A Look at the Current Meat Shortage

There are a lot of moving parts in the meat industry and nearly everyone in the supply chain is being affected, or eventually will be affected, from farmers to meat packers to the consumer.

On May 5th, HyVee announced that they would be limiting meat purchases to 4 packages per shopper (HyVee press release). This announcement from HyVee is similar to restrictions that were announced earlier in the week by major grocers, Kroger, Sam’s Club and Costco. If meat purchasing restrictions at the grocery store hasn’t affected you yet, you may have noticed the announcement earlier this week from Wendy’s that they are having trouble sourcing fresh beef for their hamburgers, and nearly 20% of their restaurants were not able to offer meat choices.

The situation is just as frustrating for farmers on the other end of the food supply chain. With meat packing facilities all over the country having to shut down due to high COVID-19 infection rates among workers, they have stopped buying as many animals to process. This means that farmers are left with fully mature animals, but nowhere to sell them. A livestock farmer in Michigan estimated that before the pandemic hit he was sending 55-60 truckloads of hogs a week to the Tyson processing facility in Logansport, IN. Now, he says it is less than 10 loads. The problem both farmers and processers are running into is that once an animal gets too large, it cannot be processed through a slaughterhouse. With a constant fresh supply of new animals coming on, many farmers have been faced with the tough decision of euthanizing mature animals because they can’t afford to continue to devote resources to the mature animals, and even if they did, by the time a processor may take the animal down the road, they would likely be too big. It’s estimated that in Minnesota alone, approximately 10,000 hogs are being euthanized daily.

As mentioned above, the main source of the logjam in the system are the large processing facilities. Large companies such as Smithfield, Tyson and Cargill have had to shut down entire facilities due to large percentages of their workforce contracting COVID-19. Given the close proximity working conditions at these facilities, it is nearly impossible to stop the spread of the virus once it is in the facility. Smaller facilities are seeing similar outbreaks, such as at Rantoul Foods in Rantoul, IL. President Trump recently issued an executive order to keep these facilities open and many facilities are taking extra precautionary steps to maintain worker health, such as temperature checks.

The short-term disruption in processing is already being felt with restrictions and shortages. The long-term ripple effects are still unknown, though. With many states easing restrictions, and restaurants beginning to open back up, restaurants will begin buying meat again. With the supply of meat already tight, prices will likely continue to rise. The wholesale price for a box of USDA Choice meat cuts has nearly doubled from early March to early May. In an interesting twist, the price of more expensive cuts has actually decreased in price in the same time period. This is primarily a result of consumers being more cost conscious and also restaurants seeing less demand. Furthermore, farmers can’t just flip a switch on the supply side, it takes time to grow these animals and prepare them for processing.

Eventually the supply chain will be fully restored, and consumers won’t have to worry about the availability of their favorite cuts of meat. Secretary of Ag Sonny Perdue said on May 6th that he expects meatpacking plants to be fully operational within a week to 10 days. However, in the short-term, you will continue to see headlines about some grocery stores restricting meat purchases and some restaurants being out of certain items. It’s important to keep in mind that ultimately the supply is there on the farm side. It is working through the logistics to get it to the consumer.