Author - jwasilewski

Kansas officials are actively working to keep the state’s beef packing facilities operational in the face of the ongoing coronavirus pandemic. Kansas Secretary of Agriculture Mike Beam said on AgriTalk (April 23, 2020) that Kansas Governor Laura Kelley and officials from the State Department of Health and interior are “engaging multiple times a day with the processing facility representatives.” Beam also emphasized Kansas officials are engaged with the Centers for Disease Control and the Department of Health and Human Services in Washington, D.C., “pointing out to the folks in DC that this is a critical infrastructure, despite other plants in other regions of the nation having shut down temporarily. These plants in Kansas are still trying to operate and are going above and beyond the guidelines of CDC, to keep in operation.” As of Wednesday (April 24), Beam said all of the Kansas beef facilities were operational, though not at full capacity. He said it is critical to maintain that harvest capacity while still protecting the health of the employees and the communities where they live.

Tyson Foods is suspending operations at its Waterloo plant indefinitely due to outbreaks of COVID-19. The Waterloo plant is Tyson Food’s largest pork plant, harvesting 19,000 pigs a day. It has been operating at reduced levels because of worker absenteeism, Tyson Foods said in a KWWL 7 News report. On Tuesday, the Black Hawk County Board of Health issued a statement to Governor Reynolds and Tyson Foods asking for the plant to be temporarily shut down. According to KWWL, the proclamation passed unanimously Tuesday morning during a special meeting of the county's Board of Health. More than 182 cases were reported as of Tuesday related to the Waterloo plant. The facility’s 2,800 workers will be invited to the plant later this week for COVID-19 testing. “Protecting our team members is our top priority and the reason we’ve implemented numerous safety measures during this challenging and unprecedented time,” said Steve Stouffer, group president of Tyson Fresh Meats in a statement. “Despite our continued efforts to keep our people safe while fulfilling our critical role of feeding American families, the combination of worker absenteeism, COVID-19 cases and community concerns has resulted in our decision to stop production." Workers will continue to receive pay while the plant is closed, KWWL reports. The plant’s reopening will depend on several factors, including the outcome of employee COVID-19 testing. “The closure has significant ramifications beyond our company, since the plant is part of a larger supply chain that includes hundreds of independent farmers, truckers, distributors and customers, including grocers,” Stouffer said. “It means the loss of a vital market outlet for farmers and further contributes to the disruption of the nation’s pork supply.” Some of the hogs intending to be harvested at the plant in Waterloo were able to be diverted on Tuesday to the Columbus Junction, Iowa, plant that reopened after being shuttered since April 6, 2020.

Hog values are plummeting due to the impact of COVID-19 and creating a financial disaster for pork producers nationwide who face a collective $5 billion loss for the remainder of the year. On Tuesday, the National Pork Producers Council (NPPC) outlined the crisis as described by producers and the immediate relief they are requesting from the administration and Congress during a media briefing. “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 “A.V.” Roth. “We are taking on water fast. Immediate action is imperative, or a lot of hog farms will go under.” The temporary closures of pork packing plants and rising employee absenteeism due to COVID-19 has exacerbated an existing harvest facility capacity challenge due to a labor shortage in rural America, NPPC said. The limited harvest capacity combined with a surplus of pigs is causing hog values to plunge. In addition, restaurant closures and the COVID-related slowdown in most export markets has crashed demand and overwhelmed the cold storage of meat. Dermot Hayes, an economist with Iowa State University, and Steve Meyer, a pork industry economist with Kerns & Associates, estimate that hog farmers will lose nearly $37 per hog, or almost $5 billion collectively, for each hog marketed for the rest of the year, NPPC said. “We were forecasting to probably make about $10 a head this year, but all that evaporated in the last two weeks,” NPPC immediate past president David Herring told AgDay TV’s Clinton Griffiths during Farm Journal Live on Monday. Herring said with the losses expected in the year ahead, there’s just no way the average producer can stay in the market like that. 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.” NPPC, in consultation with hog farmers across the nation, has identified several measures it has raised with federal policy makers. NPPC has suggested over $1 billion in pork purchases by the USDA to clear out a backed-up meat supply, supplementing agency food bank programs facing increased demand due to rising unemployment. These purchases should accommodate pork products packaged for restaurants and other segments of the food services market. In addition, NPPC has suggested equitable direct payments to participants without eligibility restrictions. NPPC said they are seeking a “legislative fix to emergency loan programs that have left farmers behind.” With 10,000 family hog farms in jeopardy because they do not have access to much-needed capital offered by the Small Business Administration, NPPC urges Congress to increase the cap on qualifying businesses to those that employee up to 1,500 and to make agricultural businesses eligible for the Economic Injury Disaster Loan program. The economic impact analysis by Hayes and Meyer was based on live hog futures between March 10-April 10.

