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  • Five million pounds of green beans that we have destroyed.

  • Eight million pounds of cabbage that we've destroyed.

  • We have to grind it up back into the ground.

  • It's the only choice we have, and hope for a better day.

  • Paul Allen isn't alone.

  • Farmers across the country are destroying millions of pounds of fresh

  • produce as the coronavirus has majorly disrupted the food supply chain.

  • Initially, consumers hoarded items like rice, beans and frozen foods.

  • The panic buying resulted in empty aisles and some wondered if the U.S.

  • was in danger of a food shortage.

  • That's far from the reality though, especially when it comes to produce.

  • The United States had a food surplus before the crisis, and we still do.

  • According to the U.S. Department of Agriculture, 30 to 40 percent of

  • post-harvest food is wasted annually.

  • And the coronavirus is making the situation worse.

  • So, it was in the middle of March when they shut down all of the

  • restaurants, you know, and then all the theme parks shut down, cruise

  • lines shut down. In a matter of days, m any farms lost the majority, if

  • not their entire market channel.

  • Before the crisis, o ver half of American's food dollars were spent outside

  • the home, at restaurants and other food service locations.

  • The coronavirus immediately changed that, but the farmers had already

  • planted their crops.

  • So now they're destroying them, plowing cabbage, lettuce and other fresh

  • produce intended for restaurants and schools, straight back into the

  • ground. Yeah, I'd say 25 percent of the crop that's grown in our industry

  • is probably not being able to make it to either retail or food service.

  • Probably the most trying time that we've probably ever had since the Great

  • Depression here in the Salinas Valley and farming.

  • While restaurants and schools are closed, this doesn't mean that we're

  • eating any less. We're just getting more of our food from grocery stores.

  • So why are farmers still destroying their crops?

  • The supply and demand in an overall sense is exactly the same.

  • The challenge is how we're getting that food, where we're getting that

  • food and in some cases, what types of food we're getting.

  • Basically, farmers are up against an inflexible food supply chain, which is

  • specialized for the end customer.

  • Longstanding contracts between farmers, restaurants, schools and grocery

  • stores determine how the crops will be packaged and processed.

  • So it's just not easy to divert all the produce intended for restaurants

  • to grocery stores instead.

  • You're really designing your farm to fit whatever specific sales outlet you

  • have. The system just isn't set up to be that nimble.

  • A quarter of all food consumed and over half of all food dollars go to the

  • food service sector.

  • So many operations are designed specifically with restaurants in mind.

  • Most of the volume sizes per unit are larger.

  • Where you might get a 12 ounce bag of veggies in a supermarket, most of

  • the food service stuff is like 10 pound bags.

  • So it's not easy to switch to those factories, the packaging in those

  • factories, from restaurant or commercial to consumer.

  • Rodney Braga, President and CEO of B raga Fresh Family Farms in

  • California's Salinas Valley, has been able to send a greater share of his

  • produce to grocery stores.

  • But he says the distribution centers are facing a bottleneck and just

  • can't handle more food right now.

  • They're not set up to run at 200 percent , they're set up to run

  • efficiently at 100 percent.

  • S o they're maxed out now at 130, 140 percent of normal.

  • So they're at that crunch point.

  • And when it comes to perishables like the lettuce grown at Br aga Fresh,

  • it's not possible to store it until distribution centers have capacity or

  • until the economy opens back up.

  • It's either harvested and sold and consumed or it's done away with because

  • the shelf life is, you know, two weeks max.

  • All this means that tens of millions of pounds of fresh produce are either

  • rotting in fields or being destroyed, even as food banks are facing a 70

  • percent average increase in demand, as the crisis has left millions of

  • Americans newly unemployed.

  • In September 2019, the U.S.

  • Department of Agriculture estimated that 37 million people were facing

  • food insecurity in the United States.

  • The national food bank network, Feeding America, estimates that figure

  • will increase by 17.1 million because of the crisis.

  • A lot of us have chose to spend more money for harvest cost just to send

  • food to food banks, and we've done a lot of that.

  • But spending money to harvest, process and transport crops for donation

  • puts a further strain on farms that are already struggling financially.

  • Lots of Allen's paying customers have already gone away since many of his

  • crops are sold primarily to restaurants.

  • Our cabbage is like 65, 70 percent.

  • Green beans are probably 60 percent food service.

  • We have to grind it up back into the ground.

  • I have a friend that had to destroy 10 million pounds of tomatoes.

  • Another friend that has destroyed 55 million pounds of leafy vegetables

  • and produce. Farmers aren't the only ones taking a hit.

