MSU Extension holds its final Solid Finances webinar until fall

Montana State University Extension held its final Solid Finances Webinar last Thursday, where economists talked about the ongoing impacts of the COVID-19 pandemic on industries and individuals.

Professor and Agricultural Policy Specialist at Extension Economics George Haynes discussed various financial relief programs stemming from the CARES Act, which was passed by Congress and signed into law by President Donald Trump March 27, and how these programs are being used.

Haynes said the Paycheck Protection Program is being used by business in various industries, but the benefits being reaped are not evenly distributed.

He said data shows the food service and retail industries are seeing far less benefit from the program when compared to manufacturing, which appears to be one of the industries benefiting most from this program.

He said the programs’ use is geographically unequal as well.

Haynes said Midwest states including Montana are seeing far more positive impacts from this program than far-west states like California and Arizona, as well as many southern states like Georgia.

He said this is in contrast with the Economic Injury Disaster Loan Program, which is seeing its most use on the East Coast while many rural states aren’t seeing the same level of usage.

He said Hawaii is taking full advantage of both programs.

Haynes said concerns about where this money goes are still relevant.

“One of the concerns that are out there, I think, they are worried that this money is flowing into places that maybe are less adversely affected by the pandemic,” he said.

Haynes said the PPP is more immediately important when looking at economic relief for small businesses.

“This program (EIDL) is not as big a deal in my eyes, at least when compared to the PPP program,” he said.

Haynes said EID loans only feature forgiveness of the emergency advance payment and require collateral while PPP loans can potentially be fully forgiven if a business plays by the rules, which primarily concern not laying off employees.

He said even though programs like these may, and in some cases are, running out of money, he thinks they are worthwhile despite their flaws.

“I think this is the crown jewel of stimulus programs for small businesses, and I’d really encourage you, if you know small business people ask them if they’ve applied for this money,” Haynes said, “If they haven’t I really encourage them to do so.”

He also encouraged people to look at the Montana Business Stabilization Grant Program which can potentially offer of a grant of $10,000, and the Montana Innovation Program which can provide a grant of $25,000, though he warned that that money is not as readily available.

MSU Assistant Professor of Economics of Farm Management Decisions Kate Fuller, who at a previous webinar provided her insights on the state of the agriculture industry, provided an update on where things stand in Montana and the world.

“Here in Montana, our agricultural trade situation is a very global one, so we want to know what’s going on with COVID and our trading partners,” Fuller said.

She said Mexico’s recent troubles with the pandemic have impacted ag trade because they are one of the biggest trading partners.

Fuller also said Russia, one of the biggest economic competitors, has seen its own problems with the pandemic, and that has further affected trade around the world.

She said, compared to other states, Montana’s ag economy is actually doing relatively well, but there are still problems in the commodities markets which she said have been on a wild ride for the last five months.

Fuller said even in January many of these markets were struggling and they’ve only gotten worse since, even taking into account that many of them are in a state of significant flux.

“These markets are moving all over the place on a day-to-day basis,” she said.

Fuller said sentiment among ag producers has continued to fall in the month since she originally appeared in the webinar and she expects it to fall more in the coming months.

She said people in Montana are generally pessimistic about the state of the ag industry.

Fuller said a recent survey found that 100 percent of farmers report a decreased rate of loan repayments, net farm income and farm capital spending, with 50 percent reporting decrease in farm household spending in the last three months.

She said the general expectation is that all these categories will continue decreasing in the coming months.

She said the wheat and cattle markets in particular have seen some serious issues crop up in the months since the pandemic, though she did say the cattle market is looking better for producers than it did last month.

Fuller said that according to the World Agricultural Supply Demand Estimate U.S. production and stock will decline, but global production and stock is rising globally along with consumption.

She said cattle prices have been low enough to cause concern that permanent damage could be done to many cattle producers’ establishments.

“We have seen some concern that some ranches even here in Montana will have to shutter,” Fuller said.

She also said the pandemic has pushed anti-trust concerns about packing plants’ place in the industry to the forefront.

These concerns have been expressed by a number of state attorneys general, including Montana’s Tim Fox, in a letter recently sent to U.S. Attorney General Bill Barr.

She said economists have been analyzing the situation for a long time and she said she wonders what the result of this letter will be.

“It will be very interesting to see what comes of this,” Fuller said.

Fuller also talked briefly about the potato market.

She said the seed potato lab on campus put together a survey of seed growers throughout the country, and according to the responses 66 percent of them have lost sales in the wake of the pandemic.

However, she said, news is not universally bad.

She said Montana’s pulses, lentils and garbanzos, or chickpeas, are doing well on the market with demand and prices for these products having risen in the wake of the pandemic, though she did say there have been supply chain hiccups.

Fuller also said according to the most recent Crop Progress Report Montana has 65 percent good to excellent ratings, which is higher than most of the country.

She also said while the pandemic has taken a toll on local food service establishments it has been illuminating to watch how business owners are adapting.

“This is a really interesting industry to watch because, I think there, has been a lot of fast innovation going on,” Fuller said.

She said by all indication, delivery services have been largely successful in keeping many businesses alive through the pandemic.

Fuller also talked about the pandemic’s effects on the cannabis industry which, she said, is notoriously difficult to study.

“Data for these industries are hard to get your hands on,” she said.

Fuller said the push for legalization has been slowed down by the pandemic and the performance of the industry varies wildly from state to state based on what kind of laws they have, and how essential the businesses are considered during the pandemic.

She said one observation of note is that customers have recently been moving away from smokable goods and are instead buying edible ones.

Fuller said she suspects this is due in part to fear of COVID-19 which causes respiratory problems.

She also talked about the Coronavirus Food Assistance Program which is supposed to provide financial assistance to farmers and ranchers and has been funded with $19 billion in the CARES Act.

Fuller said details on the program are still lacking, but she encouraged people in the industry to look into it sooner rather than later.

MSU Extension Economics Associate Specialist Joel Schumacher, who has been organizing these webinars, closed out the event with a discussion about recent changes on various policies and programs people can use during the pandemic.

Schumacher said changes have been made to FLEX plans that allow the inclusion of more eligible expenses including over the counter medicine and menstrual health products.

He said there have also been changes to how tele-health services are covered under many health insurance plans since the pandemic began.

Schumacher said people who are experiencing financial hardship and have federally backed mortgages can apply for a 180-day forbearance in which the mortgage will continue to accrue interest, but missed payments will not be reported to credit agencies.

He recommended people contact their lender for details.

Schumacher also provided an update on how the CARES Act as a whole is being handled.

He said residents of Montana have received 434,000 CARES Act payments, totaling 760 million dollars, as of a week ago.

He said estimates indicate that nationwide there would be 150 million payments and 130 million of those have already been made.

Schumacher said MSU Extension will likely hold a similar webinar series in the fall with updated data about various industries.