In this week’s version of Covid Insights, we are going to break it down into a few sections. Let’s start with some interesting facts we picked up from various industry media sources.

• For the week of April 5th, Frozen Produce sales were up 45%, shelf stable sales increased 42% and fresh sales were up 16%.
• Fresh vegetable sales grew 27% while fresh fruit sales were up 7%.

 
These trends have been fairly consistent since early March and we expect this to continue.
 
Interesting facts affecting the restaurant industry include the following.

• Hello Fresh is reporting sales are up 66% in Q1.
• Dinner is now the highest volume daypart in the restaurant industry replacing lunch.
• 52% of consumers are reporting that they will not feel comfortable dining out until Covid 19 improves.
• 50% of consumers said they will order more take out once Covid 19 subsides.
• China is requiring customers to be sprayed down with disinfectant before entering a restaurant calling it the Shanghai Spray. Yuck!

 
Here are some insights affecting the retail side of the business.

• 41% of consumers said they will continue to shop online post COVID-19.
• 1/3 of consumers report shopping online more frequently for grocery.
• 43% of consumers have never shopped online for groceries.
• 46% of consumers report buying larger sizes in the grocery store.
• About 1/3 of consumers are buying more private label, ad items and value packs.

 
The much over used term “the new normal” does not feel strong enough as we prepare for the Post COVID-19 consumer.  They will fundamentally change their behaviors for eating out and grocery shopping in a manner we have never seen in our lifetimes.  We need to prepare.
 
Here are a two interesting quotes that I feel are relevant for this week.
 
“….despite the horror of it all, this is the best time ever to start a business.”
​Mark Cuban
 
“You only find out who is swimming naked when the tide goes out.”
Warren Buffett
 
I take away two thoughts here.  Disruption creates opportunity.  The best innovators will look back and see this as the pivotal moment of their career.  And, strategic planning takes on a new meaning. We need to plan for the unthinkable and promote a mindset of adaptability during tough times. Leadership is more important today than at any point in our careers. Oh, and always where a bathing suit!  😊
 
It is not a secret that those focused on the food service side of our business have been impacted the most. Out of necessity, we are seeing some fast moving and innovative strategies emerge. 

• Panera and a few other restaurants are now selling groceries for pick up.
• Sysco is introducing a pop-up store where you order online and go to a central pop-up location the next day to buy large packs of products. This is aligned with the consumer’s desire for more large packs.
• Baldor (70% food service) introduced a direct to consumer model in a manner of weeks. They are seeing success and plan to keep it running post COVID-19. They leveraged their trucking infrastructure to make it all happen.

 
What ties each of these together is that they had to reinvent themselves very quickly.  Many more examples are out there.  Two of these companies are long standing, yet their leadership looked beyond the four walls and allowed their teams to create new solutions. As we know, it was hard to steer the Titanic. Sysco and Baldor could have been the Titanic, yet they found a way to adapt quickly. I expect many more innovations from this sector.
 
Our goals to support our clients going forward include the following.

• Stay close to the consumer and be on the forefront of their changing behavior.
• Engage with retail buyers to better understand their strategy changes.
• Help our clients win at E-Commerce.
• Encourage experimentation of new concepts including business to consumer.

 
Submitted by a friend of LIA

Trump Signs Interim Relief Bill Into Law, PPP Applications Could Open Monday

Today, President Trump signed the $484 billion “Phase 3.5” emergency interim coronavirus relief package into law. The bill includes $310 billion in additional funding for the Paycheck Protection Program (PPP), which provides small businesses up to 500 employees with forgivable loans to pay up to 8 weeks of payroll costs including benefits.

The Small Business Administration (SBA) could begin taking loan applications as early as Monday, April 27.

Funding will be available on a first-come, first-served basis, and the last round was depleted within two weeks. You can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, or Farm Credit System institution. Work with your lender to get your application in order now so you can be at the front of the line as soon as the loans become available.

Funds can also be used to pay interest on mortgages, rent, and utilities. Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.

For additional information, visit the U.S. Department of the Treasury or U.S. Small Business Administration. 

Courtesy of Candi Fitch, Class 28
Executive Director of Idaho Fresh Fruit & Vegetable Assn.
A member of Western Growers (source of the information)

I am dealing with a lot of Washington growers that face a very different landscape than we have here in Idaho.  They are cutting back on labor/workers, especially the H-2A because of lawsuits by farm labor unions, Columbia Legal and the state workforce agency who are not ag friendly.  Growers are being accused of not enforcing social distancing because of bunk beds and housing capacity, van and bus capacity, etc.  I am so thankful to be based out of Idaho because here in Canyon County it feels like business as usual for the most part.

Submitted by:
Jen Uranga, Class 37
jennifer@mwagconsulting.com​

White House Seeks to Cut Wages, Smooth Migrant Labor Hiring for Farms Squeezed by Coronavirus
By By Michelle Hackman and Jesse Newman, The Wall Street Journal

 
WASHINGTON—The Trump administration is taking steps to reduce costs and restrictions on farmers looking to hire migrant workers during the coronavirus pandemic, including lowering their minimum wages, according to people familiar with the plans.

