Effects of COVID-19 Possibly to Hinder Meat Packers
Beef accessibility worries from all over Canada continue steadily to trickle in as the Coronavirus pandemic persists. As a result of the public protection measures by the authorities, butcher houses in Canada and the United States continue to be minimizing line speeds, shifts, as well as momentary closures in some other situations. These kinds of steps result from Covid-19 issues, and experts are saying that meat supplies are expected 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 further advised those on an online presentation organized by marketing intelligence firm J.S. Ferrero that “Production is much, much slower than normal.” The slow production rate generates a unexpected challenge for cattle owners.
The persistence of Covid-19 has caused a short term closure of the Cargill plant at High River in Alta. The packer is one of the primary meat packers on the Prairies. Several employees at other main meat plants in JBS in Brooks in Alta have tested positive to Covid-19, resulting in a lot of challenges in operations due to staff shortage. The plant, as of last week was running only on a single shift, and this has substantially lowered its daily slaughter operations.
On the other hand, more than a few US meat packing plants that deal with Canadian animals have also announced drops in their slaughter activities, while others have briefly stopped working as a result of the employees getting the virus. Tyson meat plant in Pasco, Washington, has briefly shut down while the JBS plant in Greeley, Colorado, was set to open recently after its short term shutdown at the start of the month.
As reported by Grier, beef has come to be far more costly at the counter compared to pork and chicken. He says that “Beef costing has become uncompetitive relative to the other two main types of meat.”
According to Statistics Canada, Canadians like to dine out more commonly in comparison with eating at home. The pandemic has modified this as the majority of full service eateries have underwent a forced closing as the fight to control the spread of the virus continues. The effects of the pandemic continue to be felt badly in the third quarter of this year as people focus more on paying the christmas bills during the first quarter. Grier further predicts that in the 2nd and 3rd quarters, food sales will be about 20% of what they are at this point, while fast food restaurants like McDonald’s may possibly keep 40% of their current sales.
During the same webinar, an American agricultural economist, Rob Murphy, said that restricted packaging capacity had caused a disconnect between meat prices and live animal prices. He pointed out that panic buying because of Covid-19 contributed to strong margins among the packers.
Many slaughter plants in the US can be facing a slide of as much as 9% due to a drop in processing speeds and short-term closure of meat packing plants as a result of the new 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 further stated that price levels for cash cattle are most likely to continue declining because the cattle providers need to move the cattle, and there is not much leverage with the packer. The feed yard placements are also probably going to fall in the upcoming months, thus decreasing inventory, and this implies a drop in beef supply.