COVID-19 has impacted all businesses, and farming – Pennsylvania’s #1 industry - is no exception. I own a farm myself, so I know how tough it is to be profitable even in good times.  But the pandemic has added to the many difficulties farmers always face, especially during Spring - their most active season.  That’s why I and my colleague, Lynette Gelsinger, an agricultural relationship manager also a farm owner, are in constant communication with our customers to offer support. 

Sudden Halt in Demand
One group of our customers that has been especially hard hit is dairy farmers. With Pennsylvania’s disaster declaration in early March, restaurants and schools - big purchasers of dairy products - suddenly closed. At the same time, consumers bought as much dairy products as they could before abruptly stopping to shelter at home. With the sudden halt in demand, some companies that process milk either asked dairy farms to “dump” some of their supply, or took it and dumped it themselves. 

Anticipating continued low demand, the Dairy Farmers of America’s asked their participating farmers to cut back production to 85% of their March level. The farms did this by allowing some of their herd to “dry,” i.e. slowly stop producing milk, or by remixing the cows’ feed, which results in less milk. Both options present longer-term problems because it’s hard to get cows back to peak production again.

Providing Loan Assistance and Other Options
Seeing how the environment was impacting our farm customers, Lynette and I took a proactive approach by calling each one to discuss their situation. We acted as a sounding board, and let them know about the options our bank was offering. They include a temporary loan assistance program, which allows customers to defer payments on term and mortgage loans. We stressed that this program would allow the farmers to preserve their cash flow for other purposes to get through the pandemic period.

I wasn’t surprised when some customers were reluctant to take advantage of the program. Farmers are used to getting through tough time themselves and are averse to taking what could be considered a “handout.” So I encouraged them to view the loan assistance program as more of a “hand up” to be used until they could recover. Fortunately, they saw the economic benefits of participating.  

Long-term lessons
If there’s any good that can come out of the pandemic, I believe that it has made farmers recognize two things: the importance of diversifying their operations and having more capital available to deal with emergencies. I hope they also realize the benefits of working with a community bank that knows and understands their needs and is always there to help.