The push is driven by newly installed White House chief of staff Mark Meadows and Agriculture Secretary Sonny Perdue, these people said, and many agricultural employers support lower wages. Mr. Perdue has long championed easing requirements on seasonal agricultural guest-worker visas, known as H-2A, and the administration’s pandemic response has accelerated some of these changes.

The wage change, which the administration hasn’t yet formally proposed, would effectively cut the minimum wage for migrant farmworkers to $8.34 an hour, 15% above the federal minimum wage. That would amount to a cut of around $2 to $5 per hour from current wage rates, which vary by state.

States with higher minimum wages wouldn’t be subject to the new rate. “During these difficult times, President Trump and Secretary Perdue are doing everything to ensure farmers have the tools to carry out the vital work of feeding the American people,” an Agriculture Department spokesperson said in a statement. The White House didn’t respond to requests for comment.

For more on this story, click here. The Wall Street Journal is a subscription-based publication. ​

Submitted by Jarom Jemmett, Class 39

This week, the Department of Homeland Security announced a temporary order lifting the three-year limits of stay on H-2A seasonal workers.
Highlights include

• The three-year limit on H-2A workers' stay allowance has been lifted.
• The rule applies to seasonal workers who have applied for an extension of their current term, or those applications that were made on their behalf on or before March 1, 2020.
• The rule will remain in effect for 120 days.

Click here to read the full document

Submitted by Jarom Jemmett, Class 39

Although the future is very uncertain, our hope is to keep you updated as much as possible with what we know today.
 
Milk Supply:   I’m sure you have seen the many stories of milk getting dumped across the country as certain processors close their doors or limit production.  So far we are doing OK at our Jerome facility and finding enough sales for cheese to keep the plant running full.  However, with milk getting dumped across the country, finding a home for any surplus milk is extremely difficult and we anticipate extremely weak spot prices for surplus milk until the situation improves.  With overall dairy demand down sharply, maintaining your milk production levels near your “Planned Production” level is very beneficial to the overall situation.   
 
Butterfat:  As mentioned previously, our biggest challenge in Idaho right now is finding a market for the cream that we generate.  I know many of you are working with your nutritionist to find ways to quickly reduce the % butterfat.  We highly encourage those efforts given the lack of a market for cream and the declining butterfat prices.  The current market value of class III butterfat is in the mid 1.30’s as of today.  If the situation on cream does not improve soon, we may be forced to make a further deduction on butterfat.  We will try to avoid that, but we also can’t escape the reality that some of our cream customers have canceled contracts and there not being alternatives.   Again, anything you can do to reduce butterfat will help us all.
 
This is no doubt an extremely challenging time in the dairy industry and we are all feeling that.  We are working extremely hard at our end to adapt to the many challenges and new realities.  We want to be your trusted partner and a long-term market for your milk.  As we navigate through these challenging times, we will do our best to provide you as much information and transparency as possible to help you make the best decisions for your operation.  It has become survival mode in our industry, but we’re confident that if we can endure these challenges together, we’ll be stronger for it and well positioned in the long-term.

Submitted by Hank Hafliger, Class 12

​Would you possibly have any contacts on the Agricultural or Livestock Councils that may have interest in the beer that we will be decanting from our draft containers; i.e. ½ BBLS, ¼ BBLs and 1/6 BBLs. I know that when I was in CO we had a pig farmer that used our spent grain and disposed beer as part of their feed.

Submitted by Jeremy Pisca
jpisca@rischpisca.com

Schneider Farms (Pasco WA) which is one of Robin’s lessees was told by Lamb Weston that they are not going to take the last of the 2019 Potatoes that they contracted for.  This represents 20% of the 2019 crop and according to Ed Schneider (owner) Simplot is following suit.  Ed Schneider (past WA Potato President and past National Potato President) also owns Elite Seed which buys and cuts potato seed for growers in the Columbia Basin has experienced a 50% reduction in cut seed orders this spring which creates real issues because he has already taken delivery of the seed potatoes and is in the process of cutting them for his customers.

Submitted by Craig Lindquist, Class 31

According to information that Scott Calhoun received this week Frank Tiegs (Farms over 250,000 acres) received notice from Lamb Weston that his 2020 potato acreage has been reduced by 50%.

Submitted by Craig Lindquist, Class 31

JBS Meat Packing which is based in Greely, Colorado employs 78,000 people processes beef and other products.  Apparently they have 3000 confirmed cases of COVID-19 which has resulted in the closing of 8 of their plants across the country.

Submitted by Craig Lindquist, Class 31

Dear LIA Alumni: The weekly Alumni Informational Call related to COVID-19 have been of great value to many participants. After each call we frequently receive updates from our Alumni from many different parts of the state and from other regions in the country. We have established this LIA COVID-19 Resource Blog where we will post some of these updates for you to read. On each update we will post the name of the LIA alumni as the source and their email address in case you want to follow-up with questions or comments. Thank you for your participation and we hope you find these calls and this information to be of value as you deal with COVID-19 in your operation and community.
 
Rick Waitley
Executive Director