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It isn’t just about supply and demand; production lines also come into play
By Rachel Lane
Washington D.C. Correspondent

Washington, DC — The structure of the nation’s food supply chain has led consumers to find some empty grocery store shelves while in other areas, farm products are being destroyed, an official with Farm Credit Mid-America said.
As essential workers, businesses in the agriculture industry remain active. Because their normal supply line isn’t operating at the same capacity, farmers are killing off extra chickens or pouring milk down drains to make more room. Videos and stories of the destroyed food have hit mainstream media and social networks, where people are objecting over the pointless waste of food.
“It is really heart breaking for everyone when you see people who need food and you see food being destroyed,” said Bill Johnson, president and CEO of Farm Credit Mid-America. “It’s the hardest on the farmer.”
The problem isn’t on the farms, or that farmers aren’t willing to give away food if they can’t find a market. The major problem is the integration of the food chain, he said. Most crops, livestock and other products are produced for a specific integrator. The integrator has a contract with a specific processing facility that has a contract with certain end users.
The processor might send products to hospitals, schools, prisons, colleges or other places that serve many people at once. Packaging is done in large bundles. As a result, the machinery and packaging are designed for larger portions of food. It would take completely different equipment to provide family-sized portions, Johnson said.
This doesn’t consider the other changes that would need to be made: shipping to a new facility, finding new markets or dealing with products that spoil within days. One part of the country might have a lack of something, while another is dumping milk, he said. Milk is one of the products that cannot easily cross multiple states to reach a facility.
In addition, some factories have employees with COVID-19, forcing the entire facility to shut down while it is cleaned and everyone is tested. Even if this process only takes a day, the supply coming into the facility stops. The supply schedule gets shifted a day. At some point, there is no more room to store the product — whether it is milk or a chicken, Johnson said. Farmers would need to feed the animals an extra day’s supply of food. Eventually, the supply will shrink to meet the availability of the processing facilities, he said.
“If you think about hogs, the price has gone down even though you’re seeing a supply shortage,” he said, noting it goes against the basic economic principle of supply and demand. Hog farmers are earning about 25 percent less than the cost to raise the animal, he said.
Farmers need to be proactive. He said if a producer is facing financial trouble, the most important thing to do is talk to someone as soon as possible. The longer the farmer waits, the fewer options are available.
5/6/2020