As coronavirus affects the economy, Washington farm industry faces potential threat from logistics problems

Spokane-area farmers have begun spring planting, and apple growers set a new sales record during panic buying as the region continues to adjust to a pandemic that has disrupted most daily lives.

While items from flour to eggs have been flying off supermarket shelves, including a wild run on apples, that hasn’t immediately helped farmers in Washington, several industry experts said.

The higher demand at grocery stores hasn’t covered the market drop for milk, beef and produce that had been sold to restaurants.

“So far, agriculture is doing better than equities,” said Randy Fortenbery, an agriculture economist at Washington State University. “But the risk is not so much what happens to prices, it’s more what happens to logistics.

“If we have problems getting product to port and vessels out to sea, that’s where we’ll see some potential problems.”

The recent run of panic buying has not depleted the commodities, even with the record sale of apples, said Tim Kovis, communications manager for the Washington State Tree Fruit Association.

“Two weeks ago, we moved just under 3.9 million boxes of apples. That’s 400,000 boxes more than the previous record. So clearly there is a strong domestic demand for apples,” Kovis said.

An industry estimate for March still showed about 136 million boxes of apples in storage. “So, even the spike we saw will not impact the ability of our industry to provide apples until the next harvest,” Kovis said.

But the apple run pointed to a larger concern. Kovis said shippers were getting orders that were double and sometimes three times the usual order from retail outlets.

Fortenbery, who primarily focuses on wheat markets, said the recent run has strained the logistics system, including trains, trucks and ships that transport the products.

“We don’t have a shortage of food at the first stage of the supply chain,” he said. “It’s not like we don’t have wheat or eggs or milk. We just don’t have it where people want it.”

Fortenbery said recent news about employees walking out of Amazon and Whole Foods warehouses touches on his biggest worry.

“When grocery stores are behind in stocking, that puts pressure on logistics to get them restocked,” he said. “If that frustration trickles down to the trucking industry or rail, or we close borders to freight … then we could have some real problems.”

Wheat prices improve

For now, wheat farmers are enjoying decent planting conditions and have hit the fields to plant spring wheat, which last year made up about 22% of all acres planted in Washington, said Glen Squires, CEO of the Washington Wheat Commission.

“They are seeding … and for the most part, it is looking pretty good,” Squires said. “I haven’t heard of any difficulties with people getting inputs or fuel. Just like everywhere else, every store or parts store is exercising social distancing.”

Prices have spiked, but not because of the grocery store run on flour, he said. Washington grain producers have seen an uptick from about $5.80 a bushel for soft white wheat to about $6.10 at Portland.

“Russia decided over the weekend that they are going to restrict some of their exports,” Squires said. “That is sort of coronavirus-related. If they restrict more, that could also help boost prices.”

Fortenbery said another player has stepped in to buy Washington wheat: China.

“China has bought more wheat this year than last year and the second-most white wheat that they have ever bought,” he said.

Dairies face challenges

While the fortunes look workable in the grain market, prices for dairy have fallen dramatically, said Case VanderMeulen, who owns 7,000-cow Coulee Flats Dairy near Mesa, Washington.

“Our prices have been good until the last three weeks,” he said. “In the short term, the futures are well below the cost of production. Yes, milk has been flying off the shelf. But that doesn’t replace everything.”

VanderMeulen’s dairy produces about 580,000 pounds of milk per day. Earlier this year, the price per 100 pounds was about $17. Starting in April, contracts will be at about $14.

“The beef market has dropped, also,” he said. “I think it’s a combination of a lot of uncertainty and the food service industry that shut down completely.”

Exports also have taken a dive because of a lack of containers, which got stuck in China as its economy slowed from the pandemic, he said.

“Even though the stuff was sold, we couldn’t ship it,” VanderMeulen said. “You can’t turn off the faucet with cows.”

Fruit biz needs workers

The Washington tree fruit industry is mostly concerned with labor issues, Kovis said.

Last year, Washington state had 26,000 contracts with guest workers under the federal H-2A program for temporary agricultural laborers. Kovis clarified that workers could work under multiple contracts, so the industry estimated it had just under 20,000 seasonal workers who support the state’s tree fruit industry.

Two weeks ago, one of the embassies in Mexico that processes H-2A applications canceled in-person interviews. That got industry leaders working with three federal agencies to find a solution, Kovis said.

“Our industry, along with other labor-intensive industries, worked to get waivers for returning employees that had already done the interview process,” he said. “We are working to get the first-time employees processed. It’s an ongoing issue.”

The problem needs to be solved before workers begin picking cherries in June. That labor force is needed through November to pick apples and pears.

“We are optimistic that we will be able to figure that out,” Kovis said.

Mark Powers, president of the Northwest Horticultural Council, said the challenges facing the guest labor program “are severe.”

“It’s not where anybody thinks is ideal,” Powers said. “But there has been some progress with the State Department to allow a little better flow of guest workers, so that we can meet our critical needs. Hopefully, that continues until we pick fruit later in the year.”