By The Washington Post · Laura Reiley · BUSINESS, FEATURES, US-GLOBAL-MARKETS, FOOD
On Tuesday, President Donald Trump said he plans to sign an executive order addressing bottlenecks in the food supply chain. This problem has been building since mid-March, but appears to have hit a critical point this week. On Sunday, Tyson Foods, the country's second-largest processor of chicken, beef and pork, warned that the U.S. "food supply chain is breaking."
In full-page advertisements in The Washington Post, the New York Times and the Arkansas Democrat-Gazette, company chairman John Tyson wrote: "This means one thing - the food supply chain is vulnerable. As pork, beef and chicken plants are being forced to close, even for short periods of time, millions of pounds of meat will disappear from the supply chain."
American farmers are still raising chickens, beef cattle and hogs-in addition to food crops. But fewer places are available to slaughter and process those animals and get the meat to market.
Q: Why is worker illness at processing plants having such a big effect?
A: In recent years, the farming mantra "Get big or get out" has extended to American meat-processing plants and other sectors of the food system. Consolidation has been a consistent theme, with multinational companies gobbling up smaller operators for economies of scale, increased efficiency and greater speed.
"A single processing plant may kill a million chickens a week, so if one plant drops to 50% capacity that's 500,000 birds that have a problem," said Leah Garcés, president of the animal rights group Mercy for Animals.
At least 79 food-processing and meatpacking plants have reported cases of covid-19 as of Monday, with many plants closing temporarily because of illness and absenteeism and to do deep cleaning and retrofitting to accommodate social distancing and proper protective gear. The Food and Environment Reporting Network has calculated that at least 3,720 plant workers are confirmed sick and that at least 17 have died.
Many more plants are struggling to remain open despite significant outbreaks and experts anticipate rolling closures because of sick employees and to allow for deep cleaning of facilities. On Sunday, the Centers for Disease Control and Prevention and the Occupational Safety and Health Administration issued new guidelines for meat-processing workers, advising companies to provide proper protective gear, take employees' temperatures and space workers at least six feet apart.
This spacing is difficult in a high-speed assembly-line environment, said Gail Eisnitz, author of "Slaughterhouse." Spacing people out slows production speed and eats into profits.
"In hog plants, they slaughter 1,106 animals per hour," she said. "And they just raised that with the new swine inspection system," which increased line speeds to an average of 2,002 to 2,010 animals per hour.
"And with these plants down, there's nowhere for these hogs to go," Eisnitz added. "It has a lot to do with the fact that the industry is so consolidated now. There are just so few hog plants in the country."
Q: What does this mean for American consumers?
A: Steve Meyer, an economist for Kerns and Associates, predicts grocery store shortfalls and price increases over the next three weeks for fresh pork, including chops, butts and ribs. Chicken and beef prices are also likely to rise in the coming weeks.
"If the plants are closed several weeks," he says, "we're going to be well short of supplies out there."
The daily cattle slaughter for the week of April 13 fell nearly 24% from the same week a year ago, and pig slaughter was down 13%. In response to these significant and unprecedented swings, the U.S. Department of Agriculture said last week that it expects beef prices to rise 1 to 2% this year, poultry as much as 1.5%, and pork between 2 and 3%.
But there may be higher price increases in the near term as processing-plant bottlenecks create shortfalls and empty shelves again.
Jayson Lusk, an economist at Purdue University, said that panic buying produced a small price spike in March, but that consumers are likely to face a steeper and more sustained spike now because such a big swath of production is temporarily shut down.
Even at peak buying frenzy, he says, the uptick in sales at grocery stores in March didn't make up for restaurant orders falling off a cliff.
"But then processing plants started closing," Lusk said, "and we have seen beef prices spiking back up again, starting April 13, to wholesale levels we haven't seen in at least a decade."
Q: Which farmersare going to be most affected?
A: In terms of livestock farmers, some are more vulnerable than others to the processing-plant closures. Almost all of poultry and nearly 40% of pork producing companies are "vertically integrated," so that individual farmers are contracted by big companies and often don't own their animals.
But small cattle ranchers may just not have any buyers. "Cattle ranchers mostly own their own animals and there's much less vertical integration," said Meyer, the economist. "The ranchers are more financially vulnerable with this."
