COVID-19 Poses Unique Challenges For Cotton And Peanut Industry
The effects of the coronavirus across the state are far reaching. Aside from the obvious impacts to health, COVID-19 is touching nearly every part of the economy, including agriculture.
Cotton and peanut farmers in southern Georgia are experiencing unique challenges in production and distribution of their crops
Michael Brooks manages a peanut company and a cotton gin at Omega Farm Supply and Gin Co. in Omega, nearly 190 miles south of Atlanta. He also co-founded Southern Drawl Cotton two years ago, a company that makes and sells linens from Georgia-grown cotton.
Brooks said the cotton industry was already in a financial bind before the pandemic. President Donald Trump imposed sanctions on China in 2018 that included investment restrictions and tariffs on Chinese imported goods. Some of those goods included cotton products.
“Because of sanctions on China, the cotton prices are already coming down and actually, they've been below cost of production,” he said. “So we're losing money to grow it.”
The farming company received a Market Facilitation Program (MFP) payment last year from the United States Department of Agriculture while simultaneously adjusting to low profits. The government gave them a small percentage of the taxes collected on imported goods.
“I don't think anybody's going crazy, but they're trying to get us back up to a price we can live with,” Brooks said.
When the coronavirus hit Georgia, Brooks said his operation continued as normal. Cotton and peanuts are planted only once a year and the farm couldn’t stop.
“When the virus hit and the stay-at-home orders [were mandated], and everybody may have been at home, it hasn't changed my schedule one bit,” he said.
Brooks and the company continued working through quarantine and even worked on weekends to fulfill shipments and orders. However, production slowed down after two weeks and shipments were delayed.
Brooks said once their cotton is bought — whether from Pakistan, India, Taiwan or other countries around the Pacific Rim — it’s sent back spun or as finished products like clothing, and the goods are subject to taxes imposed from the sanctions on China.
“When we're importing those finished goods in, that's what they've been taxing,” he said. “Not just the cotton products.”
When Trump imposed sanctions on China two years ago, Brooks said cotton prices were at 92 cents per pound. Before the Phase 1 trade agreement with China, prices dropped to 48 cents per pound. When the market rose again, cotton was at 72 cents before the coronavirus hit, but now the price is sitting at 57 cents.
“We got cut almost in half and you don’t just recover from that,” Brooks said.
However, Southern Drawl Cotton’s business hasn’t been negatively affected despite growing unemployment around the country.
“We hesitated [to continue business] because we didn’t think anyone would buy because people were out of work, but we actually did very well,” Brooks said.
Cotton demands worldwide have also dropped dramatically because of the coronavirus pandemic. Retail sales plummeted and apparel stores were forced to shut down to slow the spread of COVID-19, and with unemployment rising in the US, there’s reduced need for cotton goods because of a lack of disposable income.
“The higher the economy goes, more people will buy cotton and cotton products, but peanuts are reversed,” Brooks said.
Brooks said peanuts have been overproduced worldwide for the past three years, and the demand underwhelmed the peanut supply.
“As the economy does good, people can afford to buy chicken and steak,” Brooks said. “You're not eating peanut butter and jelly sandwiches.”
But as the economy suffers from the pandemic in the US and more people are unemployed, peanuts have become a reliable staple in households. Warehouses that used to hold excess amounts of peanuts and peanut butter are now trying to keep up with the new demand.
“Everybody got scared that they were gonna run out of food,” Brooks said. “They’ve sold out of peanut butter. [As soon as it’s] hit the shelves, I mean, it’s gone.”
Even though the peanut market is booming during the pandemic, maintaining a high quality of peanuts is a challenge.
The hot weather conditions while harvesting peanuts in 2019 made quality peanut production difficult. Fungi such as Aspergillus flavus and Aspergillus parasiticus favor Georgia’s warm and humid climate, and if peanuts are harvested and stored in extremely hot conditions, the fungi can produce aflatoxins.
If cattle feed has aflatoxins and cattle eat it, aflatoxicosis can impair reproduction, damage their metabolism, reduce growth rates and lead to death.
Though Brooks tests his peanut crops for aflatoxins, the increased demand for peanut butter makes the risk of contamination higher and the product quality lower because of how quickly peanut butter production has ramped up.
“Now the problem is we sold them the peanuts, but we don't have the quality peanuts for them to make the peanut butter,” he said. “[The prices are] inflated because of supply and demand, but truthfully, if we would have had a really good harvest season, then prices would still be down.”
Even if worldwide coronavirus cases decline, a vaccine is accessible and the world returns to normal, Brooks said it could take years for the cotton and peanut industry to recover.
Before the pandemic, three hurricanes—Hurricane Matthew in 2016, Hurricane Irma in 2017 and Hurricane Michael in 2018— devastated southern Georgia’s agriculture, and it’s been trying to stabilize since then.
“Inevitably, we know one out of every four or five years, we're going to get slapped in the face,” Brooks said. “I can't tell you if it's dry weather or if it's a hurricane, but generally, if we get hit with one of them, it takes a year or two for us to overcome that.”
Despite the stresses of the agriculture business, Brooks is optimistic. As a child, he worked in the tobacco fields and in his family’s auto shop. He later learned about the cotton business, went to school for agriculture and that led to several jobs in the industry before eventually stepping into Omega Farm Supply and Gin Co.
Brooks is very familiar with the unique hardships agriculture provides, but the premise of hard work and providing for his wife and two children are his motivations.
“I’m just a dad trying to earn a living,” Brooks said.