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Global farming suffers from falling prices, labor shortages as virus spreads

Farmers are being hit by falling commodity prices, labor shortages, and difficulties related to planting, harvesting and transporting crops as the virus that causes the COVID-19 illness tightens its grip around the world.

In Europe, the closure of thousands of restaurants, resorts and hotels as well as a plunge in catered meals at now-shuttered business offices and schools have lowered demand for basic agricultural goods. Countrywide lockdowns have forced many seasonal laborers to stay at home, depriving their families of an income and farms of a much-needed workforce.

In the U.S., fewer Mexican seasonal workers are moving across the border, disrupting farms' plans for spring planting and for bringing in crops ready for harvest, such as lettuce in California, berries in South Carolina and tomatoes in Florida.

Farmers in poorer places are especially vulnerable, including those who work in aquaculture and fisheries. At greatest risk are those in parts of sub-Saharan Africa, where chronic hunger and famine are everyday concerns.

"We risk a looming food crisis, unless measures are taken fast to protect the most vulnerable, keep global food supply chains alive and mitigate the pandemic's impacts across the food system," said the Food and Agriculture Organization, or FAO.

On April 2, the FAO reported that world food prices declined sharply in March, driven mostly by demand-side contractions linked to the pandemic. Between February and March, the FAO sugar price index fell 19.1%, the vegetable price index fell 12%, and the dairy price index fell 3%.

About 20% of U.S. agriculture depends on seasonal workers, most of whom come from Mexico. Based on the number of work visas processed so far, "the shortage is 7%, and any shortage will have a big impact," said John Newton, chief economist at the American Farm Bureau Federation, an insurance company and lobbying group that represents the U.S. agriculture industry.

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Farms in many western European countries, including Italy, Spain, Germany and the U.K., also depend heavily on seasonal workers. In addition to the 1.1 million permanent workers on European farms, orchards and dairies, there are seasonal workers who do the equivalent work of 700,000 full-time agricultural laborers, including harvesting, pruning and planting. Many travel from eastern European countries such as Bulgaria and Romania to do seasonal work in the 26 countries that make up the Schengen bloc in Europe. Most were unable to travel as of March 17, when the European Union closed all Schengen borders for at least 30 days.

"There is a clear risk that we have endangered food security, especially in fruits and vegetables," said Pekka Pesonen, secretary general of Copa Cogeca, a pair of European organizations that represent 23 million farmers and their family members and 22,000 agricultural cooperatives, respectively. "The border restrictions and reduced movement of people could have a potentially devastating impact on our farming because we don't have a labor force for [the annual spring] planting. If we don't plant, we can't harvest."

Place UK, a closely held company near the English city of Norwich, grows strawberries, cherries, blackberries and rhubarb across 400 acres of land covered in polythene tunnels. It sells frozen produce to some of the U.K.'s biggest supermarket chains, including Tesco PLC and J Sainsbury PLC. Each spring and summer, the company recruits about 650 seasonal workers, mainly from Bulgaria and Romania, but that has become harder in 2020.

"We're OK for people until May 20, but not sure what will happen from mid-May to mid-June. It's a serious problem for everybody," said Tim Place, managing director.

According to Place, Britain's horticultural industry hires up to 70,000 seasonal workers each year, but the coronavirus outbreak has stymied many of those plans. Although Place UK hopes to recruit temporary workers from the U.K.'s hospitality sector, which has largely shut down, it will not be easy. Farm work requires "you to be on your feet all day and it can be monotonous," Place said.

Because of expected restrictions for people as a result of Brexit, by October 2019, Britain had already seen a 45% decline in seasonal agricultural workers compared to usual levels, according to Jonathan Owens, a logistics expert at the University of Salford Business School in the U.K. "Farmers were already finding it difficult to complete the harvest then," Owens said. Currently, the U.K.'s asparagus crop, which has a small window for optimum picking, needs to be brought in. Without more farmhands, some of it may rot in the fields, Owens said.

Other producers are in a bind because they supply food only to schools and restaurants, many of which have closed down. In Europe, 10% to 15% of all food is catered, according to Pesonen. Farms that used to sell high-value cuts of beef to the restaurant business, for example, now are trying to adjust by selling lower-profit minced beef that is in greater demand from supermarket shoppers. The upshot: a decline in profit.

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"Across key local and regional markets (i.e. farmers markets, farm to school, food hubs serving other institutions, and restaurants) we expect to see up to a $688.7 million decline in sales leading to a payroll decline of up to $103.3 million, and a total loss to the economy of up to $1.32 billion from March to May 2020," concluded the National Sustainable Agriculture Coalition, a U.S. alliance of grassroots agricultural groups. "Without immediate mitigation, we may lose many small, socially disadvantaged, and beginning farms and the important markets they serve."

Smaller businesses in Europe are hurting too. "People have stopped buying flowers," Pesonen said. In the U.K., the Netherlands, Belgium and elsewhere, "they've had to destroy 60% to 70% of flowers because there's no market. Millions of dollars of investment have been lost."

Falling demand has triggered a decline in the prices of many agricultural commodities, including cattle and corn. The U.S. dairy industry saw milk prices rebound in 2019, but those prices have since fallen 15% to 20% in the face of the coronavirus pandemic, Newton said.

Governments are trying to help. The EU said ensuring food security and an effective food supply chain across the continent was one of its priorities. "We are facing an unprecedented crisis,"Agriculture Commissioner Janusz Wojciechowski said during a March 25 video conference with EU agriculture ministers. To support the agri-food industry, the EU adopted temporary measures whereby farmers can now benefit from aid of up to €100,000 per farm and food processing and marketing companies can benefit up to €800,000.

For U.S. farmers, the repercussions of the coronavirus contagion may play out in other ways. Under a "phase 1" trade pact with the U.S., China agreed to purchase an additional $40 billion per year of meat, poultry and other farm products over a two-year period, and as of late February, there were signs that the plan was on track. Will it still be fulfilled?

"We want it to occur but we're facing a global economic slowdown," Newton said. "China is indicating that they're planning to live up to their commitments ... It's too early to say whether it will or won't happen."

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