The ripple effects of COVID-19 are forcing pork producers to face heartbreaking realities. The shuttering of one U.S. pork plant this week due to workers contracting COVID-19 has sent shocks through the pork industry that will be felt for some time. Closing a plant is an incredibly hard call, one that no one wants to make. Not knowing how long it will take for the labor force to feel safe to come back complicates the situation even further, says Christine McCracken, Rabobank senior analyst – animal protein. Options are limited.  “The plant slowdowns and closure limits the options for pork producers, unfortunately,” says Brian Grete, editor of Pro Farmer newsletter. “Producers can slow weight gains as much as possible through ‘maintenance’ diets, but that’s about it.” Stocks are building and McCracken says that’s a situation that is unsustainable with the number of hogs coming to market and the sheer pounds of pork that will be ready for the shelf with nowhere to go. Oversupply is not just a problem for the pork industry. However, McCracken says beef and chicken are different because they have more tools at their disposal. “You can slow down cattle a little easier and you can affect chicken production in a couple months,” she adds. “For pork, we were already going to have a difficult time managing through fall, but this just makes things more challenging.” The extreme losses are likely to force some producers to leave the industry and for others to make some difficult choices in the coming weeks, she says.   “During times like this, we often see those assets change hands – they don’t leave long-term if they are good assets,” she says. “But, anything marginal will likely be closed or producers fighting disease issues may take this opportunity to take down production and clean it out.” Marketing arrangements may change.   No one can predict what the next few weeks will bring for pork producers, but looking into the future, McCracken says she believes people will take another look at how they market their animals going forward. “Producers will likely reconsider how they price their hogs and how they manage risk. There might also be a push toward more producer ownership of plants, as we have seen in the past few years, so that producers are able to capture a larger share of the carcass value,” she says. “But, right now the industry is in survival mode and doing everything it can to just manage through the next few months with as little long-term damage as possible. There will be a lot of Monday morning quarterbacking when we come out of this, but for now it is all about how to limit the losses.” Internationally, COVID-19 is the first crisis of this magnitude affecting everyone at the same time. She says the strength of the dollar and oil taking a nosedive present more unpredictability with the export markets now. “I think people always miss what other proteins are doing. People get fixated on the fact that pork has less food service exposure than the next guy. But everyone is competing for that retail space and they all have twice as much as they need,” she cautions. More flexibility will be built into the system.  If another plant shuts down in the U.S., McCracken believes people will begin looking at alternative locations where they can send their hogs and trying to find ways to build more flexibility into their marketing system. “There’s not a lot we can do today but going forward, does it make sense to have as much exposure to labor constraints as we have – at least on the packing side?” she asks. Packing plants rely on a strong labor force and this situation sheds more light on an issue that continues to plague the pork industry. Dennis DiPietre, economist with Knowledge Ventures LLC, agrees that protecting current workers and having a source of trained or quickly trainable replacements is vital to forestalling an unmitigated short-term disaster. “The labor force for agricultural production and processing is already tight, although the high historic turnover in processing plants has created a host of strategies that can keep the lines moving with sufficient efficiency and product quality in the face of heavy employee turnover,” DiPietre says. “However, some of those strategies have required more workers than might be necessary otherwise.” For instance, keeping every part of the cutting floor assignment given to any one employee relatively simple and repetitive means that if workers leave for any number of reasons, replacements need only be trained in that task, he says. “The adoption of robotics is certain to accelerate as the cost of this pandemic begins to be fully expressed. Never has it been more important to understand the capability and capacity of your packer and supply chain to imaginatively create a more secure future than it is today,” DiPietre says. The industry will take a closer look at the supply chain. People are going to have to look at all parts of their supply chain with a very fine-tooth comb and figure out where their vulnerabilities are and determine if there is another way to find a supplier, McCracken says. Getting products from other countries has been challenging and will get more challenging over next year. Producers will be looking for more local or domestic sources for equipment and supplies. For example, she says feed ingredients could be a challenge to find later this year. “Plants are down, ships are backed up and the stockpile we were using is running out. We will need to consider alternatives,” she says. Unfortunately, this is a time in history when it seems like everything that could go wrong is going wrong. “It’s hard to know how everything is going to come back,” she adds. “But you can be happy you are healthy for now and can live to fight another day.”