The USDA’s chief economist says that the pandemic is causing America’s debt to inch toward unprecedented levels.
Rob Johansson says that the virus response shocked all economic sectors and farmers and ranchers are relying more on the government to meet their financial needs. It is a level he has not seen since the 1980s.
“When we look at borrowing, of course we know that producers have been seeing an erosion of their liquidity and partially replacing that with borrowing,” Johansson notes. “We see debt actually reaching levels that we have last seen since the 1980s. Of course the big story or big difference being that interest rates are much different today than they were back then.”
However, there are some bright spots. AFBF’s chief economist say that the huge kink in the food supply chain is starting to straighten out.
According to John Newton, “Food-away-from-home sales from February to April dropped by nearly 90 percent. It is starting to come back... Food service sales have come back as well. I think there might be some plateauing of that, given that restaurants are still not yet back to full capacity.”
Newton says that when you take all of these challenges, the ag industry has had $33 billion dollars in ad hoc support since 2018, which does not include the new CFAP 2.0 payments.