What Are the Main Issues Associated With the Beef Industry

On March 25, 2020, 502,842 hogs were slaughtered in the Usa, an all-time record. If you live where I do, hog slaughter numbers are big news. Really. The local subcontract report tracks this number on the radio every morning, along with loftier schoolhouse golf game scores and the weather report. I've never told anybody from either coast that people in the Midwest follow sus scrofa slaughter reports. (Such is the inferiority complex that comes with being a Midwesterner.)

On April 29, 267,000 hogs were killed in the U.s. in processing plants. That number was national news. COVID-xix had devastated the workforce in a number of U.S. processing facilities, not only sickening thousands of workers—many recent immigrants to the U.S.—but also disrupting beef and pork supplies for American consumers. By late April, infected workers at one big pork plant in South Dakota accounted for fully ane-third of the reported cases of coronavirus in the land. The 2d-largest pork processing institute in the U.S., in St. Joseph, Missouri, (virtually 60 miles from my farm) had most 400 cases, most asymptomatic, by early May. Rural counties that host packing plants have five times the rate of COVID cases as sparsely populated counties without plants. A number of plants have been taken off line because of the pandemic, from short-term interruptions to several week long halts in production.

In an Apr 13 statement that shook the manufacture to its cadre, the president of Smithfield Foods laid out the case for panic: "The closure of this facility, combined with a growing list of other protein plants that accept shuttered across our manufacture, is pushing our country perilously shut to the edge in terms of our meat supply. Information technology is incommunicable to keep our grocery stores stocked if our plants are non running. These facility closures will also accept astringent, possibly disastrous, repercussions for many in the supply chain, first and foremost our nation's livestock farmers."

Stores express meat purchases, newspapers and cable news featured visuals of empty shop shelves, and the cost of hamburger became a topic of national conversation. Although month-to-calendar month price increases for meat were less than 10 percent, localized price spikes garnered considerable attention.

The state of affairs has eased since early on May, but the industry volition be dealing with pandemic-related disruptions for a very long time. Consider the mass euthanization of pigs because of constrained packing capacity, with plants close down. In mid-May, CBS raised the specter of "millions" of hogs euthanized, as farmers struggled to find somewhere to sell their marketplace-ready animals. Here in Missouri, farmers are donating pigs that tin can't find a market place to local slaughterhouses while money is raised by both farmers and charitable groups to pay for processing and distributing the meat to local food banks. Iowa is appropriating state funds to help pay for the disposal of carcasses.

In mid-May, OSHA and the Centers for Illness Control provided guidance for slaughtering plants. The plants are considered "disquisitional infrastructure" and so can continue to operate if they follow the guidelines. As plants have come up back on line, they are operating at something less than full chapters considering of the social distancing required by the guidance. Presently, plants are operating at 85 percent or so of final year's levels, not plenty to piece of work through the backlog acquired by institute closures over the past two months, especially in the pork market, but the present situation is slowly and very painfully returning to something like normal.

As many observers of the crisis have pointed out, the but things immune to coronavirus are people's priors. Animal rights groups and Jonathan Safran Foer have weighed in, doubling downward on broccoli every bit the answer to the crisis in processing. Famous chefs, with time on their hands, remind usa that the only proper response is localism, with every eater not simply knowing their farmer, but their pig also. The president would similar to quit importing beef, and a fairly large and growing caliber of farmers would like to describe and quarter the executives of large processing companies. Later on all, cattle prices have dropped xix percent and hog prices 34 percent, while packer margins are at record levels.

That sentiment is likely to be reinforced by the indictments handed downwards by the Justice Section of several poultry executives for toll-fixing on June 3. And it doesn't help that there is considerable foreign ownership in beef and pork processing.

As the industry tries to recover from the pandemic, one of the more interesting discussions revolves around risk and the size of individual processing plants. The history of meat packing has been one continual argument about structure and concentration in the industry. Packer concentration is a business concern considering of the fear of market and price manipulation.

