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Iowa’s plants feeling the impact of COVID-19

By Staff | May 7, 2020



As the coronavirus pandemic seemingly shut down the world, at home in Iowa, ethanol plants were shuttered when the demand for fuel drastically declined as people were ordered to stay home. Ethanol giant Poet idled production at two of its Iowa ethanol plants and the Iowa Renewable Fuels Association noted that renewable fuels production has dropped an estimated 50 percent in Iowa due to shutdowns and reduced output. Almost a dozen ethanol and biodiesel plants have halted production.

Several beef and pork production plants in Iowa also have been idled not due to a decline in demand, but rather because a significant portion of the workforce at these plants has tested positive for COVID-19. Tyson Foods has suspended its operations indefinitely as its pork processing plant in Waterloo following the deaths of employees at that plant and its Dakota City, Neb., plant due to the virus. Smithfield, another meatpacking company, closed a processing plant in Sioux Falls, South Dakota, near the Iowa border because of a coronavirus outbreak.

Dairy farmers are dumping milk because there’s limited means to get the product to market. Pork producers say they will have to euthanize pigs because there’s no capacity for them at the plants due to the closures and reduction in workforce there.

Chad Hart, agriculture economist at Iowa State University, said beef producers are in a difficult situation because when their cattle are ready to go to market, they’ll have to be sent through regardless of the poorer price paid. Pork producers are facing even bigger challenges, he noted.

The grain market and fuel market combined have taken a giant hit due to the coronavirus. Hart said that corn has lost value due to the virus and 10 to 15 percent ethanol is off by 65 percent.

“That’s an incredible price cut and it’s due to both supply and demand factors. There’s a heck of a lot of ethanol still around; there’s a bunch in storage building up over the winter. We have record stock levels. But people just aren’t driving,” he said. “Then there’s the fight between Saudi Arabia and Russia that was impacting the oil market before COVID-19 hit.”

In the ag market, interest rates are being dropped significantly to try and maintain what’s left of the economy, Hart said.

“We’re seeing moves unprecedented in terms of fiscal and monetary policy here in the U.S. People are asking what’s this comparable to in history and really, nothing. The closest thing would be the flu pandemic in 1918 that no one remembers. This is the biggest loss in the farm sector since the 2008 recession. The only thing you can really compare it to is the Depression,” Hart said.

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