As COVID-19 took hold this spring, many Minnesotans realized they did not fully understand the agricultural industry in their own backyards.
If pigs can’t go to market, why don’t farmers just keep them instead of euthanizing them?
When I can’t find a gallon of milk in the grocery store, why are dairy farmers in neighboring states dumping milk?
Flexibility, timing and geography played pivotal roles in the market chaos earlier this year. Our systems remain vulnerable to a repeat.
Why? To answer means understanding what farm ownership looks like circa 2020. To consumers, whose closest link to agriculture might normally be visiting the Minnesota State Fair livestock barns, it’s often not that clear.
In many instances, especially in hogs and poultry, Minnesota farmers operate through what’s called vertical integration. In this model, the owners are businesses — sometimes very large — responsible for various aspects of animal care, including feed production, processing and animal husbandry. The business may own the livestock, the barns or both. Farmers get a set price for raising the animals. Farmers’ financial risk is reduced but their profit-sharing is limited or nonexistent.
Other farmers are part of share-owning cooperatives. The cooperative acts on behalf of the farmer members, negotiating prices and selling the finished livestock product, rather than each individual farmer trying to negotiate prices. Much of the state’s dairy industry is organized as farmer-owned cooperatives; dairy producers vote on long-term processing decisions. At the end of the year, profits are distributed to farmer members, kept for future distribution, or reinvested in the cooperative’s infrastructure.
Both systems have strengths and disadvantages. Through the years, Minnesota’s livestock sectors have become more efficient.
Regardless of the system in which they operate, most farmers have to live with the prices they get. They also have little control over how much of their product to ship, when or, sometimes, where.
Within the Minnesota livestock industry, labor availability, the number and size of facilities, and logistical challenges were factors in the economic impact of COVID-19. Most vividly in Minnesota, the COVID-19 bottleneck resulted in hogs being euthanized and given away for noncommercial processing. According to industry sources, no other state faced greater hog production losses.
How did that happen? For hogs and poultry, facilities are designed to process animals of a specific weight and size. Three of Minnesota’s 17 hog slaughter plants process the majority of our hogs; they operate near full capacity. Farmers must get their animals to market at just the right time and refill their barns quickly to consistently supply the processors.
In contrast, there was no reported milk dumping in Minnesota as a result of COVID-19. Minnesota’s milk is most often processed into cheese, which is easily stored when supply chain capacity or consumer demand fluctuates. And it’s processed in 117 plants, including on-farm processing and specialty facilities.
Rapid swings in market demand were another factor for Minnesota’s livestock industry. When meat, eggs and dairy products are processed, they are packaged and labeled for their final market: at-home consumption or food service. While some processors may be able to shift production from one market to another, this does not happen overnight.
Nationwide, there was excess bulk food on the market as demand from restaurants, schools and the hospitality industry dropped dramatically. Thus, the perfect storm simultaneously created empty shelves in the grocery store and images of food being thrown away on your TV screen.
Specialized and efficient food processing creates uniform, abundant products for consumers, contributing to the U.S. having one of the most consistent, safe, low-cost food systems in the world.
But COVID-19 exposed its weaknesses. Consumers had to go without. Farmers faced emotionally and sometimes financially catastrophic losses, even with some government financial support.
The toll across the U.S. food production system — farm families, truckers, processing plant workers, grocery stores — cannot be measured in dollars and cents alone.
All three of us grew up on Minnesota farms. We know firsthand that livestock farmers are resilient and innovative. We believe industry and government both have a role in fixing the gaps that caused the chaos this spring.
Consumers may not realize how much power they have. In the grocery aisles, read labels. Choosing a product that comes from Minnesota makes a difference; it builds stability into our systems. Consumer choice matters.
Joleen Hadrich, Megan Roberts and Brigid Tuck are, respectively, an agricultural economist, agriculture business management educator and economic impact analyst at University of Minnesota Extension.