Meatpacking facilities across the U.S. have become hot spots for the coronavirus, impacting production of chicken, beef, and pork and causing worry about the nation’s food supply, reported The Wall Street Journal (April 28). In recent weeks, more than a dozen major meatpacking facilities closed following outbreaks among employees, with other workers choosing to stay at home.
Closures resulted in a 25% reduction in pork slaughter capacity and 10% reduction in beef slaughter, according to the United Food and Commercial Workers International Union. Adding to the challenge, meat sales are up around 40% in recent weeks, according to FMI.
Issues in Meatpacking Facilities
In April, meat suppliers warned that the U.S. is getting “perilously close” to a meat shortage following the closure of Smithfield Foods’ Sioux Falls, SD, pork processing facility, which accounts for 4% to 5% of U.S. production, reported Time (April 13).
Smithfield, Cargill, JBS USA, and Tyson Foods meat facilities all experienced closures due to coronavirus outbreaks. The working conditions in meatpacking plants create a perfect storm for coronavirus transmission, reported Vox (May 19). Workers are unable to maintain the recommended 6 ft. of distance on the processing floor, and they breath heavily while hauling cuts of meat, possibly spreading virus particles in the air.
The CDC also recently found that workers haven’t been wearing face masks correctly due to the “pace and physical demands of processing work,” only covering their mouths and frequently touching the mask to readjust it.
Some meatpacking facilities are coming back online, but employees may remain fearful of returning to work, reported The Boston Globe (May 1). On May 4, Smithfield Foods reopened its pork processing plant in South Dakota were 850 workers tested positive while Tyson Foods brought its Logansport, IN, pork processing plant back online.
“We toured the plant and feel the additional measures implemented will allow employees to work safely while continuing to follow (CDC) guidelines and recommendations,” said Dori Ditty, the health officer for the county where the Tyson facility is located.
Cargill was slated to reopen its High River slaughterhouse in Canada on May 4, a facility where at least 935 employees tested positive for coronavirus, reported The Globe and Mail (May 4). However, the union that represents workers at the site advised employees to refuse to work if they don’t feel safe. A poll the union conducted found 80% of workers oppose the reopening while 85% said they are afraid to return to work.
Disruptions in Supply Chain
Kenneth Sullivan, Smithfield CEO, warned that the meatpacking closures and slowdowns are creating a domino effect in the industry. As meat facilities close, production of chicken, beef, and pork is declining and farmers are left with nowhere to send livestock.
How long the disruptions in the meat sector will last will depend on how many animals need to be culled due to a lack of processing facilities, according Ryan Bernstein, SVP of the McGuireWoods legal and public policy consulting firm, reported Southeast Farm Press (April 29).
In fact, Iowa—the third largest pork producer—requested federal assistance and funding to cull its animals and dispose of carcasses, reported St. Louis Post-Dispatch (April 27). And JBS had to reopen a Minnesota pork facility to euthanize up to 13,000 pigs a day for farmers, reported Reuters (April 29).
The National Pork Producers Council estimated hog farmers face a collective $5 billion loss for the remainder of the year, or about $37 for each hog.
On the retail side, some grocers had to limit meat sales due to shortages. Kroger Co. added purchase limits on ground beef and fresh pork in some stores, reported CNN (May 1).
Other large grocers, such as Wegman’s, said they expect to be out of stock of different types of cuts very soon. “We may not have every product cut or variety available for the next few weeks,” said a Wegman’s spokesperson, but it does not anticipate any shortages.
Walmart is working with its meat suppliers to convert production lines that normally process meat for the foodservice industry and redirect it for retail sales. Walmart is also focusing on supplying the most-commonly bought meat products and foregoing those that require more time to process.
Giant Eagle limited the sale of ground beef and other on-sale meat items to no more than two per transaction. The chain said it was not having an impact on its supply, but rather customers were purchasing more meat products than usual, reported Pittsburgh Business Times (May 4).
An Opportunity for Plant-Based Meat
Plant-based food makers are ramping up efforts to fill in for the missing cuts in supermarket meat cases. U.S. sales of plant-based meat products doubled in mid-April from the same period last year as consumers turn to more alternative proteins, reported Bloomberg (May 1). Investments in the sector jumped up in the first quarter, with companies including chickpea protein maker InnovoPro, plant-based chicken nugget maker Rebellyous Foods, and Plantible Foods all completing funding rounds.
“The thesis of alternative proteins is strengthened by COVID-19,” said private equity veteran Jeremy Coller. “We see this as a massively growing and important sector.”
Impossible Foods Inc. has been in talks with investors about raising more funds, according to people familiar with the matter, reported Bloomberg (May 1). Additionally, rival company Beyond Meat’s shares rose 21% this year.
Meanwhile, Tofurky’s sales were up 40% in the last three months. Before the Butcher Inc. also experienced an increase in sales, so the company is putting more emphasis on e-commerce and will begin selling online, reported The Wall Street Journal (May 13).
Looking Ahead
In April, President Trump issued an executive order aimed at speeding meat plants’ reopening and easing disruption on the food system. The Department of Labor also issued an interim guidance for the meatpacking and processing industries to better protect employees against the coronavirus.
Although meatpackers have been changing operations to make employees less vulnerable to the virus, they still have a workforce depleted by illness or unwillingness to risk entering facilities. Facilities that keep the production lines moving will have to do so more slowly.
For example, JBS is revamping facility operations to place workers farther apart. “We will not be able to go to full capacity anytime soon as we fight this virus because of all the changes we have implemented,” said Andre Nogueira, CEO at JBS. He mentioned the coronavirus will likely hamper U.S. meat production for months, reported The Wall Street Journal (May 15).
The head of National Beef Packing Co. Tim Klein agreed. He said U.S. facilities will run below capacity for months and does not expect the industry will get back to full capacity until possibly August, reported Bloomberg (May 18).
