Virus reveals conflicting pressures in meatpacking plants
Consumers pay more; farmers receive less
COVID-19 is battering the network of beef, chicken and pork packing plants as the virus spreads, forcing industry giants to temporarily close facilities as some workers die and others are sickened.
The pandemic is uncovering the conflicting interests in the meat industry as plant closures affect both supply and demand, meaning farmers and ranchers are likely to receive lower prices when they sell and consumers pay higher prices at the store.
Meanwhile, workers in the plants, many of whom labor in conditions that allow COVID-19 to spread easily, are sometimes absent for work in a sector deemed essential by the administration. And labor unions are demanding more protective gear — and even higher pay — for the employees.
"If you go in these plants you have people working in very close proximity to each other," said Jayson Lusk, a professor and director of Purdue University's agricultural economics department. "It wasn't crazy to imagine that something like what we're seeing would play out."
On Easter Sunday, Smithfield Foods said its Sioux Falls, S.D., pork facility would remain shut indefinitely rather than the three days originally announced. Smithfield initially said 80 workers had tested positive for COVID-19, but South Dakota health officials tied 293 novel cases to facility employees. The tally represented about 40 percent of all confirmed cases in the state.
Gov. Kristi Noem and Sioux Falls Mayor Paul TenHaken had pushed for a 14-day closure so employees could self-isolate and the facility could be sanitized.
The episode seemed to reflect the tensions of high-stake closures.
Kenneth M. Sullivan, Smithfield's president and CEO, said his company runs its facilities "to sustain our nation's food supply during this pandemic. We believe it is our obligation to help feed the country, now more than ever. We have a stark choice as a nation: we are either going to produce food or not, even in the face of COVID-19."
Elsewhere, JBS USA Holdings Inc. closed its Greeley, Colo., plant until at least April 24 after two workers died from the virus. The company, the world's largest meat packer, closed a Pennsylvania plant for two weeks amid COVID-19 concerns. Tyson Foods Inc. stopped work at an Iowa pork plant after more than 20 employees tested positive for novel coronavirus.
There also were reports of sick workers at poultry plants in Alabama, Georgia and Tennessee.
Consumers can expect to still find meat, poultry and pork in their grocery stores as panic buying appears to be subsiding. But they may pay more as COVID-19 creates bottlenecks in the flow of animals to slaughterhouses and meat to wholesale and retail markets.
Lusk said beef and hog producers will feel financial pain from the changes, particularly in areas where there are closures.
"The plant doesn't need as many animals to run through there so they are reducing their demand for cattle on the one and on the other hand there is less meat being produced, which is going to push prices on the retail side," Lusk said.
Consumers pay more, farmers receive less
He said there were already large supplies of market cattle and hogs and a slowdown at the processing plant means fewer animals going to slaughter. The lower plant demand for the animals means the rancher and farmer face lower prices when they sell. But on the wholesale and retail side, Lusk said demand remains strong for what will be temporarily tight meat supply. This mean higher prices for the consumer, at least in the short term.
Tom Super, spokesman for the National Chicken Council, said most poultry plants are trying to modify work conditions to fit public health guidelines. There are trade-offs, Super wrote in an email, adding that "because of additional social distancing measures that companies have employed, most plants are not operating at 100 percent."
The poultry industry, he said, also is rewarding workers with bonus and hazard pay, free chicken, waiving the waiting period for short-term disability and making paid time-off policies flexible.
"The incentives help, yes, but they are not a silver bullet. What helps most is communication, communication, communication," Super said.
While the companies say they are focused on a healthy workforce, they also are part of an industry the Trump administration has designated as part of the U.S. "critical infrastructure" with a mandate to keep operating.
After an April 7 meeting with food processing executives, Vice President Mike Pence said they faced challenges like increased absenteeism by workers concerned about exposure to COVID-19.
The rapid spread of the virus in some plants has amplified calls among advocates for safety and workers' rights to call for more protective gear and distancing among workers.
The United Food and Commercial Workers union has urged the Centers for Disease Control and Prevention to issue directives to require packing plants to issue personal protective equipment, including face masks, to workers to wear throughout the work day. Workplaces would be mandated to post safety guidelines for workers throughout a facility and in languages foreign-born workers can read.
The union also negotiated a $2 an hour emergency pay increase for Cargill workers and an expansion of virtual health visits so workers do not have to physically go to health clinics for reviews.
Plants are slowing processing lines, installing barriers to keep workers separated, staggering work breaks to limit gatherings and taking temperatures.
Some companies are offering temporary bonuses to workers to keep the healthy working and paid sick leave to encourage the ill to stay home.
"We are working overtime with our members and the entire food supply chain to ensure the safety of employees," North American Meat Institute spokeswoman Sarah Little said by email.
Little said the organization's member companies are following CDC guidelines and other protocols when they know someone who tested positive has been a facility. The North American Meat Institute also is working with members and other companies to find a sufficient supply of face masks and shields for employees, Little said.
While the industry continues to adjust to the impact of COVID-19, the kinks in the supply chain will leave farmers and ranchers with shrinking revenue when they send their animals to market.
"Even with nothing nefarious going on, the economics are going to make the margin between farm and wholesale and retail prices increase," Lusk of Purdue University said.
Colin Woodall, CEO of the National Cattlemen's Beef Association, had a similar assessment about the changes COVID-19 has brought to the meatpacking industry.
"Plant closures or slow-downs have significant regional and national implications that will ripple through the marketplace at a time when cattle producers are already suffering from market uncertainty and economic hardship," Woodall said in a statement. "Every member of the beef supply chain relies on processing plants operating daily to keep product moving."