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Omaha Magazine

Feeding Our City: Farmers, Ranchers Continue to Adapt to Change in Demand While Facing Headwinds From Before Pandemic

Sep 28, 2020 01:12PM ● By Scott Stewart
Pink piglets, gray background, repeating pattern

Illustration by Derek Joy

Omaha is surrounded by food, but feeding a city—or a family—isn’t as simple as it feels shopping at a farmer’s market.

Some of that complexity became clear when the coronavirus first began making people sick last spring, and grocery store shelves became sparse at the same time that many restaurateurs wanted nothing more than to empty their fridges and freezers.

There was never a risk of running out of food, although finding a favorite pasta sauce remained a challenge months after the onset of the pandemic, and the demand for products like soup have gone through the roof. The seismic shift that COVID-19 brought to society, however, will continue to have aftershocks at dinner tables that will be felt long after a vaccine is widely deployed.

“Agriculture has been facing economic challenges now for several years,” said Brad Lubben, an agricultural economist at the University of Nebraska-Lincoln. “The coronavirus is really the third major shock that the industry has had to work through.”

First, farmers and ranchers have struggled for years to be profitable after record highs in 2013, Lubben said. Second, trade conflicts that started under President Donald Trump have compounded those losses, while diseases like African swine fever have also disrupted specific categories within the broader agricultural sector.

When the coronavirus hit, it dramatically altered consumer demand and decimated high-end dining along with the rest of the hospitality industry. The coronavirus also spread through the processing sector, temporarily shutting down meatpacking plants and otherwise disrupting the flow of food goods through the economy.

“First the consumer demand and then the processing capacity both went through major shocks, and that’s still disrupting the market,” Lubben said. “We can’t expect to recover that demand that quickly. However quick the shock was, the pathway back is much slower.”

The agricultural sector is adjusting to that disruption—chief among them that people are eating more meals at home than they were prior to the pandemic—but doing so has required new packaging, new producers, new distribution channels, and other adaptations along the
supply chain.

The products shipped to restaurants aren’t the same as those going to households. When the pandemic struck, many warehouses had food service product sitting around.

Benny Mote, a swine extension specialist at UNL, said consumers are used to buying a 1-pound package of bacon at the grocery store. Bacon packaged for food service comes in boxes of 10 pounds or more, which most consumers aren’t willing to purchase and couldn’t be repackaged because of inspection requirements.

“While they still had some of that product sitting there, it couldn’t just be put on another truck and sent to a grocery store,” Mote said. “That took a little bit of time for the packing plants to reshuffle some lines and redo some packages to try to get product shipped to the grocery stores.”

Most pork in the grocery store is fresh and comes from a just-in-time processing system, so it isn’t sitting in a warehouse in the first place, Mote said. Then meatpacking plants started to shut down. At its worse, he said the nation was operating at 55% capacity—creating a situation where packers weren’t taking pigs for the first time in modern history.

Those plants are designed to take pigs of a certain size, so producers were suddenly forced to put their animals on restrictive diets to keep them from growing. Once they’re over 350 pounds, they can’t be sold to the plants—meaning they’re likely to be euthanized, and therefore provide no return on investment.

Producers turned up the heat in their barns to mimic summer temperatures and switched to a low-protein feed that stalled growth. The result, though, was a backlog of about 2 million pigs. In many operations, young pigs were double-stocked, and producers started looking for alternative markets, such as small meat lockers and direct-to-consumer sales. 

Pigs were still euthanized—perhaps as many as a couple million, although no one knows for sure—because the system has little room for error.

“Those buildings cost a lot of money, so you don’t want them sitting empty,” Mote said. “When that last pig leaves, probably within a matter of [a] couple days, those barns are washed and new pigs are put back in.”

Meatpackers will run at maximum capacity until the backlog is processed, he said, and there is no reason to expect disruption to consumers—unless, of course, plants shut down again.

“There’s no shortage of pigs. It’s getting things turned into pork and delivered to dinner tables that could be the bottleneck,” Mote said.

Behind the scenes, experts expect further consolidation of farms and ranches as producers wait for the good times to return and some run out of time. 

“Those prosperous years are few and far between, and typically short-lived when they come,”
Lubben said.

Another factor in that trend is the growth in agricultural land values, which grew by 3% over the last year, due in part to nonfarmer investor interest in land purchase and current interest rate levels, according to UNL’s annual Nebraska Farm Real Estate Report.

Lubben said the pandemic has accelerated a trend toward fewer operators, but it also has put the spotlight on issues of resiliency, particularly the reliance on just-in-time supply chains and migrant labor. Consumers have to choose whether they’re willing to spend a little more for locally branded, stable agricultural products or encourage the price-competitive practices that drove the industry toward those strategies in the first place.

“If the broader trend is putting us in the direction of what can we locally source or what can we repackage for the different market there are definitely producers ready and capable of responding to that,” Lubben said.

Either way, despite the possibility of more hiccups, there will still be plenty of food to put on tables in Omaha and across the country, even as the industry continues to evolve.

“In spite of the overall economic challenges and the depressed attitudes or opinions within the broader industry, there are still very successful producers out there,” Lubben said. “The ag sector is very resilient. It has the resources and the productivity and the capability to respond to (potential changes), it’s just going to take some time.”

This article was printed in the October/November 2020 issue of B2B Magazine.