Friday, 1 May 2020
By Felicity Rusk
Over the past few weeks, several major US pork-processing plants have announced temporary site closures, mainly due to confirmed COVID-19 cases amongst staff. By late April, an estimated 25% of pork processing capacity was offline, according to the United Food and Commercial Workers. With similar challenges facing both the beef and poultry sector, concerns around potential meat shortages began to rise.
In response, on 28 April President Trump signed an executive order under the Defence Production Act (DPA), ordering meat-processing plants to stay open by designating them as critical infrastructure. The order applies to all meat-processing plants in an effort to prevent further disruptions to the food supply.
Chicago lean hog futures have been recovering from the lows seen in mid-April. Rising wholesale prices, due to tightening supplies, have provided support to futures prices. Nonetheless, futures still dropped back briefly following the Presidential order, as concerns over livestock bottlenecks persist. More recently, futures have continued to move-up, supported by news of strong exports.
There have been a range of responses to the order from different processors. Smithfield Foods has opted to reduce operations in its North Carolina plant, the largest pork-processing site in the world. Meanwhile, several plants, including Tyson Food sites in Waterloo and Iowa, have temporarily closed for cleaning and to implement new safety measures.
JBS announced the following day that it would be reopening its Minnesota site. However, due to a lack of available labour on processing lines, the site is operating to cull pigs only (around 13,000 head/day). Carcases are then responsibly disposed of without entering the food chain.
Worker availability and safety remain key challenges for processors. Even if more of the US pork processing capacity comes back online over the coming weeks, overall production capacity will likely be lower as companies implement worker safety precautions.