COVID, America’s Food Supply, and Farm Investing

Any American who has visited a grocery store in the past month has witnessed empty produce and meat shelves — not to mention toilet paper! For now, those shelves are able to be restocked as the supply chain catches up to panicked consumer behavior. However, the longer government-induced shutdowns persist, the higher likelihood that America’s food supply could face more severe disruptions. Food security relates to the availability of food and the ability of people to access it, either physically or financially. America’s food security is dependent on a complex global network of agriculture producers, distributors, transportation providers, and consumer-facing retailers of various sorts. The COVID crisis is causing Americans to take a look at the fragility of our food system and how agriculture can evolve to make it more resilient.

Consumers Want Comfort & Affordability

Prior to the pandemic, American diets had become increasingly fragmented and specialized. Now, consumers are looking for quality, value, and convenience in their food purchases. One of the challenges of the pandemic is the uncertainty it has created both in consumer behavior and in the response of food supply chains. Shipping costs have escalated rapidly, which will drive higher cost consumer staples. Foreign livestock imports have been disrupted and processing facilities have temporarily closed, raising the price of domestically produced beef. Price increases could also be magnified by hyperinflation caused by the massive amounts of government stimulus.

Additionally, demand for organic, natural foods will likely decline because consumers won’t be looking for premium products right now. Many of these products are produced outside the United States and those supply chains remain at risk.

Consumers in urban areas may begin to think more about living in COVID “hotspots” and consider the advantages of moving out of the city. Remote work will become more of a norm as some people begin searching land for sale and moving to rural communities where they can still work their “city jobs,” but be closer in touch with agricultural producers.

A Changing Farm Investing Landscape

Commodities that were in a price slump prior to COVID have been hit particularly hard and many of them are plowing over freshly planted fields rather than face losses at harvest time. Farmers in corn and soy are suffering, though wheat futures have experienced a boom due to the renaissance in bread making as people have more time at home to bake.

On the other hand, indoor agriculture will likely see a boom in investments. A significant majority of the leafy greens and other vegetables consumed in the United States are produced in California due to the state’s nearly perfect year round growing climate and access to migrant labor. Indoor and locally grown produce will increase in demand due to safety, availability, and affordability. Shifting vegetable production away from concentrated areas to meet consumer needs will happen through investments in controlled environment agriculture, allowing food to be grown sustainably in harsher climates.

Plant-based meats have been extremely popular the past couple of years with institutional investors, and have shifted large tracts of farmland into growing pulses and other components that make up the numerous ingredients that go into products like the Impossible Burger. These crops and additives are produced from a large number of geographically dispersed farms and factories and are susceptible to supply chain disruptions. Despite temporary closures to livestock processing plants, simpler sources of animal-based protein are more reliable in times of crisis. Investments in smaller, geographically-dispersed processing facilities will be necessary to build a more robust livestock distribution network.

New investments into regenerative farmland for sale, as well as local and sustainable agriculture, will be needed to shift America’s production to accommodate supply chain shocks, while keeping food secure and affordable for everyone.