm and in the pork processing industry, is a major concern, according to Kelpinski, noting that employees throughout the industry also are parents contending with school and daycare closures.

“We also have a long-standing dependence on foreign workers to care for our animals and help run our processing plants,” Kelpinski adds. “So, we have concerns that the COVID-19 situation will only exacerbate what is already a major industry challenge.”

Michigan Potato Industry Commission (MPIC)

According to MPIC Executive Director Kelly Turner, the COVID-19 pandemic has put U.S. potato markets in a state of flux. Chip companies are adding to orders to keep pace with retail demand. Grocery stores are having trouble keeping stocked with table potatoes and chips.

In contrast, fryers are no longer interested in purchasing contract overages, due to reduced movement of French fries to offshore markets and to domestic foodservice customers. A supply crunch for Russet, red, and yellow variety table potatoes is intensifying.

Unsettled conditions are likely to continue for several weeks. “Packing operations have added shifts, hours, and employees to keep up with increased demands from grocers,” Turner says. “In several cases, packers who have run out of inventory, are networking with operations that have potato inventory in stock but lack the packing capacity to meet the increased demand.”

Michigan Blueberry Commission (MBC)

MBC reports that demand for fresh blueberries is up between 20 percent and 25 percent, and supplies can’t keep up, according to MBC Executive Director Kevin Robson. While this is normally welcomed news that benefits growers with higher prices, questions remain on how long higher consumer demand and prices will continue.

“Marketing experts from around the globe see the current volatility as not long-lasting,” Robson says. “Given the ongoing changes surrounding the COVID-19 pandemic, blueberry growers are optimistic but concerned with labor availability needed to actually harvest what appears to be a promising crop.”

So far, Robson reports 2020 blueberry production looks in good shape due to favorable weather conditions throughout the winter and early spring.

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