To suggest that supply in local meat cases has been disrupted since schools closed and ‘stay-at-home’ orders were issued last month might be an understatement.
The good is simply this. We have more than adequate supplies of market-ready livestock on the farm to accommodate the consumer’s demand for meat.
The bad is that COVID-19 caused disruption to the meat supply chain that created short term shortages in the meat case, and fluctuations of price in both the meat case and especially livestock at the farm.
The ugly is these concerns are likely to affect both the farmer and the consumer for weeks, and perhaps even months to come. The solution to the chain of events that have caused the problems in the supply chain all to revolve around how quickly COVID-19 is arrested and the lives of consumers and all the members of the meat supply chain can return to normal.
First, to understand the solution one must have an understanding of the inter-related actions and reactions that caused the meat case shortages and livestock price fluctuations experienced in recent weeks, and perhaps into the foreseeable future.
The story begins early in 2020 when the livestock markets were reacting negatively to the concerns of the potential impact COVID-19 could have on exports when it hit the U.S.
In mid-March when it became obvious COVID-19 had arrived in the U.S., markets shifted their attention to domestic meat supplies. On March 16 when Ohio’s schools closed, they were no longer offering lunch to 1.7 million schoolchildren. Families were suddenly needing to shop for food – including meat – to prepare at home. A week later Ohio’s stay-at-home order was issued. That resulted in restaurants closing or only offering drive through service and families were once again headed back to the grocery to stock up as they prepared to create even more meals at home. As Americans were now suddenly no longer spending more than a third of their food budget on meals prepared away from home, the markets reacted with a short-lived spike in livestock prices as supply scrambled to keep up with demand in local meat cases.
It’s now April and the markets have shifted their focus away from the demands of simply feeding the consumer, but are now concerned about packing plants operating below capacity or temporarily closing down due to the impact the virus is having on the labor force in those plants. While demand for meat in the retail case remains strong, and livestock inventory is more than adequate to supply that demand, the loss of U.S. harvest capacity is now causing a backlog of market-ready livestock at the farm. The net result is strong prices in the meat case at a time when farm gate livestock prices are depressed simply due to the lack of a market outlet.
Today, consumers are again facing the potential for temporary disruptions to the meat supply chain until packing plants can get back to full production. At first glance, this may seem to be a short-term problem the consumer can simply manage around. Unfortunately, the same is not necessarily true for the livestock owner.
If a consumer must prepare a meal without meat because of an empty meat case, it’s a meat sale that is lost forever. At the same time, along with lost packing house capacity and resulting in delayed animal sales come market-ready livestock that continue to grow – and create more meat – every day they are held off the market. Even when restaurants are allowed to reopen, the question remains, “How quickly will consumers return to restaurants, and can the supply chain quickly shift again and provide the meat they will demand in a timely fashion?”
Until COVID-19 subsides and enough healthy workforce is available to restore the U.S. packing house capacity and entire supply chain structure, we will continue to deal with the good, the bad, and the ugly of disrupted supply and demand. Consumers may experience temporary meat case shortages while livestock producers will be faced with marketing challenges, depressed prices, and the need to remain flexible in their livestock feeding and marketing plans moving forward.
The three articles that follow focus more closely on the impact COVID-19 is having on beef, swine, and lamb producers and their individual markets.