Seven Midwest meat packing plants closed; processors scramble for workarounds

That toilet paper panic was just a skirmish. American meat processing plant managers are racing to protect workforces in U.S. beef and pork processing plants: Seven large meatpacking facilities have shut down in the Midwest due to covid-19 cases among workers. The latest closure is our IBP/Tyson pork plant in Waterloo, which has a capacity for almost 20,000 hogs a day. It's the company's largest pork plant.

April 23, 2020 — So far, the mainstream media experts have not sounded an alarm over the specter of empty supermarket meat cases. But that story could quickly move to the lead feature on nightly news, triggering a consumer rush to stock up.

Update April 29 — On Tuesday night April 28, President Trump used the Defense Production Act to issue an executive order to designate U.S. meat processing plants as "critical infrastructure," allowing them to remain in operation. This enables plants to override local county or city health boards, which currently can order plant closings. More details at this link. Our neighboring Tyson hog processing plant in Waterloo, IA was closed by order of the Black Hawk County board of health after a few workers tested positive for the coronavirus. 

Update May 5: The Farm and Ranch Freedom Alliance rallied more than 50 nonprofit organizations and 200 farmers to urge U.S. House Ag Committee members to support H.R. 2859 and S. 1620, the PRIME act, which would ease restrictions on local custom slaughterhouses, many of which also retail pork and beef. See and support this action at this link.

Update May 6: Excerpted from Canadian ag news service MarketsFarm by Mike Jubinville: 

- US meat workers are quitting as virus-ridden plants reopen... America's meat-processing plants are starting to reopen, but not all workers are showing up. Some still fear they'll get sick after coronavirus outbreaks shut more than a dozen facilities last month.

According to Bloomberg News, employees are taking leave, paid and unpaid...or just quitting. At a JBS USA plant in Greeley, Colorado, absenteeism is running as high as 30%. Some workers are staying home because they are "scared," according to Kim Cordova, president of United Food & Commercial Workers Local 7 union, which represents workers at the plant.

Meat plants have been at the nexus of coronavirus hot spots across North America's rural heartland. The disease spread through plants in March and April as companies struggled to adapt their workplaces to new rules dictated by the pandemic. As absenteeism persists, the US and Canada are at risk of meat shortages and higher prices.

Shutdowns at the massive plants have created bottlenecks in supply, which could continue amid absenteeism. Giant producers have such a stranglehold on output that it leaves few remedies when even a handful of facilities slow, leaving farmers with decreased options for selling their animals.

Update May 7: This is also from Mike Jubinville:

Trump instructs DOJ to look into whether meatpacker broke antitrust laws... At a White House event attended by Ag Secretary Sonny Perdue and Iowa Governor Kim Reynolds, US President Donald Trump said he has asked the Department of Justice (DOJ) to look into allegations the US meatpacking industry may have broke antitrust law, noting that slaughterhouses have been lowering prices paid to farmers as meat prices rose. USDA has also been investigating price-fixing allegations since August, but it has yet to issue any official results.

Wall Street Journal article today indicates that retailers are anticipating shortages. USDA reported this afternoon that U.S. commercial red meat production was 5 billion pounds in March, up 13% from the same month a year ago. Hog slaughter for the month was 11.9 million head, up 11% from March 2019.  Ag writer Chris Clayton documented today on the DTN site how packers, labor unions and farm groups are calling for federal help to keep meat packing plants operating and workers safe.

A longer perspective: The nearby chart on beef plants' operating margin per head was first published by Bloomberg, then picked up by the Wall Street Journal's The Daily Shot — and we reprint it here. Since 2014, U.S. beef packing plants' operating margin per head has climbed from variations above and below breakeven to a current peak of nearly $700 per animal processed. We reason that part of this gross profit arises from consolidation in the packing industry. It helps explain why, despite sharp drops in hog and cattle prices, retail meat prices remain high.

Update: On April 29, Missouri Senator Josh Hawley cautioned that consolidation in meatpacking is by itself a threat to farmers' incomes and makes the nation's retail meat supply more fragile. Smithfield, for example, is owned by the Chinese. 

The screen shot of the Google map below shows locations of the largest U.S. meatpackers. The red X plants are closed. You can get updates by visiting the interactive version of the map at this linkThe live version shows plant capacity and owners.

Our local Tyson hog processor normally provides about 5% of U.S. pork consumption, but had been operating at a slower pace as management widened the separations between line workers — and some employees self-isolated at home. Tyson Foods Inc. also closed another plant at Logansport, Indiana. However, Tyson resumed operations at its Columbus Junction plant after a temporary closure. Local hog producers are likely to truck slaughter hogs to that facility. 

The Farm Journal Live streaming service reported today that Kansas state authorities are searching for ways to protect packing plant workers by providing safe-harbor housing. We suggest, for their guidance on policy, that they look at hard Covid-19 data based on reality, that they study this video interview with two California physicians who reveal that universal lockdowns are a net negative for both health of the population and health of the economy.

A substantial, sustained drop in beef, pork and poultry production would compound the pressure on corn prices, which are already damaged by drops in ethanol demand. On the ethanol front, ADM is shutting down its huge ethanol plant just south of us at Cedar Rapids, IA and also its Columbus, NE plant. Each plant has annual capacity of producing 300 million gallons of ethanol, consuming about 100 million bushels of corn at each facility each year. 

Bottom line for corn and soybean growers trying to get into Midwest fields: They're looking for every rational way to shave cash input costs without deep sacrifices in yield. For many, that points to options like —

  • Spending less on dry maintenance fertilizer
  • Metering out nutrients with in-furrow, 2 x 2, Y-drop and other "prescription" applications
  • Adjusting $2 of normal NPK starter cost to a blend of less NPK and in-furrow biologicals
  • Learning a lot about tissue testing and foliar nutrient application through the season. Substituting more time in the sprayer and more management oversight in place of simply calling the co-op fertilizer guy and paying the bill
  • Switching to non-GMO numbers to save on seed costs — as many growers have already done.