There’s an argument going on right now in the media between the folks who think inflation is “transitory” and those who think it’s more permanent. Meanwhile, prices for just about all the consumer goods most of us buy is going up. Businesses are paying higher wages to attract employees as well as higher costs for trucking, materials and inventory. They are beginning to pass these costs on to their customers in the form of higher prices.
One small sector of the economy has stubbornly resisted the inflationary trend: Fresh fruits and vegetables. In fact, overall prices paid to farmers this year for their fresh produce are lower than they have been since 2016. This may not be reflected in the prices shoppers pay for their tomatoes and lettuce, as retailers are marking them up to cover their own increasing costs.
It’s a bit of a mystery why this is happening. Economists and journalists don’t get excited about exploring the price of apples and broccoli. Presumably, people are still eating more or less the same amount of vegetables and fruit as they were prior to Covid, so why would prices have collapsed? I think the most likely answer is a now-familiar one: The “Supply Chain” for fresh produce that broke at the start of the pandemic has not been fixed yet. There are fewer big buyers now, and it’s harder to get products to them due to trucking shortages.
2020 looked like it would a catastrophic year for many farmers, as crops were abandoned due to the closure of restaurants and other food service outlets. Farms like Terra Firma were able to pivot into direct marketing channels like CSA and online sales, but many others were facing financial ruin. Then the federal government stepped in: first with PPP loans and then with the Coronavirus Food Assistance Program (CFAP) as well as funding to schools and food banks to purchase food directly from farms for distribution to anyone who needed it. Without these programs, thousands and thousands of farms — large and small — would have permanently shut down last year.
Like all businesses that made it through 2020, farms were left with little certainty about the future as the new year started. But farmers are optimists, as the saying goes, and plenty of folks figured that by mid-summer, everything would be “back to normal”. So they planted as if the pandemic was ending. Instead, we got 2020, version 2.1. It was already clear in late spring that there was an oversupply of vegetables on the market, and prices were terrible. The situation did not improve over the summer, and prices for most fall vegetables are as low as they’ve been in a decade.
Unfortunately for farmers, everything they buy is now more expensive: fertilizer, boxes, trucking, etc. And there is no indication that the federal government is going to step in again with more money. Farmers who held onto some or all of the funds that the taxpayers generously provided them will have a cushion to get through what could be a very ugly period. Farmers who spent it all betting that the economy was going to come roaring back may not still be in business next year.
Disaster payments and other government support for farmers are critical to maintaining the viability of U.S. agriculture, and will likely become more so as climate change strengthens its grip on our planet. But subsidies always cause problems later on, and the government programs enacted during Covid were hastily designed and poorly thought-out — a panicky response to an unprecedented situation.
Terra Firma survived 2020 and 2021 thanks mostly to you, our CSA subscribers, and the incredible support you provided. With many of our other marketing outlets — such as tech company food service and restaurants — essentially disappearing early in the pandemic, we focused on growing only what we were sure we could sell. And going into 2021, we decided that caution was the only viable option.
I have no idea what 2022 holds for our farm, but I can say with confidence that we are in a good position to weather what will likely be another challenging year. Covid-19 was a traumatic experience, and its long shadow will likely hang over our civilization for longer than some people think. Some of the changes it wrought will end up being temporary, but others may be semi-permanent. I think it will take a few more years before we understand them.