In the middle of this pandemic, milk is poured down the drain, livestock is euthanized, and vegetables are plowed over. Supermarket shelves are not as well-stocked as they were only a few months ago, while food banks are having difficulty meeting the uptick in demand. It is so rough out there that you may need to resort to (gasp!) Beyond Meat burgers. There is huge consumer demand for the essentials, but store aisles are bare. And yet the United States produces and maintains ample supplies of food and beverages, so what is happening to the nation’s agricultural sector during the Wuhan Coronavirus crisis?
Cooking Up a Storm
Across the United States, there is so much food that it is being thrown away – and we are not talking about households chucking their leftover cabbage soup in the garbage. Every day, dairy processing plants are pouring 3.7 million gallons of milk into manure pits. One plant flushed 31,000 gallons of milk into a lagoon, while a Wisconsin plant disposed of 30,000 gallons in one day. That’s not all. Farmers are expected to euthanize about ten million pigs. Growers are burying millions of pounds of onions, smashing tens of thousands of eggs, and plowing ripe vegetables into the soil.
Are we living in the Twilight Zone or something? It may seem crazy, but it is an issue of basic economics.
Despite grocery stores placing limits on how much milk or meat shoppers can purchase to avoid hoarding, the nation’s largest farmers have no place to sell their output. While the supermarket is a top revenue-generator for these businesses, a significant portion of crops is sold to restaurants, schools, and other food-service enterprises. With the COVID-19 pandemic shutting down these entities, there is no buyer for half of their produce.
A decade ago, eating out overtook eating at home for the first time. Today, Americans are now chewing more of their meals at home. But more of the population consuming home-cooked meals is not enough for two reasons. The first is that households have different meal preferences – people love onion rings, but they do not know how to cook them at home. The second is that they cannot absorb all the perishable food that was planted a couple of months ago for companies and schools. Dairy organizations are so desperate that they are encouraging pizza shops to increase the amount of cheese on each slice.
So, why not just shift logistics to sell to retailers? At many of the country’s processing plants, the capital equipment is designed to meet the needs of restaurants and schools. For instance, a dairy processor may possess machinery that was put together to package shredded cheese in large bags for restaurants or fill small cartons of milk. It would require millions in new investments and additional time for these plants to tailor operations to retail, and the sector does not think it is worth the headache. You also have the issue of governors continually extending their deadlines to opening their economies, so even if businesses wanted to retool their facilities, they would probably need to reverse the changes if everything returns to normal.
A growing number of farmers are now dropping off their surplus to food banks and food-related non-profit organizations. On the one hand, these institutions have seen a massive spike in demand. On the other, they do not have enough refrigerators or manpower to handle the influx of food. Plus, this is an unsustainable endeavor for producers since harvesting, processing, and transporting to charities can cost a lot of money for cash-strapped firms. They cannot export either since the global economy is suffering the same fate as the U.S. right now.
The federal government has attempted to alleviate the problem. President Donald Trump recently announced Uncle Sam would stock his refrigerator with $3 billion worth of products from farmers.
A Supply Glut for Punishment
It might break your heart to see milk being poured down the drain or eggs being destroyed as people starve in socialist Venezuela or the remotest parts of Africa. But it illustrates the incredible wealth of the United States. When you have a global supply glut of food, and you can toss your ample supplies in the trash without most of your citizens going hungry, it is a remarkable measurement of prosperity. It may not be the best way to show your gratitude for this incredible affluence, and Quality Milk Sales group CFO Rance Miles told The Federalist that many farmers enter a depression when they see these immense levels of waste. At the same time, consumers can be confident knowing that the agricultural sector has the means to grow those same millions of onions during the next harvest.
Make Baking Great Again
If you have noticed one missing item on grocery shelves, it is flour. This kitchen staple is a hot commodity in the pandemiconomy because a lot of consumers are making baking great again, whether it is to pass the time or because they have nothing else better to do than to eat rich desserts. Food producers are unsure if this is a permanent trend or a blip on the radar. With this uncertainty, companies will refrain from modifying their operations to adapt to these changing conditions. If people are staying home and permanently opting for a nice meal in their humble abodes, businesses will quickly revamp their facilities and shift their business models to ensure they are meeting these evolved – or devolved – needs. That is how the free-enterprise system works, baby.
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Read more from Andrew Moran.
