COVID-19 Impacting Craft Beer Market

Mike Snider reported recently at USA Today Online that, “Beer lovers may soon find themselves crying in their beer – or at least what’s left of it. And you can blame it on the coronavirus.

“After a decade of ever-expanding beer choices – hazy, citrusy IPAs, crisp lower-alcohol lagers, mouth-puckering sour beers – the beer list could rapidly become shorter.

The lockdowns to prevent the spread of COVID-19 has shuttered brewpubs and closed taprooms across the country. As local and state officials began instituting stay-at-home orders for much of the nation over the last month, the typical brewery experienced on-site beer sale declines of 65% with draft sales falling about 95%, according to a survey by the Brewers Association.”

Mr. Snider noted that, “Should official edicts preventing customers from consuming beer in a taproom or brewpub continue for a total of three months, many breweries may be forced to close. About six in 10 breweries said that could drive them out of business, according to the survey of 525 brewers earlier this month by the association, a trade group representing thousands of independent and small brewers.”

The USA Today article pointed out that, “Beer lovers have been treated to an abundance of choice as the U.S. added more than 5,000 new breweries over the last five years, bringing the nation’s total breweries to an all-time high of nearly 8,150.

But as many as 4,800 could go out of business if the shutdown continues through mid-June, the survey results suggest. Even with just one month of consumers staying at home, about 14%, or 1,120 breweries could face closure, survey respondents said.”

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Ag Groups File Motion to Intervene in Glyphosate Lawsuit

DTN writer Todd Neeley reported last week that, “Agriculture interest groups and companies have filed a motion to intervene in a federal lawsuit that challenges EPA’s interim registration of the herbicide glyphosate.

“In a motion filed in the U.S. Court of Appeals for the Ninth Circuit in San Francisco on [April 20], the ag groups said intervention is needed because the industry stands to lose an important tool to combat weeds.

“‘Growers rate weed control as their number one crop production challenge — more significant than pests, diseases, frosts, and many other kinds of growing impediments,’ the motion said.”

Mr. Neeley noted that, “In the motion to intervene, the ag groups said combating weeds without glyphosate could be costly.

“‘As the National Cotton Council has explained, weeds can reduce yields by an average of 30%,’ the motion said.”

The DTN article added that, “The court filings are just another development in a series of complicated legal battles over glyphosate, which has pitted EPA and the chemical’s registrant, Bayer, against environmentalists and consumers.”

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Meat Plant Workers File Lawsuit Against Smithfield Foods During COVID-19 Pandemic

Reuters writer Daniel Wiessner reported last week that, “Smithfield Foods Inc, the world’s largest pork processor, has been accused in a lawsuit of failing to adequately protect workers at a Missouri plant who have been forced to work ‘shoulder to shoulder’ during the novel coronavirus pandemic.

“The lawsuit filed Thursday in Missouri federal court claims Smithfield has created a ‘public nuisance‘ by providing inadequate protective equipment to workers at the plant in the town of Milan, refusing to give them time to wash their hands, and discouraging workers who are ill from taking sick leave.

“Workers have also been disciplined for covering their mouths while coughing or sneezing, because it could cause them to miss pieces of meat coming down the processing line, according to the complaint.”

The Reuters article noted that, “Virginia-based Smithfield is owned by China’s WH Group Ltd. Smithfield’s executive vice president for corporate affairs and compliance, Keira Lombardo, said in a statement that worker health and safety is the company’s top priority.

“‘The allegations contained in the complaint are without factual or legal merit and include claims previously made against the company that have been investigated and determined to be unfounded,’ she said.

“The group in the complaint said conditions at the Milan plant have worsened since Smithfield shuttered other pork-processing plants in Missouri, Wisconsin and South Dakota.”

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U.S. Supreme Court Clean Water Act Ruling on Groundwater Discharge Permitting

Reuters writer Lawrence Hurley reported yesterday that, “The U.S. Supreme Court on Thursday rejected arguments by President Donald Trump’s administration seeking to limit the reach of a landmark water pollution law in a Hawaii dispute over wastewater indirectly discharged into the Pacific Ocean – a ruling hailed by environmentalists.

“The case involves whether Hawaii’s Maui County can be sued by environmentalists for allowing discharges from a sewage facility to reach the Pacific without a federal permit under the Clean Water Act. The wastewater was not directly discharged into the Pacific but rather into groundwater that ended up in the ocean.

“The justices in a 6-3 decision threw out a 2018 ruling by the San Francisco-based 9th U.S. Circuit Court of Appeals that had allowed the lawsuit by the Hawaii Wildlife Fund and other environmental groups to proceed, saying it was too broad. They sent the case back to the 9th Circuit to apply a new test to decide whether the lawsuit can move forward, leaving the door open for the litigation to proceed.”

