Corona Virus and the Farm Economy (Part 2)

With Corona Virus, Farms Stay Strong As People Must Eat

By Tim Hammerich with AgInfo.net

How should agricultural producers be preparing for a slowdown in the global economy, due to the Corona Virus? That’s the question many are asking. UC Davis Economist Dr. Daniel Sumner has a simple reminder: people still need to eat.

“Don’t forget, agriculture is hardly ever cyclical with the rest of the economy. There are booms in the economy when agriculture is struggling, like last year or the year before,” said Sumner.  “There are times when the rest of the economy is not doing well and agriculture is doing okay. And even within agriculture, there are times when the dairy industry and the almond industry aren’t necessarily in sync, to pick the two biggest commodities in California.”

People still eat. People still spend money on food even as incomes fall.”A good bit of what we produce, even in California agriculture is pretty basic products for people. And if they’re stuck at home, they’re buying more of it, not less of it. So we’re going to have some gains here in California agriculture, even if the rest of the economy’s not doing well,” Sumner said.

Sumner adds that animal agriculture supplies have been hit especially hard with issues such as African Swine Fever before coronavirus. This may add to potential agricultural gains even in the midst of a slowdown or even a potential recession in the economy.

Corona Virus and the Farm Economy (Part 1)

Wine Purchasing Habits Might Change Because of Corona Virus

By Tim Hammerich with AgInfo.net

How will food supply and demand change as a result of the Corona virus? Consumers in uncertain economic times will adjust their purchasing habits, even for essentials like food. This according to UC Davis Economist Dr. Daniel Sumner, who says different agricultural products will be effected in different ways.

“You do have to think about it commodity by commodity. Which ones are most sensitive to income.  Which ones aren’t,” noted Sumner.

“Let me just give you a quick example from the wine industry. The premium wine industry here in California, which means the grapes that are grown along the coast. Higher proportion is sold in restaurants. Higher proportion is income sensitive. And people that still want to drink wine, they now drink it at home,” explained Sumner.

“They’re a little worried about their job. They say, ‘gee am I going to get laid off?’ whatever. ‘My company’s not making any money’. ‘I don’t get my bonus’, whatever.,” said Sumner. “They move down and move in the direction of Central Valley wines. So you could have the Central Valley wine industry be better off at the same time, the coastal wine industry is hurt. And we saw that in a recession 10 years ago,” Sumner said.

Dr. Sumner says staple goods are more likely to see strong demand while those perceived as luxury items may struggle. This is especially true for products that are sold through restaurant or food service channels.