North America continues to struggle under COVID-19 processing plant closures

Jon Condon, 22/04/2020

THE number of meat processing plants in the United States and Canada that have closed or reduced production due to COVID-19 infections among staff continues to climb, limiting weekly rates of slaughter across North America.

US meat processors had ramped-up weekly kills in response to the retail beef demand spike seen in March, but those increases have quickly reversed as plants have suspended operations or slowed chains to implement employee distancing measures and increase sanitation interventions.

The closures and reductions have dramatically impacted weekly rates of slaughter across the US.  Steiner Consulting yesterday estimated total US cattle slaughter last week at 502,000 head, down 21.8pc from the same week a year ago (see more details below).

In latest developments, about 60 employees at a JBS USA beef plant near Plainwell, Michigan, have tested positive for COVID-19, according to local health officials. The company’s human resources team is said to be working closely with the county authorities on an investigation.

JBS’s Packerland facility near Green Bay, Wisconsin, also reported a number of positives; a nearby facility operated by American Foods Group has also had positive test results;  and 10 employees of Salm Partners in nearby Denmark, Wisconsin, have contracted the virus.

A Cargill beef plant in Fort Morgan, Colorado has had positive cases of COVID-19 amongst staff and announced ramped up precautionary measures this week. Lincoln Premium Poultry at Fremont, Nebraska reported three additional cases at its facility, bringing its total to six.

Earlier, a JBS beef plant in Greeley, Colorado and a Smithfield pork plant in Sioux Falls, South Dakota both announced temporary closures.

As the number of COVID-19 cases in the US increases, additional plants may be forced to take greater precautions, slowing processing chains further, or temporarily close. Managing workforces will become increasingly challenging.

“As we all learn more about coronavirus, it is clear that the disease is far more widespread across the US and in our county than official estimates indicate, based on limited testing,” said Bob Krebs, president of JBS USA Pork, in a statement. “We have taken aggressive actions to keep coronavirus out of our plants and keep this critical infrastructure operational.”

US media reports suggest another challenge has been employee anxiety over COVID-19, manifested in elevated absenteeism and reduced willingness to work in close contact.

Both have reduced the ability to move cattle through US and Canadian processing plants.

Packers are addressing concerns by sanitising plants, ramping-up testing and screening and implementing ever more rigorous safety precautions.

Canada also being impacted

In Canada, Cargill has decided to temporarily suspend operations at its High River processing plant, one of the nation’s largest beef facilities, handling about 20,000 head each week.

The executive vice president of the Canadian Cattlemens Association, Dennis Laycraft, said the industry was working on how to deal with the growing inventory of cattle ready for slaughter, noting it will be impacted for the duration of the closure.

Mr Laycraft said the Canadian industry was looking at slowing down feeder cattle placements, moving heifers intended for slaughter back into the herd, and reducing the number of cattle entering into the feeder system.

“We’re looking at structuring an industry/government committee similar to what we did during BSE,” he said. “That will be trying to look at what is a realistic, on a weekly, monthly and quarterly processing capacity or harvesting capacity. That will determine how many slaughter-ready cattle will be put on a maintenance ration.”

Mr Laycraft suggested the Canadian industry was looking at a half billion (Canadian) dollars in market losses between now and the end of June, if there was no set-aside program and if plants did not get up and running soon.

Last week, a JBS plant in Canada also announced it would be reducing its processing line down to about 2000 head a day, as it also had employees impacted by the COVID-19 virus.

Mr Laycraft said his industry was also looking at whether other federal or provincial Canadian processing facilities still operating could increase their daily capacity.

Slaughter sharply down

Yesterday’s Daily Livestock Report issued by Steiner Consulting notes that US livestock and meat markets were in turmoil last week, as major beef and pork processing plants were either idled or reducing shifts due to cases of COVID-19 in their workforce.

Total US cattle slaughter last week was estimated at 502,000 head, down 21.8pc from the same week a year ago. In the last two weeks, US cattle slaughter was down 19pc or 241,000 head from the same period last year.

Fed cattle slaughter has been impacted more than non-fed (cow and bull) slaughter, in part because of the closure of the JBS Greeley plant and the Cargill plant in Fort Morgan going to one shift per day.

“We think US fed cattle slaughter last week was about 378,000 head, 26pc lower than a year ago,” Steiner said. It emphasised that these were estimates only at this point – actual slaughter data for last week will be released at the end of April.

There were other media reports of other major US beef, pork and poultry processing plants dealing with positive cases of COVID-19 within their workforce, Steiner said.

“Whether they can continue to stay open, albeit with reduced capacity, will depend on the scale of the outbreak, local government responses and the ability to implement a comprehensive testing regime,” it said.

“Any way you look at this, it appears the issue will continue to impact US livestock markets this week.”

There are also reports of manufacturing (further processing) plants closing. While key livestock and poultry slaughter plants are seen as the key bottlenecks, given the sheer number of animals they process a day, it was important to remember that the disease is impacting the entire US supply chain, Steiner said.

“Often the animals that are processed will then go to further processing plants where they are either converted into case-ready packaged products, or prepared for sale at grocery stores or foodservice operators. As such, as plants work at reduced capacity or are closed altogether, this could result in less product available at the grocery store.”

Further compounding the issue was the fact that the US supply chains used service retailers and foodservice operators are not always interchangeable.

“A 20-pound bag of beef that the distributor normally would send to the local restaurant cannot simply be placed in a supermarket meat case,” Steiner said.

“Faced with labour constraints, we think US packers will be forced to adjust how they process livestock, limiting the number of cuts they harvest,” it said.

“Labour-intensive cuts may be reduced, and more beef will probably go into ground beef packages. Over time, this will tend to reduce the overall value of the carcase, although, in the near term, strong retail demand continues to underpin the US beef cutout.”

Where does this leave Australian beef?

Even an ongoing slowdown in US cattle slaughter will pose limited opportunity for Australian beef to fill the gap, Meat & Livestock Australia suggested in an analysis issued on Friday.

“Australia exports predominantly grassfed manufacturing beef and chilled grassfed primals to the US, which target specific channels in the market – not the cornfed beef the majority of US retail is geared to,” MLA said.

“Moreover, a sustained substantial slowdown in US processing seems unlikely, given there are still very large numbers of market-ready US cattle coming through the system. Cattle won’t stop growing regardless of how disruptive COVID-19 is, and they will still need to be processed,” MLA said.




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  1. Alex McDonald, 22/04/2020

    How lucky is Australia that we have Covid-19 under control due to the early and decisive self isolation measures taken by the Federal and State Governments.

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