The article stated that, “‘It’s a huge victory for environmentalists,’ said David Henkin, a lawyer with environmental group Earthjustice who argued the case for the challengers.

“Henkin voiced confidence that Maui County ultimately will be required to obtain a permit.

The Supreme Court adopted a middle ground, saying permits can be required under the Clean Water Act when the discharge into groundwater is the ‘functional equivalent’ of the discharge from a pipe or other ‘point source.'”

“The new interpretation would allow environmentalists to file lawsuits in certain circumstances when water is discharged into groundwater, an outcome Trump’s administration opposed. The administration, which has rolled back numerous environmental regulations, sided with the county in the case,” the Reuters article said.

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Do “Business Interruption” Insurance Policies Cover Pandemic Claims, a Dispute Emerges

Washington Post writers Tom Hamburger and Tony Romm reported yesterday that, “A multibillion-dollar standoff between the nation’s leading insurers and the restaurants, hotels, gyms and theaters that purchase their policies has spilled into some of the most powerful corridors of Washington, as both sides clash over who should foot the sky-high costs of the coronavirus outbreak.

The battle hinges on whether insurance providers should have to pay claims to companies that have shuttered unexpectedly as a result of the deadly pandemic. The dispute has attracted the attention of President Trump, triggered lawsuits in courtrooms nationwide and touched off a massive lobbying blitz on Capitol Hill, where some insurers say the federal government instead should be the one providing financial help to those that need it most.

“The industry’s powerful lobbyists, led by the American Property Casualty Insurance Association (APCIA), say ‘business interruption’ policies never were intended to cover contagions. Even if they had been, the estimated claims just from small businesses during the coronavirus pandemic could total more than $430 billion a month, threatening to create a ‘solvency event‘ for the industry, said David A. Sampson, the group’s chief executive.”

The Post article noted that, “But business executives who have paid their premiums for years say they have been misled — and now face dire financial straits without the aid they believe they were promised. Some have sought federal aid in response: Prominent restaurateurs including Wolfgang Puck, for example, have raised the issue directly with Trump in recent days. The problem has taken on even greater urgency because of growing confusion about who qualifies for federal coronavirus aid, given changing government guidelines — and fast-dwindling funds.

“Even some of the more obscure Washington political players have bulked up for a fight: The International Health, Racquet & Sportsclub Association, which represents 40,000 fitness clubs nationwide, said it took the rare step this month of hiring a slew of new lobbyists, including two new firms, partly to nudge Congress to provide help on the insurance issue.”

Yesterday’s article added that, “Last month, the National Association of Insurance Commissioners appeared to take the side of industry. ‘Business interruption policies were generally not designed or priced to provide coverage against communicable diseases, such as COVID-19 and therefore include exclusions for that risk,’ they said in a statement.

“But J. Robert Hunter, a former insurance commissioner from Texas, took a different view, saying that some policies do not specifically exclude coverage in case of a virus or pandemic. ‘The courts will have to decide,’ added Hunter, who now directs insurance policy at the Consumer Federation of America, predicting mixed results for both sides in the ongoing battle.”

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USDA Reports Record Enrollment in Key Farm Safety-Net Programs

A news release yesterday from USDA’s Farm Service Agency stated that, “Producers signed a record 1.77 million contracts for the U.S. Department of Agriculture’s Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) programs for the 2019 crop year, which is more than 107 percent of the total contracts signed compared with a 5-year average. USDA also reminds producers that June 30 is the deadline to enroll in ARC and PLC for the 2020 crop year.

“‘Producers for several years have experienced low commodity prices, a volatile trade environment and catastrophic natural disasters,’ said Richard Fordyce, Administrator of USDA’s Farm Service Agency (FSA). ‘Farmers looking to mitigate these risks recognize that ARC and PLC provide the financial protections they need to weather substantial drops in crop prices or revenues.’

“Producers interested in enrolling for 2020 should contact their FSA county office. Producers must enroll by June 30 and make their one-time update to PLC payment yields by September 30.”

The FSA update noted that, “USDA Service Centers, including FSA county offices, are open for business by phone only, and field work will continue with appropriate social distancing. While program delivery staff will continue to come into the office, they will be working with producers by phone and using online tools whenever possible. All Service Center visitors wishing to conduct business with the FSA, Natural Resources Conservation Service or any other Service Center agency are required to call their Service Center to schedule a phone appointment. More information can be found at farmers.gov/coronavirus.

“For more information on ARC and PLC, download the program fact sheet or the 2014-2018 farm bills comparison fact sheet. Online ARC and PLC election decision tools are available at www.fsa.usda.gov/arc-plc. To locate the nearest USDA Service Center, visit farmers.gov/service-center-locator.”

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WeWork’s Lessons for U.S. Real Estate

Writing recently at The Financial Times Online, Rana Foroohar noted that, “When it comes to cautionary global business tales, all roads seem to lead to WeWork. I have been thinking about the short-term office space company, and not only because of the lawsuit some of its board members issued last week against investor SoftBank over its decision to pull out of a share buyout.

