COVID-19: The Meat Was Not So Tasty!

Portrait of a bearded meat man holds fresh cut meat.

In this article

The pandemic led to major disruptions in the U.S. meat industry and the consequences have been felt across the entire nation. Read to know more.

The meat industry is one of the largest segments of the food industry. Problems are not new to the industry because it is quite natural with the cattle being affected by various diseases such as Mad Cow, Bird flu, SARS, and so on.

The damage by COVID-19 was too huge to be ignored like the others. The disruption was felt across the entire U.S. meat industry. It created a dilemma that was evident with consumers facing limited availability of meat items at the groceries, while simultaneously, producers were unable to find buyers or market for poultry and livestock ready to harvest.

The sudden shock of the pandemic disrupted the system leaving the livelihood of many farmers and meat producers in limbo.

Expected Effects

Consumers had to hide the craving for meat foods as the prices soared for preferred meat products. On the other hand, producers were unable to find a market and hence prices were likely declining.

The producers were never able to make a comeback unlike other catastrophes as the main function of the price system was to prevent shortages and surpluses. The COVID-19 pandemic unexpectedly created an imbalance between consumers and producers.

The Disadvantage Of Perishable Food

Normally, the meat industry is very efficient in transporting large quantities of market-ready livestock through processing, distribution, and retail channels to the end consumer. And since meat is perishable, the meat industry has to complete the task in a relatively short time.

Retail food market segments such as convenience stores, supermarkets, specialty meat shops, etc. are the purchasing points for approximately half of the domestically consumed meat. While the other half is consumed in the foodservice segment (schools, restaurants, sporting events, hotels, etc.).

The stay-at-home, lockdown, and social distancing orders significantly affected the foodservice meat demand and it declined with no prior notice, with schools and restaurants shutting down and recreation canceled, the situation worsened.

Death Of The Demand

The instant closure of activities only resulted in an increase in demand in the retail market and panic buying further encouraged the retail demand and fuelled price increases.

Inflicting more damage was the difficulty in rerouting meat products destined for foodservice easily to retail. Bacon, for instance, used to go to restaurants in 25-pound cartons, while retail customers opted to purchase 1-pound packages.

The Uprooting Of Plants

The pandemic refused to stop as the packing plants were unable to harvest livestock and poultry in a timely manner with no workforce. Plants had to incessantly shut down to clean and disinfect premises, implement Centers for Disease Control and Prevention and Occupational Safety and Health Administration guidelines, and test employees for the virus.

Closed plants decreased the demand for market animals, particularly in that region. And plants that reopened usually operated at lower volumes and capacity than were previously possible.

The See-Saw Effect

U.S. meat production was at a record high level during the first quarter of 2020. However, as pandemic impacted meatpacking and processing, meat production drastically declined. In the midst of this, livestock prices also came down with packing plant closures and economic slowdowns.

During the pandemic, the demand for hamburgers at retail markets exploded, with consumers emptying shelves in no time. And many fast-food restaurants still managed to provide drive-through and take-out service. Ground beef prices also were in high-demand and touched a record high price per pound during the peak of the pandemic.

Eventually, retail pork prices, chicken prices rose to record levels as well. But the persistence of the pandemic leads to a decline in the market hog, steers, and chicken prices for the year.

Packing plant and meat distribution issues have at least partially been resolved quicker than first thought possible and restaurants have started reopening in many states.

Returning To Normalcy

Some states are getting into the act of addressing the bottleneck in the meat industry by allowing state inspectors to approve direct-to-consumer and interstate sales.

And new federal legislation is the key to make those efforts possible nationwide.

Following the U.S. Department of Agriculture (USDA) the business is falling back to how it was but with more demand. The opening up of new sales channels for farmers using the slaughterhouses.

A lot of federal programs are now allowing ranchers and farmers to sell animals that have been slaughtered under the supervision of state inspectors across state lines, bypassing a log created by the limited number of USDA-inspected slaughterhouses.

Meanwhile, state and federal lawmakers are proposing new grants and other regulatory fixes to revive the small slaughterhouses. Their timely efforts were much needed as the COVID-19 has highlighted the shortcomings of a long and consolidated food chain and prompted more consumers to seek locally produced food.

Adjustments In Laws

A law passed in Wyoming is allowing ranchers to sell cuts of meat directly to consumers barring the need for USDA-inspected slaughter. Ranchers can now easily sell shares of a herd of livestock enabling those shareholders to buy cuts of meat when the animals are processed.

The law is a creative and great way to scale rules that allow farmers to have a shortcut for inspection requirements by selling live animals to customers before they are slaughtered, but with some limitations. There is a catch though the law only applies to ranchers for selling meat directly to consumers in the state. However, meat sold at restaurants and retail still has to be processed under the supervision of a USDA inspector.

The Need For Game-Changers

While creative policy-making in certain states is being welcomed, the options for small livestock farmers across the U.S. remain limited.

Approximately half of U.S. states do not have alternate routes for meat processing, forcing farmers to limit their animal supply to a small number of USDA-approved slaughterhouses or sell them to large producers.

The laws are receiving appreciation from small farm advocates who are hailing the legislation for heading in the right direction. But still, these laws are falling short of solving the main underlying challenge.

At present, the USDA only permits custom slaughterhouses to process animals for personal consumption by their owner. If the agency were to facilitate and start allowing these facilities to cater to commercial sales, that would be an ultimate game-changer.

Still, if federal legislation does make progress and move forward, it remains to be seen whether the middle of small- and medium-sized slaughterhouses will return to the normal profitable levels in the future.

Walking On A Tightrope

Slaughter is laborious work and overhead costs are too high. Farmers are facing the wrath of the pandemic and the laws are just to clear the path for the normal processes that were in place. These are unprecedented times with price volatility and tremendous uncertainty.

No one has a clue how severe the pandemic will be or how long it will persist. The government is trying hard to fill in the cash crunch but that is insufficient considering the intensity of the damage.

Farmers are left in the lurch and with no savings to rest upon alternative financial options like an emergency fund can help them beat the blues and go on the full-throttle once the situation is under control.

Bottom Line

When the hysteria and dilemma surrounding COVID-19 subsides, we hope everyone will have a greater time and appreciation for how crucial an efficient meat production, processing, distribution, and retailing system is. Till then, it is our duty to safeguard the farmers who form the connecting link for the people and the food produce. The meat industry will bounce back for sure and it is just a matter of time when the pandemic is long gone with aggressive vaccination drives and to prevent any further outbreak.

By Karthik V

This page is purely informational. Line does not provide financial, legal or accounting advice. This article has been prepared for informational purposes only. It is not intended to provide financial, legal or accounting advice and should not be relied on for the same. Please consult your own financial, legal and accounting advisors before engaging in any transactions.

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