Beef and pork supplies at U.S. supermarkets could shrink by nearly 30 percent and prices may rise by a stunning 20 percent by Memorial Day, the result of coronavirus slowdowns and shutdowns at packing plants, said agricultural lender CoBank on Tuesday. “Shortages and stock outs in the meat case couldn’t come at a worse time. Food inflation and a weak U.S. economy is a combination that will leave many consumers in greater financial strain.”
Livestock slaughter plummeted during April as coronavirus outbreaks hit the meat industry. Cattle, hog and lamb slaughter last week was two-thirds of its pace a year earlier, said the USDA. “For consumers, closed meat plants means they will find less meat in the grocery store in the weeks ahead,” said Will Sawyer, CoBank’s lead meat economist.
Some grocery stores already are limiting meat purchases. Midwestern chain Hy-Vee imposed a purchase limit of four packages of meat per customer at its 265 stores on Tuesday. National retailer Kroger Co. said last week that it was limiting ground beef and fresh pork purchases at some of its stores and there were reports of a two-package limit at the Stop and Shop chain, said Progressive Grocer. Big-box retailer Costco “has placed a three-product cap on purchases of fresh beef, poultry and pork,” said the New York Times.
For producers, the closures “pushed down livestock prices to a level not seen since the Great Recession, just over a decade ago,” said Sawyer in the CoBank report. With no place to sell their animals, farmers will cull their herds, which could put further strain on the meat supply later in the year.
President Trump has ordered meat plants to remain in operation during the pandemic. Some large pork slaughter plants are resuming operation this week. All the same, Sawyer said hog farmers may be forced to kill as many as 7 million hogs during April, May and June, “worth nearly $700 million at historical average prices.” Cattle and hog groups say producers will lose billions of dollars this year due to lower market prices.
“The impact of significant contractions in meat supplies has often led to substantial inflation of retail beef and pork prices,” said CoBank. “In the past two years, only twice have retail pork prices experience greater than 10 percent inflation – and neither time saw inflation climb to 20 percent, which may be coming in the months ahead.”
Wholesale prices for beef and pork are at high levels although the amount of beef, pork and chicken meat in cold storage, roughly a 10-day supply, is larger than usual, said economists Jayson Lusk of Purdue University and Glynn Tonsor of Kansas State University in an editorial for a think tank.
“Still, the specter of reduced meat supplies, and less consumer choice, will require a close evaluation of the industry’s potential vulnerabilities,” said Lusk and Tonsor. “In the future, owners of large food-processing and packing facilities may look to more regionally distributed facilities to mitigate supply risks that occur from a total plant shutdown. Another solution is to reduce labor use through increased automation.”
According to data compiled by FERN, at least 37 meat workers have died and 7,535 workers were confirmed sick due to the coronavirus. At least 18 meatpacking and five food processing plants were closed as of Tuesday at midday.