In this file:
∑ Meat industry triumphs over COVID-19
∑ A rousing rebound
Meat industry triumphs over COVID-19
Prime Cuts with Steve Kay
By Steve Kay, Contributor, Canadian Cattlemen
January 12, 2021
The North American meat and poultry industry faced unprecedented challenges when the COVID-19 pandemic began to wreak havoc throughout the continent last spring. The many ways the industry tackled these challenges and returned to a semblance of normalcy in such a short time is one of the greatest stories in the long history of the industry.
Beef, pork and poultry processors on both sides of the border faced scenarios never before seen. Thousands of workers either became ill with the virus, were in contact with those who did or stayed home out of fear of contracting it inside plants. Absenteeism ran high and in one week in May U.S. beef plants ran at only 68 per cent of capacity. Huge cutbacks resulted in a dramatic decline in cattle and hog prices. U.S. cattle prices today remain six to seven per cent below year-ago levels.
That production rebounded so quickly after May is because meat and poultry companies had already started spending millions of dollars to protect their workers. They have now spent well in excess of US$1.5 billion on numerous measures inside and outside plants. Meanwhile, they had to revamp production lines because widespread restaurant closures and restrictions transferred consumersí food dollars from foodservice to retail establishments. This meant producing more cuts to retail specifications and fewer for foodservice. This will continue as such spending is unlikely to return to a normal 50:50 split until the pandemic dramatically recedes or until the majority of Americans are vaccinated against the virus.
Companies acted on numerous fronts to protect their workers, at huge expense. Tyson Foods, North Americaís largest meat and poultry company, incurred direct incremental expenses associated with the impact of COVID-19 totalling approximately US$200 million and US$540 million for its fourth quarter (ended October 2) and 12 months of fiscal year 2020, respectively, it says. It expects such costs to decline to US$330 million in fiscal 2021.
Meanwhile, Tyson sold far more beef to retail outlets in fiscal 2020 than in 2019, in large part because of the impact of the COVID-19 pandemic on foodservice establishments from March on. Tysonís retail beef sales totalled US$8.155 billion, up US$735 million on 2019ís US$7.420 billion. Its foodservice sales totaled US$3.669 billion, down US$482 million from 2019ís US$4.151 billion. Beef sales in 2020 were thus 2.2 times larger to retail than to foodservice, versus 1.78 times in 2019.
U.S. processors still face challenges. Most beef companies cite labour shortages and worker protection as the number one issue facing the industry. This was clear from companiesí responses to my annual survey of the Top 30 U.S. beef packers last November. The main issue facing the industry remains labour, says Kazunobu Nomura, president and CEO of Creekstone Farms Premium Beef. The pandemic magnified the labour issue, but it was a major problem long before the virus came to the U.S. Even with a high level of unemployment, packing plants are struggling to run at capacity, he says.
The number one issue is still employee training, engagement and retention, says Trevor Caviness, president of Caviness Beef Packers. The top issue is...
A rousing rebound
By Steve Kay, Meat+Poultry
Alarm bells started ringing through the US meat and livestock industry over the coronavirus (COVID-19) as early as last February. Thatís when the virusí rapid spread began to roil the global and US commodity markets. Export slowdowns meant that red meat and poultry products rapidly filled cold storage facilities throughout the United States.
The disease outbreak by early March was declared a global pandemic and continued to wreak havoc on equities and commodity markets. March 12 saw the largest one-day selloff in US stocks since 1987 and live cattle and hog futures prices continued to plunge, along with cash prices for these animals.
The worst was to come, as the virus began to infect workers at most meat and poultry processing plants. Many plants reduced production in early April to try and protect workers. JBS USAís beef plant in Souderton, Pa., was the first of more than 10 plants to suspend all production temporarily.
Trepidation gripped the industry throughout April and beef and pork production levels declined to unprecedented lows relative to plant capacities because of worker illnesses and absenteeism. The last week of April saw weekly cattle slaughter total 439,000 head, 68% of available slaughter capacity. Weekly hog slaughter fell to 1.553 million head, also under 70% of capacity. The average price of live fed steers that week was 21% below the same week in 2019 and the average carcass price for live hogs was down 27%.
Down but not out ...
Challenges loom ...
Lessons learned ...