Contempo increases in packer margins have convinced farmers that monopoly power held by packers is harming both livestock producers and consumers. In 1902, the federal government began a successful antitrust case confronting large meatpackers, at a time when the five largest packers controlled nigh eighty percent of the market. Antitrust action concluded that concentration in the early on part of the 20th century, but since then, consolidation and integration has led to a slow only inexorable decrease in the number of packing and processing firms. Today, the 4 largest packers market about 80 percent of beefiness processing, and pork processing is highly concentrated besides.

Recent calls to disperse packing institute capacity are not based solely on these traditional arguments. The pandemic has highlighted the risk to our nutrient supply and distribution network from single huge plants. When 1 of those plants goes offline, the market response and disruption to the supply chain tin can be swift and severe.

Agriculture economist Jayson Lusk reports that 15 plants contain 59 percent of the daily pork slaughter in the U.Due south. 1 plant in North Carolina supplies near 7 percent of our daily pork consumption. A number of other plants each provide about 4 percent of pork supplies. When one of these plants goes offline, information technology's a problem. If two of them cease production, supply disruptions tin be national news. Critics of the industry take added this take a chance to their indictment of meat processing.

Lusk and others have attempted to recollect about the problem and raise some interesting questions. It'due south clear that packing plants as presently constituted present unique problems in dealing with the virus. They are air-conditioned, with institute temperatures kept low for nutrient safety reasons. Workers are close together, considering processing animals is a labor intensive business and all the incentives are to economize on space and speed of moving carcasses through the found. If nosotros had double or triple the number of plants, those incentives wouldn't alter. As it happens, smaller plants in the industry have suffered interruptions because of illness besides.

Lusk goes on to make two further points. Beginning, what we take is non a resiliency problem as much every bit information technology is a back-up problem. We received sort of a warning shot across the bows near the vulnerability of our processing manufacture when a large fire occurred at a Kansas beefiness packing found tardily concluding summer. The price of cattle dropped by x percentage, while the price of beef to grocery stores increased by $1.50 per pound. The Kansas found supplies about 5 pct of U.S beef.

Now fire is non a pandemic, and there is no doubtfulness that a larger number of smaller plants would increase our resiliency in case of fire. But a nationwide pandemic can only be guarded against by maintaining excess capacity in normal times. The virus doesn't care whether a plant is large or small. Excess capacity would be ruinously expensive for a private company to provide.

Secondly, slaughter plants are not necessarily seen every bit good neighbors by local communities. The siting of a large chicken constitute well-nigh Fremont, Nebraska, in the very recent by is i case in point. Information technology was and continues to be a huge controversy, as locals are worried about dissonance, smells, traffic, water quality, air pollution, and an influx of relatively low paid workers, often recent immigrants. To find willing homes for enough slaughter plants to avert the threat of a hereafter supply disruption would be difficult, if not impossible.

Wired recently tackled the issue, contrasting our industry to processing plants in Denmark. Danish plants are highly automatic, as Dutch packers have been forced past higher wage rates in Europe to substitute capital for labor. As the U.S. tightens immigration and thinks about future risks to our supply concatenation, automation may be the preferred solution. Which raises a dilemma. If the problem is collusion, and the Justice Department clearly thinks it is, then the answer is antitrust action to increment the number of firms and competition in the industry. But, if the trouble is a supply chain vulnerable to disruptions in the labor supply, then only large firms with admission to capital can afford the needed transformation.

There are no easy solutions to the issues faced past a large and complex manufacture like the one that delivers meat to our plates each and every mean solar day of the yr. Meat production is a long process from farm to store; demand for meat is in inelastic, pregnant that small changes in supply cause large changes in price; and to deliver a hamburger to your cookout involves the coordination of moo-cow calf producers in Missouri, backgrounders in Kansas, feedlots in Texas, packing plants in Colorado, and retailers on the corner downwardly the street from your house. It is a miracle of the market place that disruptions in supply are rare enough to cause national soul searching. The performance of that complex chain during the pandemic, while less perfect than we would like, is better than we had whatever right to wait. The industry will change and ameliorate, but there are no perfect solutions, just trade offs between what nosotros have, what we want, and what nosotros can adequately expect.

Blake Hurst is president of the Missouri Farm Bureau.

Photograph by David McNew/Getty Images.

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Source: https://thedispatch.com/p/the-problems-of-the-meat-processing

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