Broken Links in the Supply Chain

The coronavirus has complicated meat production across all proteins and companies throughout the country. Major processors closed or limited plant operations due to sick workers and contaminated equipment. This will cause a cascade of issues up and down the supply chain from farms to distribution. Closures at plants like Smithfield’s massive pork facility in Sioux Falls, South Dakota, and JBS’s central beef plant in Greeley, Colorado, will cause a backlog of livestock as production can no longer keep up. Likewise, consumers are very likely to see a short supply and higher prices on grocery shelves.

As the pandemic progresses, the industry has a better understanding about supply chain interruptions. Restaurant closings have slowed demand for some foods and increased demand for others. The availability of workers for farming, trucking and retail stores will also make the normally streamlined process of keeping our nation fed much more difficult.

“Chicken processors are doing everything they can to 1) keep their employees safe and 2) work to keep chicken on the shelves — in that order.”

Mike Brown, President, National Chicken Council

Meat Going Bad

This week saw a pivotal turn for meat processing plants in the midst of the pandemic. Companies including Smithfield, Tyson, JBS and Cargill have announced shutdowns, with some reporting COVID-related employee deaths. Other companies have reported reduced capacity or temporary closures. The impacts are especially desperate for farmers who are losing markets for livestock.

• Sioux Falls, South Dakota, Mayor Paul TenHaken told NPR, “It wasn’t easy getting the world’s top pork producer to shut down one of its biggest plants.”
• In a company statement, Smithfield President and CEO Kenneth Sullivan warned, “The closure of this facility, combined with a growing list of other protein plants that have shuttered across our industry, is pushing our country perilously close to the edge in terms of our meat supply.”
• Agri-Pulse summarized the slowdowns and shutdowns across the poultry, pork, sheep and cattle industries, and the potential impacts.
• Purdue University agricultural economist Jayson Lusk explained how decreased cattle and hog processing will push wholesale and retail prices up and live cattle and hog prices down.
• Livestock associations raised concerns for producers. NPPC President Howard Roth warned, “The pork industry is based on a just-in-time inventory system … leaving farmers with tragic choices to make. … hog farmers have nowhere to move their hogs.”
• Estimating losses at $13.6 billion, National Cattlemen’s Beef Association President Colin Woodall commented, “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.”
• Adding insult to injury, The Associated Press confirmed that turkey producers in South Carolina are looking to stop a confirmed case of avian influenza from spreading. More fortunately, Meatingplace reported disruptions from damaging tornadoes that touched down in Mississippi will have minimal impact on poultry production.

Supply Chain Stressors

Supply chains are built for efficiency. But the coronavirus crisis has changed where supplies are expected to go and how they will be used. With workers staying at home, produce rotting in fields and food banks looking to resupply, lawmakers and industries are scrambling to redirect resources.

• Civil Eats reporter Lisa Held walked through “Food distribution 101” to illustrate the many links in the food supply chain and the failure points caused by COVID-19.
• Scientific American detailed how labor and supply chain disruptions would hurt producers of specialty crops — think apples, berries and honey — more than growers of commodity crops.
• In an April 10 letter, Feeding America and the American Farm Bureau Federation advocated for the USDA to connect farmers with food banks “to respond to shifting demands.”
• Idaho potato farmer Ryan Cranney of Cranney Farms took distribution into his own hands and offered free potatoes to anyone willing to pick up from his farm; CNN reported on April 16.
• Freight service Convoy pledged on April 16 to cover costs of shipping donations to food banks. C.W. McCall would be proud.
• Bloomberg reported that the USDA allowed poultry plants owned by Tyson and Wayne Farms to increase line speeds in order to address shortage concerns. Activist group Food & Water Watch accused USDA of putting “profit over safety.”
• In Fortune, Consumer Brands Association President and CEO Geoff Freeman, and General Mills CEO Jeff Harmening advocated for a government supply chain office that could apply uniform standards for critical infrastructure across the country.
• On April 15, Slate reported that, of all things, packaging is the kink in “activating” the yeast supply chain.
• NPD Group put numbers to the biggest shift in demand: the past few weeks have seen 40% fewer restaurant transactions than the same time last year.
• On April 14, President Trump announced the “Great American Economic Revival Industry Groups” tasked with restarting the economy when lockdowns end. The food-focused panels include leaders from the full production chain, including seed maker Corteva Agriscience, pork producer Seaboard, foodservice distributor Sysco, and multi-channel brand Wolfgang Puck.

“Chicago is no second-class taco city. … Immigration has transformed it into a taco capital, with some of the best Michoacan-style tacos outside of Michoacan.”

José R. Ralat, Taco Editor, Texas Monthly (Chicago Tribune)