Impact of COVID-19 Expected to Hinder Meat Producers
Beef accessibility worries from all around Canada continue to come in as the COVID-19 pandemic persists. Due to the general public security measures by the authorities, slaughter plants in Canada and the US are lowering line speeds, shifts, and short-term closures in other cases. These measures are due to Covid-19 issues, and analysts are stating that meat supplies are expected to be struck hard.
Kevin Grier, a market analyst, says that Canadian slaughter activities are most likely to decline by at least 5% in the second quarter of the year and that he says “is if we are lucky.” He further told those on a webinar organized by marketing intelligence firm J.S. Ferrero that “Production is much, much slower than normal.” The slow production rate creates a major problem for cattle keepers.
The persistence of Covid-19 has brought about a temporary closure of the Cargill plant at High River in Alta. The packer is one of the major meat packers on the Prairies. Several employees at other major meat plants in JBS in Brooks in Alta have tested positive to Covid-19, resulting in a lot of problems in operations due to employee shortage. The plant, as of last week was working barely on a single shift, and this has substantially diminished its daily slaughter operations.
On the other hand, multiple American packaging plants that deal with Canadian livestock have also announced decreases in their slaughter activities, and others have briefly stopped running because of staff contracting the virus as well. Tyson meat plant in Pasco, Washington, has temporarily closed while the JBS plant in Greeley, Colorado, was expected to open last week after its temporary closure at the start of the month.
According to Grier, beef has become far more expensive at the counter in comparison 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 love to eat out more commonly as compared to eating at home. The pandemic has altered this as the majority of full service eateries have undergone a forced closing as the struggle to control the growth of the virus continues. The effects of the pandemic continue to be felt seriously in the third quarter of this year as people focus more on paying the christmas 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 these days, while fast food restaurants like McDonald’s may possibly maintain 40% of their sales.
During the same webinar, an American agricultural economist, Rob Murphy, said that reduced packaging capacity had brought about a disconnect between meat prices and live animal prices. He stressed that panic buying due to Covid-19 contributed to strong margins among the packers.
Many slaughter plants in the US might be facing a slide of as much as 9% due to slower processing speeds and temporary closure of meat packing plants as a result of the COVID-19 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 claimed that price levels for cash cattle are most likely to continue dropping because the cattle sellers 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 bringing down inventory, and this indicates a drop in beef supply.