Unexpected pandemic effect: United States facing meat shortages

American stores are struggling to provide themselves with meat and are looking for new suppliers, as the coronavirus pandemic reduces domestic production and causes fear of a shortage of this product, writes Fox Business.

Photo: Shutterstock

The outbreak of COVID-19 shuts down about a dozen US meat packing plants, including three Tyson Foods Inc. Other enterprises have slowed production as workers remain at home for various reasons.

Retail grocery store executives including Walmart Inc. and Costco Wholesale Corp., fear that some products may end up as demand grows.

“I haven’t seen beef sales like this in a long time,” said Jeff Lyons, senior vice president of fresh produce at Costco. According to him, the chain of stores is considering new suppliers to increase meat orders.

Tyson, the largest US meat sales company, temporarily closed a meat processing plant in Washington state on Thursday, April 23, and on Wednesday, April 22, closed two pork factories in the Midwest that produce millions of pounds of meat, killing those plants almost 35 pigs per day. Smithfield Foods Inc., Cargill Inc., JBS USA Holdings Inc. and Hormel Foods Corp. in the last month, factories were closed, which led to a significant decrease in total meat production in the United States.

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In mid-April, U.S. beef production fell 24% from the previous month, pork production fell 20% and poultry production fell 10%, according to CoBank estimates.

Some orders for meat are incomplete, as suppliers refuse to diversify, and large factories remain closed, grocery store managers said. Deliveries of ground beef are declining, and wholesale prices are rising after the fall that occurred when closed restaurants reduced demand for products.

Meat stocks are likely to be reduced within two weeks due to recent closures of processing plants, so there may be temporary shortages, said Pat LaFrida, executive director of a New Jersey-based store. According to him, the company usually supplies products for Shake Shack Inc. and other restaurants, but now sells most of its products to stores.

The spread of COVID-19, the disease caused by the new coronavirus, among U.S. meatpacking plant workers has led to $213 billion in losses in the industry. Meat companies transport poultry and livestock for processing at other plants, and also employ welders to install shields between production line workstations. Farmers say they are forced to euthanize some pigs because slaughterhouses have closed. In Iowa, Gov. Kim Reynolds sent 1000 National Guard members to help deliver COVID tests to meat plants.

"We've never seen the industry shrink as much as we did last month in our lifetimes," said Will Sawyer, a CoBank economist who researches meat production.

At Costco, Lyons supplies pork and chicken. According to him, in these industries there are fewer opportunities for jumps in sales inherent in supply chains, since animals are bred in exact quantities to meet expected demand. According to Lyons, Costco is satisfying the demand, but is considering working with new suppliers to fulfill orders if necessary. At the same time, it is expected that some factories of American suppliers will be shut down for about two weeks.

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Walmart is buying more products typically destined for restaurants, working to help convert plants into retail outlets and narrowing its meat offerings to focus on best-selling items to streamline its supply chain, a person familiar with the matter said. Sales of vacuum-sealed bags are also rising at Walmart, he said, a sign that consumers are buying products they intend to keep for a long time.

Todd Allen, director of meat and seafood at the Raley grocery chain in West Sacramento, California, said the company receives about 80% of orders for chicken, while meat sales have increased by about 67% since March. Recently, the store introduced restrictions on the purchase of chicken products and was able to keep more stocks in its warehouses to meet demand, but pays higher wholesale prices for some products.

“If we have to lose money to be competitive, we will,” he said.

Several closed factories reopened this week. Cargill in Hazleton, Pennsylvania, closed April 7 after the county experienced a spike in COVID-19 cases. At the beginning of this week, about 60% of day shift workers returned to work, as well as 70% of night shift workers.

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