Economic Impacts of the COVID19 Pandemic on Tennessee Cotton Producers and Rural Economies

The COVID-19 pandemic has affected all aspects of agricultural commodity production and distribution. Substantial price and income declines were experienced by Tennessee cotton producers. Comparing January to February through July, average monthly cotton prices were 8 to 22 cents lower in Tennessee. Reduced prices caused declines in producer income. As a result, the federal government issued aid to producers through Coronavirus Food Assistance Program (CFAP) direct payments. This analysis estimates the decline in producer income and the corresponding reduction in economic activity in the state. Initial analysis projected the decline in Tennessee cotton producer income for the 2019 crop at $20.25 million. This decline in income was partially mitigated with CFAP payments. From an individual producer’s perspective, COVID-19 2019 income losses without CFAP payments averaged $50.01 per harvested acre for cotton. With CFAP income losses were decreased to $8.51 per harvested acre. However, the economic damage from COVID-19 did not stop at the farm gate. As such, using IMPLAN to shock proprietor income, we estimated the COVID-19 impact on labor income, gross regional product (GRP) and economic activity. With no CFAP payments, the estimated impact was a decline of $26.4 million in labor income, $30.5 million in GRP, and $37.7 million in economic activity. CFAP payments reduced the losses to $4.5 million, $5.2 million, and $6.4 million for labor income, GRP, and economic activity, respectively. The long-term economic loss to the Tennessee cotton industry, due to COVID-19, is highly uncertain. Estimated declines in producer income and economic activity does not include the 2020 crop, which will be added in future work.