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Serving: United States
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Pandemic impact on small business on display

House committee hears from small business leaders, NFU leader about how COVID-19 has impacted business.

The House Small Business Committee focused on "How COVID-19 is impacting small businesses across the food system" during a Sept. 30 hearing.

National Farmers Union President Rob Larew was among those giving testimony. Larew said pandemic-related disruptions have exposed underlying weaknesses in the nation's food and farm system. He highlighted the need for significant structural reforms to protect farmers and consumers from similar disruptions in the future.

One of the primary contributors to supply chain delays and food shortages has been widespread corporation consolidation, particularly in the meat processing industry, Larew said. Since 1968, the number of slaughtering facilities has dropped from 10,000 to just 2,773 – representing a 72% drop in just 52 years. “As the number of plants has shrunk, many remaining plants have grown in size,” Larew said, citing the fact that “just 50 plants slaughter and process 98% of all cattle in the United States.” Similar levels of concentration across the food sector has made the entire industry “less competitive, resilient, and flexible,” to the detriment of farmers and consumers alike.

As a solution, Larew proposed policies that would stem the tide of consolidation as well as build regional food infrastructure. For the former, he recommended “stronger antitrust enforcement from the Department of Justice, the Federal Trade Commission, and the Packers and Stockyards division of USDA.” For the latter, Larew pushed for legislation that would support the development and certification of small- and mid-sized processing plants.

Another major problem exacerbated by the pandemic is chronic oversupply, Larew said. In recent months, restaurant closures and shifting demand has made matters worse, he said. “Many farmers and ranchers were left without a market for their products, leading to surplus crops being buried and milk being dumped,” he said. “Other farmers who managed to find a market often had to accept a lower price due to sudden loss of demand.” Overall, farmers are earning 6% less for their products than they were a year ago.

Though pandemic aid has helped farmers withstand persistently low prices, “policy changes are needed to address the causes – rather than simply the symptoms – of a broken farm economy.” One way to do this is through a supply management system that would balance farm production with consumer demand. This not only would have helped producers, but it likely would save taxpayer money as well. “If a reserve system had been in place between 1998 and 2010 for major commodity crops,” Larew remarked, “it would have reduced government payments by nearly $100 billion while net farm income would have remained about the same.”

Also testifying were Kimberly Gorton, President and CEO, Slade Gorton & Co., Inc, testifying on behalf of the National Fisheries Institute; Jimmy Wright, President, Wright’s Market, testifying on behalf of the National Grocers Association, and Collin Castore, owner, Seventh Son Brewing, president, Ohio Craft Brewers Association.

Wright said "independent grocers have experienced sustained and unprecedented levels of demand for grocery and household products" amidst the pandemic. At his market, they installed plexiglass shields at checkout, required face coverings, instituted senior hours and cleaned and disinfected the store thoroughly each night.

He praised grocery workers for showing up everyday amidst the pandemic.

"Seven months of working during the pandemic has taken a toll on our workers who are mentally and physically exhausted," Wright said. "While grocers have stepped up to do their part to recognize these supermarket superheroes by providing overtime pay, bonuses, and increased wages, we believe Congress must step up and show their support as well."

Castore said the brewing industry is struggling, citing a Dunham and Associates report that 651,000 jobs supported by the beer industry will be lost by the end of 2002 due to the pandemic.

"While taprooms and brewpubs continue to limp along at a variable pace wholly dependent on regulation and consumer sentiment many of my fellow Ohio small brewers and fellow small brewers across the country have little to no packaging capability, and have been unable to take

advantage of the rise of packaged sales and offset the lost revenue at their breweries," Castore said. "Many are quite literally hanging on by a thread at this point."

More than 1.7 million Americans work in the seafood supply chain, Gorton said. With 70% of the seafood being consumed outside the home, pandemic-related closures left the seafood industry in uncharted waters.

"One of the biggest issues affecting the seafood supply chain in the wake of the pandemic is the large unpaid debts owed to distributors for food that restaurants could not sell due to COVID- related government shutdown orders," Gorton said. "We estimate that the seafood industry has about $2.2 billion in outstanding bad debt and other distributors have about $10 billion. Small businesses cannot absorb a deficit of this magnitude. We need help to fix this."

Source: NFU, Small Business Committee
TAGS: Coronavirus
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