  • Five percent of the country's milk supply is currently being dumped, and

  • hundreds of thousands of eggs are being smashed daily , s dairy farmers

  • and poultry farmers deal with similar supply chain challenges.

  • While we won't have a complete picture of the financial impact until the

  • crisis subsides, Allen says that his revenues dropped substantially since

  • mid-March, amounting to hundreds of thousands of dollars in losses every

  • day. Well for cabbage, my revenue's down 60 percent.

  • For beans, for a month time I mean, it was down 50 percent.

  • Oftentimes you're talking about 250, 300 thousand dollars per day because

  • the volume is so large.

  • Even farmers who grow primarily for grocery outlets are being hit hard as

  • they've seen wholesale prices for produce fall.

  • The price impacts that we're starting to see are ten to twenty five percent

  • lower than what they had been suggesting a couple of months ago.

  • Braga Ranch sells primarily to large grocery chains, and while demand is

  • up, Braga says it's just not enough to overcome the glut in products like

  • iceberg and romaine lettuce.

  • To have demand be up 30, 40, 50 percent, t hat usually would mean that the

  • price is very good and very high.

  • But there's so much crop, and some of it being disked under, that you've

  • got prices down basically at breakeven.

  • Even if the supply chain bottlenecks were solved, t he demand for certain

  • items might never keep up with supply, until the restaurant business has

  • fully recovered. The crisis has revealed that Americans just consume more

  • vegetables at restaurants than they do at home.

  • Who all goes to a supermarket and buys a head of cabbage anymore?

  • It's just not happening. And who makes coleslaw at home anymore?

  • They just really don't. But so long as farmers assume that the food

  • service industry will open up over the next few months, it just doesn't

  • make sense for them to completely alter their growing patterns or seek out

  • new markets, e ven as the sector faces substantial losses.

  • We were estimating for the 2020 year, there would be about a 20 billion

  • dollar loss out of about 100 billion dollars in net farm income.

  • Unfortunately, the situation has gotten worse since we've done those

  • estimates. So 20 billion looks like a fairly optimistic scenario.

  • Instead, many are hoping that government interventions and aid packages

  • will help to carry them through this rough patch.

  • In mid-April, the White House announced their long-awaited 19 billion

  • dollar farm relief package, which sets aside 16 billion in direct payments

  • to farmers and ranchers and three billion in government purchases of

  • dairy, meat and produce intended for distribution to food banks.

  • Absolutely, no question, it's all going to help.

  • But there's no way it's going to take each individual business back to

  • where they would have been in 2020 absent all of this.

  • Farmers welcome the relief, though many are upset that the program caps

  • payments at 125 thousand dollars per product and 250 thousand dollars

  • total per farmer.

  • A lot of farmers, particularly farmers who grow vegetables and fruits, they

  • are going to lose significantly more than a quarter million dollars in

  • this year's pandemic.

  • We need to make farmers whole and not have an arbitrary dollar cut off.

  • Allen says because some crops cost much more to grow, it's unfair that all

  • farmers have the same ceiling.

  • He claims the 125 thousand dollars per product cap is less than what one

  • day's harvest could bring in.

  • Cabbage will be probably 10 times the amount to grow and harvest as what a

  • soybean crop is, no doubt.

  • And what's happened is the USDA has really made this one size fits all.

  • But what is fair is not always equal.

  • But as farmers push for more money, at least some of this initial aid

  • package will help redirect the enormous amount of food waste to food

  • banks. For the next six months, the U.S.

  • Department of Agriculture plans to spend approximately 100 million dollars

  • per month purchasing excess produce and 100 million on dairy and meat.

  • These items will be combined into variety boxes to be distributed at food

  • banks and other community organizations.

  • This will be a boon to the millions of Americans facing food insecurity as

  • a result of the pandemic, but farmers say the government purchases won't

  • come close to solving their food waste woes.

  • Even if we could harvest everything that t he food banks could take, it

  • still wouldn't be one tenth of what the food service sector is in our

  • country. Analysts, academics and farmers themselves have all gotten used

  • to admitting that they just don't know what to expect over these next few

  • months, as it's become clear that the return to normal will be a slow,

  • halting process.

  • In my opinion, we're in a bad spot for at least two years.

  • We're not done with this until you and I have a vaccine that has been

  • distributed everywhere and works.

  • And by that point, we're going to have debts that are measured with with

  • the letter T instead of the letter B.

  • And even as many states begin to open back up, the dining experience will