With nowhere for farmers to sell their livestock, Tyson said, "millions of animals - chickens, pigs and cattle - will be depopulated because of the closure of our processing facilities."
Q: What happens to the animals that can't be processed?
A: "Depopulating" is when a live animal is killed because of a disease outbreak or, in this case, because a farmer doesn't have access to legal slaughter facilities. Eisnitz estimates that there is a backlog of 687,500 hogs weekly or 100,000 hogs per day that cannot be slaughtered because of processing facility closures.
Eisnitz said the American Veterinary Medical Association guidelines for emergency killing are extremely weak. For poultry and pigs, they allow animals to be killed by simply shutting off the ventilation system fans (heat or carbon dioxide may be added). The animals die of hyperthermia, baking and suffocating over a period of several hours.
According to the Delmarva Poultry Industry, a large chicken processing company in Delaware and Maryland killed 2 million chickens earlier this month because worker shortages left them without workers to slaughter and butcher the animals.
The industry generally uses the ventilator shutdown method or a water-based foam, the consistency of firefighting foam, that flows up and over, suffocating birds in seven to 15 minutes.
Garcés said that some poultry companies, such as Perdue, anticipated processing plant closures and took eggs out of hatcheries and breeder birds out of production and slowed down the whole system to reduce the bottleneck.
That's much harder to do for pigs, Meyer said.
"Hog producers don't have any of that flexibility," he said. "There are six months of pigs out there lined up every week, you can't put them out on pasture, you have to be feeding them, you have only so much building space. Realize that the pork producers are in a bad spot and they are doing things they abhor."
When asked how many piglets are being killed and buried, he said, "I can only estimate, but it gets to the millions pretty quick."
Cows have longer lives and thus there's a bit more wiggle room in the system - they can be left on pasture or even on a confinement feed lot, their rations adjusted to slow their rate of growth. For cattle ranchers, though, a bottleneck at the processing plant means a diminished revenue stream. They can hold on for only so long while they feed and maintain their animals.
Q: Is there any other meat in the supply chain?
A: The United States has a lot of meat in freezer storage. The USDA reported 921 million pounds of chicken in storage last week and 467 million pounds of boneless beef, which includes ground meat as well as more premium roasts and steaks.
But there are challenges to using frozen beef, pork and chicken to offset shortfalls from meat processing-plant closures.
According to Purdue's Lusk, a lot of the product in cold storage was packaged for restaurants and food service - huge cuts and whole muscles that may not be easy to repackage for home use. Much of it would require thawing, re-butchering to yield more manageable portions for home use, and then repackaging.
Repackaging frozen meat introduces food safety hazards. Because experts don't advise refreezing meat, it would have to be sold unfrozen.
And laborers for that kind of skilled work are in short supply. Many of them work in the meat-processing plants that are currently closed or operating at diminished capacity. Others are grocery store butcher counter workers, many of whom have been repurposed to stock and clean stores because of surges in consumer purchasing.
Some of the meat in frozen storage, Lusk said, was slated for export, hung up by coronavirus outbreaks that shut down ports worldwide.
"USDA reports on inventory and cold storage suggest we have more pork, beef and chicken in storage than compared to the same time last year," Lusk said. "If processing capacity falls even more and prices continue to rise, that stuff in storage has got to be pulled out."
Q: If the animal agriculture supply chain is messed up, what about plant-based meats and other substitutes?
A: Sales of plant-based meats in the eight weeks ending April 18 were up 265% over the previous eight weeks, said Bruce Friedrich, founder of the Good Food Institute, a trade group for plant-based food. He said conventional meat sales were up 39% for that same period.
As with many other grocery items, demand has outstripped supply in some places, leaving some store shelves bare. Friedrich said that these supply issues are a function of transportation bottlenecks, and that no plant-based meat facilities have been closed because of coronavirus outbreaks because "facilities are significantly more automated and it's easier to socially distance because there's no chopping up carcasses to create the cuts of meat."
He said that before the pandemic, plant-based meat companies were already scaling up to meet increased demand, but that they are quicker to respond to world events than more conventional animal agriculture.
"If you want animal-based pork, you have to plant enough soy to feed the animals, you have to grow breeding animals for years, then it takes 10 months from birth to slaughter. It entails much longer lead times and razor-thin margins at every step," he said.