What is striking is the broader lessons WeWork’s travails provide — especially for a post-Covid-19 world. Among them: debt matters; corporate valuations were unsustainable even before the crisis; nobody is going to be rushing to lease office space anytime soon; and real estate in many parts of both the residential and commercial sectors has far, far further to fall.

“The coronavirus pandemic has triggered a corporate debt crisis that has been long coming. WeWork epitomises the excess that led to this crash. Its troubles also offer a hint of what is still to come — namely a long period of falling property prices in prime global cities in North America and parts of Europe, as the second big global real estate bubble of this millennium deflates.”

The FT item stated that, “The value of global real estate is more than all the world’s stocks and bonds combined. It’s also a key growth driver. Construction in all areas of real estate in the US, for example, accounted for 18.1 per cent of gross domestic product in 2019. Unfortunately, what we are seeing in many parts of the global real estate market right now is an explosive combination of oversupply, under-demand, and the very worst aspects of financialisation.”

The FT column added that, “The deflation we are likely to see for the next few years as the result of this downturn will be yet another challenge for real estate, across the board. Deflation and low interest rates will allow some buyers to scoop up property on the cheap. But deflation means lower prices, lower incomes and less buying power. That may well translate into higher borrowing costs for many companies as markets realise the depth of the trouble they are in. Consider how the pandemic has already pushed ‘blue-chip’ companies, such as Ford and Kraft Heinz, into junk bond territory.”

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Mechanical Pollination Attempts to Replace Bees

Reuters writer Lianne Back reported today that, “A mechanical hum replaced the buzzing of the bees in one Israeli community this season as farmers, concerned over the global drop in bee populations, tried out a new method of pollinating their crops.

“Through an almond orchard in the area of Tel Arad in a desert plain in southern Israel, a tractor pulled a mast equipped with about a dozen small cannon that fired precise shots of pollen at the trees, enabling them to fertilize.

“The job is usually done by natural pollinators – most often bees – but there has been a drastic fall in bee numbers around the world, largely due to intensive agriculture, the use of pesticides and climate change.”

The Reuters article added that, “‘We see a crisis in 15 years where we don’t have enough insects in the world to actually do pollination and most of our vitamins and fruits are gone,’ said Eylam Ran, CEO of Edete Precision Technologies for Agriculture.”

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Washington State Sued Over Farm Worker Protections During COVID-19 Outbreak

Bloomberg writer Josh Eidelson reported today that, “Unions representing U.S. farmworkers, many of whom are immigrants, are escalating their push for safer working conditions during the coronavirus pandemic.

The United Farm Workers and Familias Unidas por la Justicia sued Washington state on Thursday, accusing regulators of failing to do enough to protect workers from exposure to the contagion.

Food producers from farms to processing plants are grappling with the need to keep people fed while safeguarding their workers. They also have to comply with broader containment efforts such as travel restrictions that squeeze the supply of migrant workers they count on. Washington is the top apple-producing state and a major supplier of staples including wheat, potatoes and dairy.”

The Bloomberg article noted that, “The state’s governor, Jay Inslee, a Democrat, has pledged strong support for farmworkers and immigrant communities during the pandemic.”

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COVID-19 Has Kicked the Table Out from Under the Farm-to-Table Movement

New York Times writer Kim Severson reported earlier this month that, “Zaid Kurdieh has so many fava beans growing at his farm in upstate New York that he could send 4,000 pounds a week to the best chefs in New York City. In Kentucky, Robert Eversole and Thomas Sargent planted enough winter greens to fill the all the salad bars at the University of Kentucky and still have enough left over to feed fans at the state’s two major spring horse races.”

The Times article stated that, “So these small farmers, like many others across the country who spent decades building a local, sustainable agricultural system, are staring at their fields and wondering what to do now that the table has been kicked out from under the modern farm-to-table movement.”

Ms. Severson indicated that, “Farm-to-table — the term has become a fixture in the culinary lexicon — started in the 1970s, when Chez Panisse and a handful of other restaurants hatched what then seemed like a radical notion: Build menus from food grown by nearby farmers who are thoughtful about everything from the seeds they select and the soil they grow them in to the communities they feed.

“That idea grew into a pipeline connecting farmers, ranchers and chefs that in 2019 had generated $12 billion in income for small-scale producers including cheesemakers and vintners. Governments, hospitals and schools have come to see the value in buying locally grown food. No Silicon Valley tech company worth its stock price would dare to design a cafeteria without local food.

Since the pandemic hit, that conduit has shut down. The loss in sales could run as high as $689 million, with much higher costs in jobs and other businesses that make up the farm-to-table economic ecosystem, according to a report compiled in March by the National Sustainable Agriculture Coalition.”

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