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Closing plants: Concerns rise as processing plants close over COVID-19 effects

by admin

Published April 18, 2020

As the COVID-19 pandemic continues, many agriculture entities have stayed open for business as they have been deemed essential.

           However, since the end of March and first of April, many processing plants for beef, pork and poultry have been shut down over COVID-19 concerns.

Plant closures

           As of April 12, Smithfield Foods, the largest pork processor in the world, indefinitely closed the doors of its Sioux Falls, S.D. plant after nearly 240 workers were sickened by the virus. This plant processes about five percent of all U.S. pork.

           In a statement released April 12, Kenneth M. Sullivan, president and chief executive officer for Smithfield expressed concern over the market reactions.

           “The closure of this facility, combined with a growing list of other protein plants that have shuttered across our industry, is pushing our country perilously close to the edge in terms of our meat supply,” said Sullivan. “It is impossible to keep our grocery stores stocked if our plants are not running.”

           “These facility closures will also have severe, perhaps disastrous, repercussions for many in the supply chain, first and foremost our nation’s livestock farmers. These farmers have nowhere to send their animals,” said Sullivan

           He continued, “Unfortunately, COVID-19 cases are now ubiquitous across our country. The virus is afflicting communities everywhere. The agriculture and food sectors have not been immune. Numerous plants across the country have COVID-19 positive employees.”

           “We have continued to run our facilities for one reason, to sustain our nation’s food supply during this pandemic. We believe it is our obligation to help feed the country, now more than ever. We have a stark choice as a nation – we are either going to produce food or not, even in the face of COVID-19,” he concluded.

           On April 13, JBS-USA closed their beef processing plant in Greeley, Colo. until at least April 24 following the death of two workers due to COVID-19 complications. This closure is expected to have ripple effects across the region and nation. According to JBS, the plant can kill as many as 5,400 head per day.

           “While the Greeley beef facility is critical to the U.S. food supply and local producers, the continued spread of coronavirus in Weld County requires decisive action,” said Andre Nogueira, JBS USA CEO. “As a leading member of this community, we believe we must do our part to support our local health professionals and first responders leading the fight against coronavirus.”

           Tyson Foods closed down its Columbus Junction, Iowa plant on April 6 after more than 24 cases emerged involving employees. As of April 13, the plant intends to stay closed until further notice.

           National Beef Packing suspended cattle slaughter at an Iowa Premium beef plant until the week of April 20 following numerous employees testing positive for the virus. The plant had previously shut down the week of April 6 for disinfecting.

           Aurora Packing closed a beef plant in Illinois, while Harmony Beef in Alberta, Canada, shut its cattle slaughter operations on March 27, after a worker tested positive for coronavirus and an Olymel pork plant in Quebec shut on March 29 for two weeks after nine workers tested positive.

           Several North American poultry plants have also closed or reduced operations after disease detections.

Industry reactions

           Following the closure of JBS-Greeley, NCBA CEO Colin Woodall released the following statements.

           “NCBA is concerned about the closure of the JBS-owned beef packing plant in Greeley, Colo. The company reports the plant is closing for a two-week period after several employees fell ill,” said Woodall. “Beef producers mourn the loss of the two employees who died as a result of the virus, and we empathize with plant workers who are being affected by the outbreak. We also support President Trump’s ongoing effort to keep America’s food supply chain operational.”

           “The closure of packing plants during this crisis will have an impact on cattle and beef prices,” he said. “Plant closures or slow-downs have significant regional and national implications that will ripple through the marketplace at a time when cattle producers are already suffering from market uncertainty and economic hardship.”

           “Every member of the beef supply chain relies on processing plants operating daily to keep product moving,” according to Woodall. “America’s cattlemen and cattlewomen are hopeful that any beef processing plants which have been slowed or closed as a result of the COVID-19 outbreak return to full operation as quickly as possible.”

           “Currently, there is no shortage of beef and consumers can continue to be confident about the safety and wholesomeness of the products they are purchasing during this crisis,” Woodall said. “There is no evidence COVID-19 can be transmitted by food or food packaging.”

           He concluded, “However, it is always important to follow good hygiene practices when handling or preparing foods.”

           The National Pork Producers Council (NPPC) has deemed the COVID-19 pandemic and its numerous impacts a “financial disaster” for pork producers.

           “We remain committed to supplying Americans with high-quality U.S. pork, but face a dire situation that threatens the livelihoods of thousands of farm families,” said NPPC President Howard Roth, a pork producer from Wauzeka, Wis. “We are taking on water fast. Immediate action is imperative, or a lot of hog farms will go under.”

           Roth added, “The pork industry is based on a just-in-time inventory system. Hogs are backing up on farms with nowhere to go, leaving farmers with tragic choices to make. Dairy producers can dump milk. Fruit and vegetable growers can dump produce. But, hog farmers have nowhere to move their hogs.”

           According to NPPC, the suspension of pork packing plant operations and rising employee absenteeism due to COVID-19 has exacerbated an existing harvest facility capacity challenge due to a labor shortage in rural America.

           “With limited harvest capacity, a surplus of pigs exists, causing hog values to plunge,” NPPC noted. “The loss of the food services market and the COVID-related slowdown in most export markets has crashed demand and overwhelmed the cold storage of meat.”

Economic impacts

           Texas A&M University Extension Economist David Anderson explained, “Disruptions to the nation’s supply chain and final destinations for meat and milk products due to COVID-19 are causing anxiety from farms to markets.”

           “The nation’s food supply chain, the most efficient and reliable farm-to-market system in the world, is dealing with unprecedented disruptions and uncertainty,” Anderson explained. “Empty shelves at grocers and retailers are a result of distribution, not low supplies. Production of products like ground beef and milk is the same, but unexpected demand has strained the logistical farm-to-market process.”

           He noted anxiety has caused panic buying in meat products as well as household items such as toilet paper.

           “It adds an element of anxiety that Americans are not used to when they see the meat section empty,” he said. “But, we are still producing record amounts of chicken, pork and beef. In reality, it is just a temporary inconvenience that we are not accustomed to.”

           Anderson noted prices should fall with the costs of production. Lower fuel costs for production, processing and distribution should ripple into lower prices at checkout.

           “But so far, prices on products like beef have surged at grocers who are dealing with unexpectedly high demand,” he said. “Prices for wholesale Choice beef was up 25 percent, from $2.05 to $2.57 per pound.”

           “That is all driven by grocers and all their purchases to keep up with these rushes on products,” he said. “They will come back down as purchases slow down and some calm returns or when people have filled their freezers and feel they don’t need as much meat.”

           “The ripple effect of higher beef prices at grocers hasn’t reached beef cattle operations,” Anderson said. “It probably won’t because of changes in a range of markets that utilize different cuts from beef, pork and poultry.”

           “Filet and ribeye steaks and bacon will likely go down because demand from the food service industry has plummeted,” he said. “This could mean good deals for consumers, but the end result will be lower sale prices at market for producers.”

           “The whole value of the animal goes down when the prices for these high-value cuts go down,” he said. “That’s bad for farmers and ranchers but might help consumers. I don’t know that we’ll see grocers drop prices on lower value cuts because there’s no incentive if people are buying them up. But consumers could see good features on higher-value cuts in the future.”

           Callie Hanson is the managing editor of the Wyoming Livestock Roundup. Send comments on this article to roundup@wylr.net.

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