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April 7, 2020
By Mary HightowerU of A System Division of Agriculture
(1,038 words)(Download this story in MS Word format here.)(Newsrooms: With additional accompanying graphics at https://flic.kr/s/aHsmMrft75)
FAYETTEVILLE, Ark. — Arkansas agriculture and the state’s rural areas may face the
potential for significant disruption in supply chain, labor and government services
due to the effects of the COVID-19 pandemic, according to a multi-sector economic
impact released by the University of Arkansas System Division of Agriculture.
The 15-page report, released Friday, provides an overview of potential impacts to
agriculture’s protein sector, including beef, pork and chicken; its row and field
crops sector; the specialty crop sector, including fruits and food sold across local
foods networks; as well as stresses being faced by county and municipal governments
and the tourism industry. The full report is available at https://www.uaex.uada.edu/COVID-Ark-Economy.
“Arkansas is highly reliant on agriculture – a functional food supply chain in these
times is critical and agriculture is very important to the state’s economy with about
a sixth of its economy depending on this sector,” said Mark Cochran, vice president-agriculture
for the University of Arkansas System. “We needed to quickly assess the potential
impacts all around as the state grapples with this pandemic.
“It’s important to note that this is a first installment,” he said. “We will continue
to analyze the situation and provide timely reports from this highly experienced team.”
The report was prepared by the Agricultural Economics and Agribusiness faculty of
the University of Arkansas System Division of Agriculture: John Anderson, department
head; Assistant Professor Alvaro Durand-Morat; Wayne Miller, professor and extension
economist; Jennie Popp, associate dean of the Honors College for the University of
Arkansas; Daniel Rainey, associate professor; Ron Rainey, professor; Scott Stiles,
extension economist; and Brad Watkins, professor.
The report noted that even at this early stage, the effects are apparent.
The situation has created tremendous uncertainty and has greatly increased the risks
from price volatility, uncertain labor, availability of inputs and the threat of a
serious recession, Anderson said.
GOVERNMENTCounty, municipalA COVID-caused decline in consumer spending due to unemployment will mean losses in
county, municipal and some state sales tax revenue. Those losses in turn will “will
impact those counties that rely heavily on them to pay for the services they provide
to residents and businesses,” said Miller.
The report said the specific effects will depend on the county’s dependence on local
sales tax revenues. Miller said two mitigating factors could reduce the effects of
a COVID-19-led recession on local government revenue. One would be the ability to
collect sales tax revenue from remote sellers. The other would be portions of $2 trillion
Coronavirus Aid, Relief and Economic Security, or CARES Act, which provides some funding
for families, unemployed workers, and state and local governments.
“While these factors are expected to slow and limit the extent of the recession, they
are not expected to provide enough assistance to help local governments avoid making
budget cuts in 2020,” he said.
AGRICULTUREProtein sectorBeef purchases are closely linked to both consumer confidence and disposable income.
“Recent panic buying has affected the entire sector; wholesale prices for beef and
pork have spiked,” Anderson said. “However, these gains are expected to be short-lived.
Widespread unemployment and general economic uncertainty are expected to cause consumers
to reduce future expenditures, favoring cheaper protein cuts.
“Chicken seems best positioned given its relatively low domestic price point and its
diverse portfolio of export customers,” he said.
Any shutdown of processing plants due to labor issues would disrupt supply chains
both back to the farms and to the end consumers. The ability of transportation systems
to adjust to any changes in labor or the flow of products and inputs will also be
very critical to maintaining functionality, according to the report.
The picture for crops is mixed, according to Stiles, Watkins and Durand-Morat.
Lower fuel prices and interest rates were the one bright spot for farmers.
“Steep declines in energy prices and easing access to capital can benefit energy and
capital intensive crops such as rice and cotton. Many producers have found opportunities
to refinance term debt and thus improve liquidity,” the report said.
Specialty cropsCOVID-19, weather and financial conditions are squeezing specialty crops as the season
“COVID-19 and a one- to three-week predicted early season start has created confusion
regarding farmworker availability, including domestic and H2A labor, likely resulting
in a lower supply of skilled workers for both planting and harvest,” Ron Rainey said.
“Further, action plans are still lacking regarding what to do if a worker contracts
the virus. Such labor disruptions will lead to crop losses.” There is additional pressure with the closing of schools and restaurants, which have
“eliminated many existing direct markets for farmers and ranchers,” Rainey said.
TOURISMIn 2018, Arkansas’ Accommodation and Food Service sector and the Arts, Entertainment,
and Recreation sectors represented roughly 7 percent and 1.4 percent of the state’s
total direct employment, respectively. With travel restrictions and the closure of
dine-in opportunities at restaurants, “some estimates put lay-offs in these sectors
between 80-90 percent for April and May,” Daniel Rainey said. “Many fast food chains
with drive-through windows have seen an increase in activity over the past few weeks
as dine-in services have been curtailed. However, if more people fill the unemployment
lines, these increases are not likely to last for long.”
The report suggests the sector could see improvements “if the economy gets back to
For information and resources on COVID-19 for families, businesses and others, visit
To learn about extension programs in Arkansas, contact your local Cooperative Extension
Service agent or visit www.uaex.uada.edu. Follow us on Twitter at @UAEX_edu.
About the Division of Agriculture
The University of Arkansas System Division of Agriculture’s mission is to strengthen
agriculture, communities, and families by connecting trusted research to the adoption
of best practices. Through the Agricultural Experiment Station and the Cooperative
Extension Service, the Division of Agriculture conducts research and extension work
within the nation’s historic land grant education system.
The Division of Agriculture is one of 20 entities within the University of Arkansas
System. It has offices in all 75 counties in Arkansas and faculty on five system campuses.
The University of Arkansas System Division of Agriculture offers all its Extension
and Research programs to all eligible persons without regard to race, color, sex,
gender identity, sexual orientation, national origin, religion, age, disability, marital
or veteran status, genetic information, or any other legally protected status, and
is an Affirmative Action/Equal Opportunity Employer.
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Media Contact: Mary HightowerDirector of CommunicationsUniversity of Arkansas System Division of Agriculture firstname.lastname@example.org 501-671-2006