Soy-related Industries Focus on Recovery

Feb 19, 2021

By Chris Crawford  • From Winter 2021 American Soybean magazine

As America exits one of its most turbulent years in recent history and enters 2021 with cautious optimism, we asked representatives from soy-related industries how the COVID-19 pandemic affected their business in 2020 and what they see as the outlook for this year.

Soy Transportation Coalition

Mike Steenhoek, executive director of the Soy Transportation Coalition, Ankeny, Iowa, said once the pandemic hit and travel was restricted, the group advocated to relax federal and state regulations to allow for heavier truck configurations of soy.

Mike Steenhoek, executive director, Soy Transportation Coalition

With travel reduced, there was less gas and diesel revenue, and subsequently, less fuel tax generated, he said.

“This led to less money to improve roads and bridges,” Steenhoek said. “Some states were more severely affected than others. States with registration fees remained more stable than those heavily dependent on fuel tax revenue.”

As an example of general tax revenue lost, top soybean producer Illinois estimated it lost $2.7 billion in 2020 and projects a $4.6 billion loss in 2021, according to the state’s office of management and budget.

Additionally, Steenhoek said the COVID-related shutdown of freight from China to the United States led to fewer empty containers available to fill and ship back to Asia.

“Transportation has been wrestling with the pandemic in its own way,” he added. “This seismic event has had a ripple effect throughout society.”

As for agriculture in 2021, Steenhoek said there remains a robust export market that needs to be kept in motion.

“The year 2020 was obviously full of unexpected challenges,” he said. “However, one encouraging development that has occurred for soybean farmers is the robust volume of exports to our international customers. As this hopefully continues into 2021, the Soy Transportation Coalition remains focused on ensuring our multi-modal transportation system is capable of connecting supply with demand.”

American Seed Trade Association

Andy LaVigne, president and CEO, American Seed Trade Association

When COVID hit U.S. shores, most seed companies already had conditioned seed in house and were prepared for deliveries at that time.

“Timing-wise, everyone was on time,” said Andy LaVigne, president and CEO of the American Seed Trade Association, Alexandria, Virginia. “And I don’t think our companies missed a beat.”

LaVigne said the association advocated early on to designate the seed industry as an essential business.

It signed on to a pair of letters, along with the American Soybean Association and other agriculture groups, to the president and state governors asking them to follow the U.S. Department of Homeland Security's Cybersecurity and Infrastructure Security Agency's guidance that identified agriculture supply chain workers as "essential critical infrastructure workers."

However, making matters worse, the effects of the 2020 pandemic were compounded by the August derecho, which hit Iowa hardest.

Damage in Iowa affected an estimated 2.5 million acres of soybeans, according to the U.S. Department of Agriculture’s (USDA’s) Risk Management Agency.

Luckily, South America offered increased seed production in 2020 that U.S. producers used to supplement what was lost, LaVigne said.

Seed transportation to and from South America proved more difficult during the pandemic, as commercial airlines were less available to carry seed.

“We used all of the major carriers, like UPS and DHL, to move seed to South America and back again after harvesting,” LaVigne said. “Our trading partners did a good job keeping seed movement consistent without hiccups.”

This year, LaVigne said the seed industry looks to get back to some level of normalcy, which should begin with national COVID vaccine distribution.

“The seed industry requires intimate relationships,” he said. “Seed company representatives like to walk fields with growers. So, we look forward to the ability to interact more closely with our farmer community.

“Our companies are ready to supply seed for spring plantings. Contact your seed company and plan now to have the varieties and traits you want for your farm. Early conversations with seed companies are key.”

National Pork Producers Council

Rachel Gantz, director of communications, National Pork Producers Council

U.S. hog farmers were hit disproportionately hard by COVID, “a black swan event” for the entire economy, said Rachel Gantz, director of communications for the National Pork Producers Council (NPPC), Des Moines, Iowa.

“After being at the tip of the trade retaliation spear for more than two years, U.S. pork producers were expected to have a profitable 2020,” she said. “Then the COVID-19 pandemic hit, another financial catastrophe for our nation’s hog farmers.”

As COVID spread, harvest facilities closed or dramatically reduced capacity, which created a backup of millions of hogs on farms across our country, Gantz said.

“Aside from the emotional toll, the financial crisis facing producers is devastating,” she said.

The considerable surplus of pigs created by COVID-related disruptions in early 2020 led to hog values plummeting, and producers estimated a billion-dollar loss for 2020, Gantz said.

Pork producers continue to hurt and need relief to help weather this unprecedented crisis, she added, and is thankful language included in the just-passed COVID relief package includes funding to compensate hog farmers who were forced to euthanize animals due to COVID-related supply chain disruptions.

“The dual challenges of trade retaliation and the COVID pandemic have caused us to lose hog farmers of all sizes, and these funds in the COVID relief bill will provide much-needed help for pork producers to weather this difficult time,” said NPPC President Howard “AV” Roth, a hog farmer from Wauzeka, Wisconsin.

National Cattlemen’s Beef Association

Marty Smith, 2020 president, National Cattlemen’s Beef Association

At the beginning of the pandemic, beef exports and restaurant sales decreased, while domestic retail beef sales continued to grow, said Marty Smith, 2020 president of the National Cattlemen’s Beef Association (NCBA), Centennial, Colorado.

“Currently, everything is bouncing back, and we have seen our exports increase due to the removal of tariffs and non-tariff trade barriers as a result of the numerous trade agreements that have been signed in the past few years,” Smith said. “We are finally on a level playing field in key Asian markets, and we are in a much better position to recover stronger and faster due to our strong market access to overseas markets.”

When COVID-19 lockdowns began, he said the NCBA acted quickly, sending a letter to the “Big Four” packers requesting higher cash bids for fed cattle.

“We asked each of them to ensure their bids for fed cattle accurately reflected market demand and pricing conditions at the consumer level during the pandemic,” said Smith.

In 2020, the association also successfully helped get agricultural enterprises included in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) Paycheck Protection Program (PPP), which resulted in the Coronavirus Food Assistance Program (CFAP) being released. This program included $19 billion in direct support to agricultural producers.

“NCBA is still working to eliminate CFAP’s remaining disparities and deliver to our nation’s ranchers and farmers the support they so badly need in the next coronavirus package,” Smith said.

Finally, in early December, NCBA worked closely with the Department of Transportation and Federal Motor Carrier Safety Administration (FMCSA) to get another extension to FMCSA’s COVID-19 hours-of-service emergency declaration, until Feb. 28.

“This is a big win for our producers and livestock haulers, ensuring that grocery store shelves are well stocked with beef going forward.”