OPEN FOR BUSINESS BUT NOT ON TUESDAY – Alan and Ben Mesman are a diversified dairy farm, selling milk and a variety of beef products. Like every farmer in the Skagit Valley, they are responding to economic conditions turned upside down by the COVID-19 virus pandemic.– Photo by Ken Stern
“Expected Returns on Most Northwest Ag Commodities Leveling Up” was the optimistic headline of Northwest Farm Credit’s quarterly Market Snapshot in January.
The April 2 Snapshot says that in sector after sector, forecasts now range from “variable profitability” to “unprofitable returns”.
“It’s all so new and changing so fast, it’s hard to get a clear picture,” said Don McMoran, director of the Washington State University Skagit County Extension. “It’s super clear that people are not buying flowers, bulbs or coming to the Tulip Festival, which is having a huge impact.
“If you are a food producer and you are not dealing with the export market, those kinds of crops will be trending upward. If you produce commodities that are not shelf stable, like the dairy industry, you are taking a big hit.”
Milk prices had been forecasted to increase 50 cents per hundred pounds in 2020 after hovering just above break-even through 2019.
“We thought we’d have a decent year, and then prices were cut across the board.” said Jason Vander Kooy of Harmony Dairy on Beaver Marsh Road.
Shuttered restaurants and schools have depressed demand for milk just as grass starts growing and production goes up. Product is sitting in warehouses. Plants set up to produce 40-pound blocks of cheese and 55-pound barrels of sour cream for institutional clients like Pizza Hut and Domino’s can’t retool for the consumer market, where milk is still in great demand.
About 40 percent of the powdered milk produced by Darigold’s Lynden plant is exported. With ports closed, sales have slowed. “There are no shipping containers in Seattle because no vessels are coming over,” Vander Kooy said. “The virus doesn’t mean people stopped eating, but movement of product is a big monkey wrench thrown into the system.”
The Mesman Dairy on Chilberg Road sells to Organic Valley, which serves the consumer market. Prices and demand are holding steady. The Mesmans’ new organic beef business has been affected, however. Anticipating tulip traffic, Ben and Chelsy Mesman had produced 1,000 hamburger patties for the Rex’s out-of-town visitors. To get them out of the freezer prior to the sell-by date, they had to discount them.
Fortunately, sales of all cuts and beef quarters skyrocketed when area residents stocked up in early March.
“All we have left are patties, soup bones and a couple stir-fry packets,” said Ben Mesman, “but we’ll have more after April 24.”
Skagit Valley Malting, which malts barley grown by the Hedlin’s Farm and the Washington Bulb Company for local breweries, backed out of its contracts for spring-planted barley. It will honor existing contracts for winter barley.
“Barley contracts pay a lot of the bills for us, but I think the fresh market component is fine,” said Dave Hedlin.
The Hedlin farm is taking social distancing seriously, making sure its crew members stand a few feet apart during meetings in the greenhouse. It plans to add a drive-up option to its farm stand, so that locals can order produce online for pickup.
“We’ll do what we need to do to keep our family, crew, customers, and community safe, healthy, fed and moving forward,” said Hedlin.
All farmers gamble when they plant crops six months out. But John Thulen says COVID-19 makes deciding what to plant and how much even harder.
“Tom Thumb, fingerling, and purple potatoes are food service items,” he says. “What kind of market will come back? And are Brussels sprouts a luxury item or a Thanksgiving staple? How about pumpkins and raspberries? It all depends on how hard people are hit, and for how long.”
Skagit Valley potato farmers “dodged a bullet” because the virus shutdown came at the tail end of their season. Pioneer Potatoes even saw an uptick in sales in March as grocery store customers filled their pantries.
According to Thulen, winter growers in California and Florida “are in the bullseye” along with Idaho potato processors. “Nobody is going out for French fries now—but if the unused winter crop spills on the open market, it could flood us.”
“Farmers rely on a lot of sources to sell crops, and this crisis has revealed just how big a role the restaurant industry plays for us,” said Thulen. “There are 600,000 restaurants in the U.S., and about 15 per cent aren’t going to make it. Retail may be a better path for us than restaurants going into 2020-21.”
No restaurants means no market for the table flowers that Beth Hailey of Dona Flora supplies weekly to places like Nell Thorn. No Tulip Festival means no Rexville Grange Art Show, which means no sales of her herbs and vinegars. New rules for the Bellingham Farmer’s Market, now permitting only sales of farm produce and bread, meat and cheese, means no Mother’s Day flower business.
“Many small farmers like me sell only to restaurants, and we are all in a terrible place,” she said. For now, she is taking orders for pepper and tomato starts on Facebook.
Dean Swanson of Swanson’s Farm is looking forward to a good berry crop but isn’t certain about labor or the market. If there are no farmer’s markets, he will have to freeze berries or sell them to an ice cream producer.
Offers for government aid and loans arrive daily.
“No government agency owes our farm money because we haven’t failed yet,” he said.
“I don’t know where it will shake out overall,” said Dave Hedlin, “but my grandpa always said the only thing more important than good farmland is good neighbors. We all just have to be good neighbors and get through this.”