4 Bright Spots in the Post-Pandemic World

Tight land supplies, favorable interest rates, relatively high farmer incomes and strong interest for 1031 exchanges have kept farmland prices stable to higher. ( Lindsey Pound )

COVID-19 has disrupted and impacted every type of agriculture in every corner of the globe. The future will definitely look different from the past. In the long run, what opportunities could farmers harvest? Consider these emerging trends. 


1. Home Cooking creates Demand

2019 was the first year Americans spent more money on food away from home versus money spent on food consumed in the home. But that trend is shifting due to COVID-19, says Dan Basse, president of AgResource.

“We will consume more meals in the home now than pre-COVID-19 days,” he says. “The food consumption skew favors an ‘American renaissance’ with home meal preparation.”

As consumers prioritize safety and food availability, expect this cooking-at-home trend to continue and increase demand.


2. Farmland Shines in Uncertain Times

Ahead of the COVID-19 outbreak in the U.S., R.D. Schrader, president of Schrader Real Estate and Auction Company, says farmland values were showing strength.

“It is very location dependent,” he says. “But we had some examples of the strongest competition we have seen at auction in the last five years.”

Tight land supplies, favorable interest rates, relatively high farmer incomes and strong interest for 1031 exchanges have kept farmland prices stable to higher. Combine those trends with COVID-19, and you have farmland poised to be a highly sought-after, safe haven investment option.

Case in point: In Nebraska, the statewide all-land average value for the year ending Feb. 1, 2020, averaged $2,725 per acre. That’s a 3% increase to 2019’s value and the first year-over-year increase since farmland values in the state peaked in 2014.
Over the years, farmland has been a strong diversification tool for investing. Schrader says in the past two recessions, farmland steadily outperformed the stock market:

  • During the dot-com bubble of 2000 to 2002, the S&P 500 dropped 44%. Meanwhile, row crop farmland returns increased by 18%.
  • During the financial crisis of 2007 to 2009, the S&P 500 dropped 46%. Meanwhile, row crop farmland returns increased by 26%.

“While there are times the S&P 500 runs ahead, it’s times like this when farmland will look really attractive,” Schrader says.


3. Farmers Create Resilient Business Models

For direct-to-consumer Tennessee producers Jennie Schutte and Walt Patrick, COVID-19 created angst — and opportunity. When the family couldn’t sell their beef, pork and lamb cuts at their local farmers markets earlier this year, Schutte knew it was time to be resourceful and creative.

“Social media, specifically Facebook and Instagram, have been our bread and butter,” Schutte says. “We have a newsletter, too. All of our advertising is on social media. We push information constantly.”

When supermarket shelves were stripped of essentials, including meat, earlier this year, Schutte started doing porch deliveries of their Pilaroc Farms (pronounced pile-a-rock) products. Since farmers markets have opened back up, the door-to-door deliveries are on hold, but the Pilaroc team is considering deliveries, and shipping, as part of the future business model.  

“Jeff Bezos has totally spoiled us into thinking we're supposed to have something on our porch within 24-to-48 hours,” Schutte says. ”Consumers are looking for more convenient options.”

To learn more from the owners of Pilaroc Farms about how to pivot your business model, visit AgWeb.com/Pilaroc


4. Agriculture Will Receive Respect

A great upside to COVID-19 is consumers are starting to understand how agricultural supply chains work, Basse says.

“Consumers have not had a relationship back to the farm gate,” adds Luke Chandler, chief economist for John Deere. “This crisis gives us an opportunity to tackle that challenge and look for the opportunities to connect with consumers so they can value the entire supply chain.”


Conflicted on Showing Livestock

Are we putting our kids in danger? Is this the right decision? I’ve never had those thoughts before as we headed off to show our pigs at a national show — but 2020 is different.

Everything feels like a battle in my mind these days, as coronavirus is a difficult enemy to battle.

Working with our showpigs allows us to focus on something other than COVID-19. When the opportunity presented itself to get the pigs to a national live show in July, we wanted to give it our best shot to get there.

Was the risk worth it? I hope so. The one thing I know about this virus is that it’s hard to know what’s right. No one agrees — not even the experts.

At the end of the day, we had to weigh out what was best for our family. Because really, that’s all any of us can do.  ~Jennifer Shike, Farm Journal’s PORK Editor

 

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