While most of corporate America is practicing social distancing and working from home, the cattle industry and other food industries are focusing on keeping thousands of people at meatpacking plants continuing to produce food.
Cattle prices have fallen, and at least one cattlemen’s group has called for direct aid to producers, but a critical element is ensuring food production continues.
Late Monday afternoon, after weekend calls and concerns raised by livestock groups, USDA officials sent a statement to industry stakeholders on COVID-19, assuring that USDA is doing everything it can to continue inspecting food and keep packing plants operating.
USDA Undersecretary for Regulatory Affairs Greg Ibach and USDA Deputy Undersecretary for Food Safety Mindy Brashears wrote that USDA’s Food Safety Inspection Service (FSIS), Agricultural Marketing Service (AMS) and Animal and Plant Health Inspection Service (APHIS) are working to ensure the health of agency staff “while providing timely delivery of the services to maintain the movement of America’s food supply from farm to fork.”
The letter added that the three agencies are working with packers as well as state and local officials “to handle situations as they arise in your community” and stressed communication with industry. USDA officials cited industry groups have had questions about both inspection staff and grading.
The letter also pointed out that ensuring food is easily accessible is important to help calm American consumers.
“We have all seen how consumers have reacted to the evolving coronavirus situation and how important access to food is to a sense of safety and well-being,” USDA officials wrote.
“It is more important than ever that we assure the American public that government and industry will take all steps necessary to ensure continued access to safe and wholesome USDA-inspected products.”
Agriculture Secretary Sonny Perdue said the American people are counting on people to continue producing food, and also need USDA to continue its services. Pointing to both school meals and the food supply, Perdue said, “We have the responsibility to help our food supply chain be efficient and effective in this uncertain time.”
A spokesperson for the North American Meat Institute told DTN most companies are operating normally, but have contingency plans to address the threat of coronavirus.
“The food supply chain has been deemed critical infrastructure, and NAMI has been working with the administration and industry partners like transportation, utilities, among others, to ensure food remains on the table,” the spokesperson said.
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Colin Woodall, CEO of NCBA, said the group has had continued conversations with Ibach and Brashears with the major focus to ensure packing plants remain open.
“That’s the key for us is making sure the plants are open, we have inspectors in place and we can keep product moving because we know that if we have one or more plants slow down or shut down, that’s going to make the financial side of this much, much worse,” Woodall said.
Woodall said both USDA and companies operating packing plants have vowed to do everything they can to keep processing meat products.
“The overall retail demand right now is through the roof as we’ve seen those empty meat cases, and I saw some of that myself this weekend,” Woodall said. “That is still good and seems to be helping us from a demand perspective, but if we see any sort of call to shut down restaurants, that could change the equation for us.”
Shortly after that conversation, President Donald Trump and his coronavirus task force on Monday issued guidelines recommending Americans over the next 15 days avoid groups larger than 10 people, and limit visits to restaurants, bars and food courts.
CATTLE MARKET PRICES
Cattle markets have been roiling due to the panademic, as April live cattle have lost $13.37 per cwt in just the last week of trading, closing at $91.85 on Monday. The June contract has seen slightly steeper losses. Actual live cattle trade has lost about $17 per cwt over the past two weeks as well.
Yet, as grocery shelves have emptied quickly of nearly every kind of protein product, boxed beef prices rose $14 to $16 on Monday.
Brooke Miller, a Virginia purebred Angus producer and president of the U.S. Cattlemen’s Association, on Monday noted the country is facing a historic situation with the COVID-19 pandemic. He expressed confidence in the response from President Trump and health officials, but he also said cattle producers are reeling from the latest “non-fundamental drop” in the market.
“The cattle market has been pretty much in shock,” Miller said. “We’ve seen again a drop in the live cattle prices and an increase in the boxed beef.”
Members of USCA leadership also visited Saturday with Ibach regarding market oversight, as well as the need to monitor packing plants over the risk of employees testing positive for the coronavirus.
Miller said he did not anticipate any shortage of food, but the industry was looking for some statement of assurance from USDA.
CALM THE PANIC
“I don’t think it’s going to come to that, but we probably just need to calm the panic,” Miller said.
Early Monday, USCA also sent a letter to Perdue calling on the secretary to use his authority under the Commodity Credit Corp. to provide “funds and programs” for cattle ranchers and feeders now dealing with excessive market losses.
“If the board doesn’t balance out soon, livestock producers, and especially feeders, might need access to programs to address this non-fundamental drop in the market,” Miller said.
Miller noted other industries have come forward, calling for direct federal aid. The airline industry, for instance, has requested as much $50 billion in government aid.
“It seems like the cattle producers get the short end of the stick all of the time,” Miller said. “It’s pretty apparent you have all of these industries suffering economically, and they are all asking for government bailouts. But it seems like the cattle producers never get any economic support, and this seems like a situation where we might need some.”
Regarding the price collapse, Woodall said NCBA right now does not have any silver bullets, but he said Ibach has made it clear USDA’s Packers and Stockyards Division is continuing to monitor the situation.
“It’s on everybody’s minds, but we do not have a good solution yet on how we fix it,” Woodall said.
On the rival group’s proposal for direct aid, Woodall said that same scenario was raised on the Market Facilitation Program payments, which cattle producers have not participated in.
“How do we ensure the fair and equitable distribution of that money?” Woodall said. “We don’t know how to make that happen, and that is one of the reasons cattle was not part of the MFP programs throughout the fall. That is something that is complicating this. And also where does the money come from, and what exactly is the metric to measure that off?”
Woodall added, “So all options should be on the table, and all are on the table, but some of them we just haven’t figured out mechanically how to execute.”
NO DISRUPTIONS YET IN CHICKEN, DAIRY
Other related industries issued statements declaring they have had no disruptions in production yet, including the National Chicken Council and the National Milk Producers Federation.
“The U.S. food-supply chain is more than capable of meeting demand, and consumers should be reassured that milk and dairy products will continue to be produced and available in the coming weeks and months,” said Jim Mulhern, president and CEO of the National Milk Producers Federation.
“Dairy supplies aren’t experiencing production interruptions at this time, and dairy farmers and processors will continue to do what they do best: produce safe, quality products every day for consumers in the U.S. and worldwide.”
In Nebraska, Jessica Kolterman, director of corporate and external affairs for broiler producer Lincoln Premium Poultry, said the company has continued to run “business as usual,” even though local schools in the community already have been closed for more than a week. Kolterman said that has not affected work attendance so far.
“We’re constantly watching and communicating with local health officials and watching for any new information coming out,” Kolterman said. “We’re making sure we can do what we can to prevent anyone from getting ill at any of our facilities.”
Lincoln Premium sells chicken to Costco for its rotisserie chicken sales. Retailers such as Costco have seen an increase in grocery sales and demand for food.
“We’ve been working to get as much product out the door as fast as we possibly can,” Kolterman said.
Chris Clayton can be reached at Chris.Clayton@dtn.com
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