Effects of COVID-19 Potentially to Affect Meat Supply
Beef supply issues from all over Canada continue to trickle in as the COVID-19 pandemic persists. Because of the general public security measures by the authorities, slaughter plants in Canada and the US are decreasing line speeds, shifts, and temporary closures in other cases. These decisions are due to Covid-19 worries, and analysts are stating that meat supplies are likely to be struck hard.
Kevin Grier, a market analyst, says that Canadian slaughter activities are most likely to decline by at least 5% in the second quarter of the year and that he says “is if we are lucky.” He further told those on a webinar organized by marketing intelligence firm J.S. Ferrero that “Production is much, much slower than normal.” The slow production rate generates a major problem for cattle keepers.
The persistence of Covid-19 has caused a temporary closure of the Cargill plant at High River in Alta. The packer is one of the primary meat packers on the Prairies. Several workers at other primary meat packing plants in JBS in Brooks in Alta have tested positive to Covid-19, resulting in a lot of problems in operations due to employee shortage. The plant, as of last week was working barely on a single shift, and this has considerably diminished its daily slaughter operations.
On the other hand, more than a few American packaging plants that deal with Canadian animals have also announced decreases in their slaughter activities, and others have briefly stopped working because of their staff getting the virus. Tyson meat plant in Pasco, Washington, has momentarily shut down while the JBS plant in Greeley, Colorado, was set to open last week after its temporary closure at the beginning of the month.
According to Grier, beef has become much more expensive at the counter in comparison to pork and chicken. He says that “Beef costing has become uncompetitive relative to the other two main types of meat.”
According to Statistics Canada, Canadians love to eat out more often as compared to eating at home. The pandemic has changed this as the majority of full service eateries have underwent a forced shutdown as the battle to control the spread of the virus continues. The consequences of the pandemic will be felt drastically in the third quarter of this year as people focus more on paying the new years charges during the first quarter. Grier further predicts that in the 2nd and 3rd quarters, food sales will be an estimated 20% of what they are at this point, while fast food service restaurants like McDonald’s may possibly keep 40% of their sales.
In the same webinar, an American agricultural economist, Rob Murphy, said that limited packaging capacity had resulted in a disconnect between meat prices and live animal prices. He stressed that panic buying simply because of Covid-19 contributed to strong margins among the packers.
Many slaughter plants in the US can be facing a decrease of as much as 9% due to a drop in processing speeds and temporary closure of meat packing plants as a result of the Coronavirus pandemic. Murphy reported that “We think that’s going to persist, that you’re going to continue to see those types of problems that will lead to year over year declines in steer and heifer slaughter, at least for the next couple of months and maybe beyond.”
Murphy also stated that price levels for cash cattle are most likely to continue decreasing because the cattle sellers need to move the cattle, and there is not a great deal of leverage with the packer. The feed yard placements are also likely to fall in the coming months, thus lowering inventory, and this indicates a drop in beef supply.