There’s been no shortage of challenges in the meat–livestock sector since the COVID-19 pandemic began, with meat plant closures, hogs euthanized due to overcrowding, and worker safety issues all contributing to a slowdown in the supply chain.
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Many consumers who had previously taken for granted the efficiency and effectiveness of the meat supply chain are now seeing limited supply in supermarkets and prices starting to rise. USDA reported that the country’ beef processing capacity is much lower than in 2019 due to COVID19-related shutdowns and slowdowns, and wholesale beef prices are increasing as a result—they’re up 67 percent since January 2020.
Economist Jayson Lusk, department head of agricultural economics at Purdue University, says that, as meatpacking plants slowed production and shut down due to worker illness in April and May, the amount of meat available decreased, resulting in higher prices. “The worst of the situation occurred in early May, when beef- and pork-packing plants were running about 40 percent below the output from last year,” he told Food Quality & Safety. “In the past couple of weeks, we’ve made progress. Pork is now only about 10 to 15 percent below last year’s production and beef is about 20 percent below last year.”
Lee Schulz, PhD, an associate professor of economics at Iowa State University, says that this temporary decrease in the availability of meat means grocery stores and consumers are bidding up the price of what’s available and wholesale meat prices have surged, reaching a level never seen before, at least in nominal terms. “Temporarily lower meat supplies should lead to higher meat prices, but that presupposes a steady demand curve,” he told FQ&S. “Factors such as disposable income, unemployment levels, and the overall economic environment will also play a role. The outlook for meat prices out front is precarious because the current dynamic greatly depends on processing capacity, purchasing patterns, and ultimately consumer demand. Prices should begin to stabilize as those uncertainties ease.”
What’s to Come
There are still a lot of unknowns that could impact whether meat prices continue rising or stabilize, as experts can’t predict whether more COVID-19 related closures of meat plants will occur or if the safety measures enacted will slow down the supply. “Packers place utmost concern on worker health, safety, and availability. They have engineered controls such as workstation alignments and modifications, plus worker physical distancing measures where possible,” Schulz says. “How much these adjustments will reduce packing plant capacity is a huge unknown. Arbitrary 10 to 15 percent figures have been suggested, but they’re just speculation. Only time will tell. Ingenuity will be a huge factor.”
While beef and pork prices increased significantly in late April and early May, with Lusk noting that beef reached “record levels” and pork reached “near-record highs,” prices at the end of May were starting to reverse course. “Still, consumers should expect to see higher than normal retail prices for the coming weeks and limited availability in some locations,” Lusk says. “With less labor in packing plants, consumers can also expect to see more whole muscle cuts in vacuum packaging.”
In addition, some shortages are expected in the months to come. Glynn Tonsor, an assistant professor in agricultural economics at Kansas State University, said consumers will likely see grocery and restaurant meat prices higher than last year for June not only due to meatpacking plant closures, but also to the pandemic-induced bottleneck in the ability to harvest animals and produce meat. While week-over-week slaughter increases in early May fueled guarded optimism that the worst of packing plant disruptions were over, more than a month with severely reduced slaughter means that a backlog of slaughter animals is growing rapidly.