Animal Agriculture and Contract Disruptions

Contracts are being disrupted, cancelled, and breached because of COVID-19 and the economic ripples it has caused throughout the world. No one is exempt from this. For example, I am writing this blog from my cold basement office, where I’ve been holed up since mid-March. My kids are banging on the (locked) door and I’m thankful my headphones are noise-cancelling. But not all disruptions can be so easily cured with Beats by Dre.

Animal agriculture is being hit especially hard during this pandemic. According to a recent article from Farm Journal, pork producers are facing a $5 billion loss for the remainder of 2020. The National Pork Producers Council released a statement explaining that the temporary closures of pork packing plants and rising employee absenteeism due to COVID-19 has exacerbated an existing harvest facility capacity challenge due to a labor shortage in rural America. Demand from food service has plummeted, and while retail demand is up, it is not enough to overcome the drastic loss from the closure of restaurants nationwide. Dairy farms are milking less and being forced to dump milk. As schools, restaurants, universities, and other institutions close, demand has plummeted. Again, demand for milk and cheese at home has risen, but it isn’t enough. Some grocery stores have limited the milk a person can purchase at one time, exacerbating an already grim outlook for dairy processors and farmers.

All these changes mean contract disruptions. Contracts are the document links that bring food products from the farm to our plates. Changes in demand, packaging, and pricing will impact farmers, drivers, processors, and retailers. The ripple effect will reach feed suppliers, grain farmers, and other agri-businesses. There is the bad news. Now, what is a farm or business to do? Read your contract. Is there a force majeure provision? The specific language used will dictate the contract parties’ rights and duties. This is a time to look at breach provisions and what damages are available under the agreement. Some contracts may be scaled back but kept in place, others will be terminated completely, and others could be temporarily halted or changed with the the plan to revert to “normal” in the future. Farmers, integrators, processors, and retailers all should carefully review their agreements to determine their rights and the rights of their contact partners.

Beats by Dre won’t help contract disruptions, but your actions could help you avoid disputes and mitigate damages. Review your agreements. Contact an attorney if your ability to perform is being impacted by COVID-19 or if another entity notifies you it cannot perform its obligations because of the virus. Stay well.