As more workers test positive for the coronavirus throughout the U.S., more plants are temporarily closing. As of Tuesday, plants in South Dakota, Iowa and Colorado have temporarily halted production. Other than these plants, Kansas, Nebraska and Texas hold the lion’s share of the meat processing market.
While no one plant represents more than 7% of national capacity, said Glynn Tonsor, agricultural economics professor at Kansas State University, the challenge is that no one knows how many plants the virus will affect and for how long.
Kansas has three major plants: two in Dodge City; one in Holcomb, near Garden City; and one in Liberal. As of Wed., Ford County, where Cargill and National Beef have plants, saw a spike that moved the needle to 32 active cases there. Finney County, where Tyson Fresh Meats has a plant, holds at 17. Seward County, where National Beef processes some of its beef, has seven cases. Not all cases in these counties are from employees of these plants. Some plants do not have any workers who have coronavirus.
All of the plants have enacted stringent safety measures to combat the coronavirus.
"We may be working differently, but it does not mean our work stops," said Daniel Sullivan, a spokesman for Cargill.
Cargill, which has about 60 protein facilities in North America, is working with local health officials and has adopted temperature testing where possible, providing and encouraging the use of face coverings, cleaning and sanitizing procedures, prohibiting visitors from facilities, adopting social distancing practices where possible and offering staggered breaks and shift flexibility.
"We also will continue toenforce a mandatory 14-day quarantine for any employees who may have been exposed to COVID-19, and that includes any employees who may have come into contact with any team member who has tested positive," Sullivan said.
Tyson Fresh Meats continues to promote more social distancing at its plants, including the facility near Garden City. Along with temperature checking and sanitary measures, Tyson is erecting dividers between work stations or increasing the space between workers on the production floor. In some locations, it has set up tents to create outdoor break rooms.
Both Cargill and Tyson are giving incentive pay to their employees.
Neither company is expecting plants to temporarily close, but each plant is experiencing varying levels of production impact due to worker safety measures.
"We are adjusting the number of cattle we receive in a few of our locations but are working with farmers and ranchers to keep the agricultural economy moving," Sullivan said.
"Our beef and pork plants are still up and running, with the exception of our Columbus Junction, Iowa pork plant; however, we’re beginning to experience varying levels of production at some locations," said Liz Croston, a spokeswoman for Tyson. "Some is planned due to additional worker safety precautions, but some is occurring because of absenteeism."
According to Croston, Finney County continues to operate with scaled back production.
"Where possible, in the event production is temporarily scaled back, we are working to shift hogs or cattle to other Tyson facilities to minimize disruption and continue meeting customer needs," she said.
According to the USDA, as of March 1, Kansas feedlots with capacities of 1,000 or more head contained 2.38 million cattle on feed. This inventory was up 3% from last year.
Placements during February totaled 390,000 head, down 8% from last year.
Price of cattle and hogs
Already, the price of cattle and hogs has decreased dramatically.
"When we have less available opportunity capacity for packers, that reduces the demand for fed cattle," Tonsor said. "It does not change the availability of fed cattle."
Tonsor said it is important to keep the biological demands separate from the economic demands.
Although there are plenty of cattle in the fields ready to go to feedlots, and plenty of cattle in feedlots ready to go to slaughterhouses, the supply chain is creaking as capacity at slaughterhouses has decreased.
"That largely is why cattle prices are declining," Tonsor said. "The (meat) supply chain is taxed, and that shows up in the marketplace."
According to Tonsor, CME cattle and hog futures prices for April delivery fell 20 to 40% since Jan. 11, when the first death from COVID-19 was reported in China.
Live cattle futures for April delivery fell from $127.96 per hundredweight (cwt) on Jan. 10 to $94.28 on April 9, Tonsor said. Hog futures plummeted 42% during that time period.
"Beef demand does better when consumer income goes up," he said. "Ground beef is the only part of the story that is up."
Because most hotel dining rooms and restaurants are temporarily closed, steak and roast prices are going down. Ground beef prices — what consumers usually purchase — are going up.
"Net demand of all these prices shape the price of beef," Tonsor said.
The ultimate effect on the livestock market is unknown. Less utilization of meat in meat packing plants will reduce the number of cattle needed from ranchers, causing prices to continue to decrease.