Pork and Beef Plant Closures: Dynamic Disruptions Continue

FJ Live - April 13-20
( Farm Journal )

The pork industry was tight on harvest capacity before the COVID-19 pandemic, and the recent closure of pork processing plants around the country has just exacerbated the issue, says David Herring, a North Carolina pork producer and immediate past president of the National Pork Producers Council.

“We had record amounts of pork being produced in the country and shackle space was pretty full. And then with COVID-19 hitting, we lost our food service industry, which makes up about 25% of all the pork that's produced. So not only we're having trouble getting our animals harvested, we're having finished product on the other end backing up,” Herring told AgDay TV’s Clinton Griffiths during Farm Journal Live on Monday. “The industry is really in dire straits.”

In the last 10 days, both the carcass cutout and the cash hogs value have been decimated. 

“We were forecasting to probably make about $10 a head this year, but all that evaporated in the last two weeks,” Herring said. “Last Friday, the average producer was probably losing $40 to $50 a head. By the end of this week, it’s probably going to be somewhere between $60 and $70 per head. There's just no way the average producer can stay in the market like that.”

NPPC has been working closely with USDA, asking them to purchase pork for food banks and other organizations who need food, Herring explained, to try to help get product pulled through the chain. 

“It seems like every time we turn around, we get another curveball thrown at the industry,” Herring said. “We have a large supply of pork in the United States and the producers are very reliant on these plants to operate and get our product through the chain.”

Griffiths asked about the possibility of holding hogs and feeding maintenance diets to keep pig weights where they are at until shackle space opens up.

Herring said this may work for a few weeks in some operations, but hog production is different than other species because a majority of the hogs are raised inside. 

“It's a very efficient system. As pigs go to market, there's pigs following. So there's just not any extra space out there. Any producers that have a lot of extra space are probably going to exit the business anyway, because they're not very efficient and are probably not very profitable,” Herring added.

Fortunately, China is taking a lot of pork. But Herring says the 25% tariffs U.S. producers face continue to put them at a disadvantage compared to European trade partners.

Cattle Slaughter Declines 
The beef industry saw a 14% decline in beef cattle slaughter last week. Drovers editor Greg Henderson says cattle producers could see another 10% decline this week. 

How many weeks can the beef industry withstand these disruptions? Henderson said maybe two.

“We've already got a lot of cattle on feed,” he said. “The meat industry is unlike any other industry because we have those animals ready to go. They can't wait two or three weeks; you can't put them on the shelf and store them.”

He said it disrupts everything backwards from the slaughter plant. Feedlots are going to back up, and that's going to hurt price. 

“We already lost $7 to $8 last week. We could see another decline this week, although feed yards say they are asking higher money this week,” Henderson said. “It's an unprecedented situation. The next two weeks are obviously critical.”

Over the last couple of weeks, the choice cutout price has come down roughly 20% to 25%. But, at the same time, the cash cattle prices have been declining, too. 

Big questions remain. Will there be enough space for all the cattle to be harvested? Will there be workers to fulfill those tasks? If things don’t change soon, Henderson said consumers may see further meat shortages in the stores. 

Related articles: 
NPPC Helps U.S. Pork Producers During COVID-19 Crisis

Smithfield Foods To Close Sioux Falls Plant Indefinitely Amid COVID-19

Derrell Peel: Meat Production Threatened With Disruption