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One-third of small independent farms could go bankrupt in 2020 due to COVID-19

Close to one-third of small independent farmers could go bankrupt this year as a result of COVID-19 severely limiting their sales, a new survey finds.

One-third of small independent farms could go bankrupt in 2020 due to COVID-19
[Photo: Thomas Peham/Unsplash; Tetiana Lazunova/iStock]
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Close to one-third of self-described small independent farmers could go bankrupt this year as a result of COVID-19 severely limiting their sales.

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That’s according to a survey by ResourcED—a new joint initiative of the Stone Barns Center for Food and Agriculture and the Blue Hill Farm restaurant in Tarrytown, New York—which checked in with grain, produce, livestock and poultry, dairy, and flower farmers, most of whom use farming methods like organic or regenerative.

The poll finds that more than 35% of farmers experienced an average drop in revenue of over 51% in March and April, compared to the same period the previous year, due to a lack of sales to restaurants and at farmers’ markets. The concern for them is getting stuck with goods they can’t sell; of the almost 37% who expect to have this problem, over half don’t have cold storage or another way to salvage what they’ve produced.

Most have pivoted to other ways of selling their wares. For example, the survey found that online home delivery is up more than 250% over last year, while sales from online farm stores and CSAs saw small bumps.

And farmers suffering as a result of COVID-19 have cut payroll, taken on new debt, postponed bill payments, sold off capital, and reduced employee benefits in order to make ends meet.

Government help is sparse for small farmers

Almost 40% of the poll’s respondents have applied for government assistance, such as the Paycheck Protection Program or Economic Injury Disaster Loans, but close to 60% haven’t gotten any money, because they didn’t know how to apply, are the sole proprietor, don’t have access to the internet, or hire temporary agricultural workers with H-2A visas.

The research found that 28% have already taken on debt due to the pandemic’s impact and almost 33% expect to do so later this year.

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“Of those who expect to take on additional debt, the amount of debt ranges from 15-30% of gross annual income. Much of this debt has come from PPP or other government loans,” the survey said.

Labor remains a key problem. Almost 48% think they’ll have fewer workers this season—on average, 50% smaller staffs—because of less money to play employees, lower demand from buyers, not enough local workers, or visa problems.

About one in four farmers explained that fewer workers means they can’t get ready for the season correctly, which will result in smaller harvests. That’s compounded by how many have pivoted their businesses—more to direct-to-consumer, a model that demands more labor and more overhead, like packaging for retail items.

“Despite the significant changes to their businesses since the onset of COVID-19, 81.5% have not increased prices to account for higher labor requirements or overhead,” the survey found.

The timing ‘could not have been worse’

Leslie Cooperband of Prairie Fruits Farm, a goat dairy and farmstead creamery with a small orchard in Champaign, Illinois, felt the economic crunch, because the majority of her sales from her close to 80 acres were wholesale to restaurants and food service.

“We’re also a seasonal business, so our goats are dry in winter and have babies in spring,” she said. “The timing [of] when we started back in production is exactly when things started to shut down in a drastic way. The coincidence of timing could not have been worse.”

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But she and her husband, Wes Jarrell, tried to shift gears by launching an online store, placing their food in small independent stores, and supplying a school-lunch-turned-meal-kit company with six-ounce containers of fresh goat cheese. They also received a PPP loan to keep their 12 full- and part-time staffers employed and a Small Business Administration loan for operating expenses.

Cooperband, who’s been farming for 15 years, credits the goat cheese deal for keeping her farm intact.

“If not for that, we would be bleeding like no one’s business. That is making up the losses almost completely—that coupled with all the other avenues we’re running,” she said. “That everyone’s being really creative in trying to survive gives me hope. People are biding their time to wait it out.”