Impact of Coronavirus Very Likely to Affect Meat Availability
Beef supply issues from all over Canada continue to come in as the COVID-19 pandemic persists. Due to the general public protection measures by the government, butcher plants in Canada and also the US are lowering line speeds, shifts, as well as momentary closures in other cases. All of these steps are because of Covid-19 issues, and specialists are suggesting that meat supplies are probably to be hardest hit.
Kevin Grier, a market analyst, says that Canadian slaughter activities are expected to decline by at least 5% in the second quarter of the year and that he says “is if we are lucky.” He also told those on a web conference organized by marketing intelligence firm J.S. Ferrero that “Production is much, much slower than normal.” The sluggish production rate brings a major challenge for cattle owners.
The persistence of Covid-19 has led to a short term closure of the Cargill plant at High River in Alta. The meat packer is one of the major meat packers on the Prairies. Several workers at other primary meat packing plants in JBS in Brooks in Alta have tested positive to Covid-19, causing a lot of struggles in operations due to employee shortage. The plant, as of last week was operating only on a single shift, and this has dramatically diminished its daily slaughter operations.
However, many US packaging plants that deal with Canadian animals have also announced reductions in their slaughter activities, while others have temporarily stopped operating because of workforce contracting the virus. Tyson meat plant in Pasco, Washington, has momentarily shut down whilst the JBS plant in Greeley, Colorado, was planning to open recently following its short term closure at the beginning of the month.
According to Grier, beef has come to be much more expensive at the counter as compared to pork and chicken. He says “Beef costing has become uncompetitive relative to the other two main types of meat.”
According to Statistics Canada, Canadians love to eat out more commonly in comparison to eating inside the home. The pandemic has modified this as the majority of full service eateries have underwent a forced closure as the battle to control the growth of the virus continues. The effects of the pandemic will be felt badly in the third quarter of this year as people focus more on paying the new years expenses during the first quarter. Grier further forecasts that in the 2nd and 3rd quarters, food sales will be around 20% of what they are at this point, while fast food service restaurants like McDonald’s might keep 40% of their sales.
During the same webinar, an American agricultural economist, Rob Murphy, claimed that restricted packaging capacity had resulted in a disconnect between meat prices and live animal prices. He emphasized that panic buying because of Covid-19 contributed to strong margins among the packers.
Many slaughter plants in the US may be facing a slip of as much as 9% due to reduced processing speeds and temporary closure of packing plants as a result of the Coronavirus pandemic. Murphy stated that “We think that’s going to persist, that you’re going to continue to see those types of problems that will lead to year over year declines in steer and heifer slaughter, at least for the next couple of months and maybe beyond.”
Murphy also claimed that price levels for cash cattle are most likely to continue declining because the cattle suppliers need to move the cattle, and there is not a great deal of leverage with the packer. The feed yard placements are also most likely to fall in the coming months, thus lowering inventory, and this indicates a drop in beef supply.