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Commodity Headlines

Meatpacking workers often absent after Trump order to reopen

June 16, 2020 10:33 AM

Source:  Reuters


CHICAGO/WASHINGTON (Reuters) - Smithfield Foods Inc [SFII.UL] is missing about a third of its employees at a South Dakota pork plant because they are quarantined or afraid to return to work after a severe coronavirus outbreak, according to the workers’ union.

Tyson Foods Inc (TSN.N) was forced to briefly close its Storm Lake, Iowa plant - a month after U.S. President Donald Trump’s April 28 order telling meatpackers to stay open - as worker absences hobbled its slaughter operations.

Nationwide, 30% to 50% of meatpacking employees were absent last week, said Mark Lauritsen, a vice president at the United Food and Commercial Workers International Union (UFCW).

More than a dozen meatpacking workers, union leaders and advocates told Reuters that many employees still fear getting sick after losing confidence in management during coronavirus outbreaks in April and May. Absenteeism varies by plant, and exact data is not available, but some workers’ unwillingness to return poses a challenge to an industry still struggling to restore normal meat output.

Daily pork production was down by as much as 45% in late April as some 20 plants closed because of outbreaks. Production has rebounded since plants reopened last month in response to Trump’s order, but remains down from before the pandemic. The UFCW union, which represents about 80% of U.S. pork and beef production, told Reuters that major pork plants are running at about 75% capacity.

Data from the U.S. Department of Agriculture show that processors slaughtered about 438,000 hogs on Friday, down 12% from the peak before the pandemic.

The USDA and the White House declined to comment for this story. Tyson, Smithfield and other meatpackers say they have taken extensive safety measures, at great cost, to protect workers.

Meat companies have prevented the pace of slaughter from falling further by bolstering kill lines with employees from other operations that require more labor, such as butchering and deboning. As a result, meatpackers are producing fewer products that require extra work - such as boneless hams - and throwing away items like offal that otherwise would be sold, Lauritsen said.

The cure for absenteeism is a safe job at a decent wage, Lauritsen said.

“Right now” he said, “there are employees that don’t see the safe job part.”

FIGHTING INFECTION, FEAR

Plants became hotbeds of infection because they house thousands of employees working in close quarters. Outbreaks tightened meat supplies and contributed to a 40.4% surge in prices in May.

The world’s biggest meat companies have spent tens of millions of dollars to protect workers by erecting physical barriers, taking workers’ temperatures, providing protective gear and staggering break times. They have not been able to eliminate infections, however.

“They have changed a lot of things that I think are great,” said Alejandro Murgioa-Ortiz, a community organizer who works with meatpacking workers in Iowa and Nebraska. But workers remain wary, he said, because “there’s still so many risks.”

Infections have risen steadily in rural counties that are home to large meatpacking plants since Trump ordered them to stay open. At least 15 meatpacking counties now report a higher infection rate, on a per capita basis, than New York City, the virus’s epicenter – though that is likely a reflection of the extensive testing of workers and local residents along with elevated infection rates.

In Kansas, 2,896 meat workers have tested positive, accounting for nearly one third of all cases in the state, according to the state health department.

EXPOSED AGAIN

At the Smithfield pork plant in Sioux Falls, South Dakota, about 1,200 employees - about a third of the workforce - were absent as of June 1, including some who quit, said BJ Motley, president of the UFCW local. The plant closed from about April 15 to May 7 as more than 850 workers tested positive for the virus.

Smithfield, owned by China’s WH Group Ltd (0288.HK), said it has implemented aggressive measures to protect employees.“Absenteeism remains a challenge, but we are managing,” the company said in a statement to Reuters. Smithfield declined to disclose its levels of absenteeism.

Sandra Sibert - a 47-year old who works on the plant’s ham bone table and caught the virus - said it is not easy to stay six feet apart in the locker room and cafeteria. Sibert said she grew worried after the plant reopened when a female employee with an infected husband was allowed to work while awaiting her test results.
“I worry about everybody,” Sibert said.

ABSENCES SHUT PLANT

Tyson’s Columbus Junction, Iowa plant closed on April 6, when surrounding Louisa County had just six known cases and no deaths. When it reopened on April 21, the county had recorded 215 cases and 2 deaths. As of May 29, there were 352 known cases and 11 deaths.

Tyson, the top U.S. meat supplier, declined to say how many employees are missing work, but said absenteeism had declined to its lowest percentage since before the pandemic at its Columbus Junction plant and another Iowa plant, in Waterloo.

Tyson had to halt operations at its pork plant in Storm Lake, Iowa in late May - a month after the president’s order to reopen - partly because of “team member absences related to quarantine and other factors,” the company said in a statement. The plant restarted limited operations on June 3.

The company said that 591 workers, or 26% of its workforce, had tested positive. Surrounding Buena Vista county, where many workers live, has one of the nation’s highest infection rates, with 1,257 cases, a fivefold increase over the past two weeks.

Tyson warned in an earnings report last month that worker shortages were expected to contribute to more production slowdowns and plant shutdowns. The company said in a statement that it is continually working to improve safety and social-distancing protocols.

In Kansas, more than 2,900 workers were absent in late April and early May from five plants run by Tyson, Cargill Inc [CARG.UL] and National Beef Packing Company [NBEEF.UL], according to reports by the U.S. Centers for Disease Control and Prevention.

National Beef said it has focused on protecting its employees while running plants to produce meat for consumers.

Worker-safety measures still sometimes came up short, according to CDC officials. They noted in a report, for instance, that “many people” at a National Beef plant in Dodge City, Kansas, were not wearing masks that covered their noses, and that some only wore face shields that would do little to slow the spread of the disease.

Temple Grandin: Big Meat Supply Chains Are Fragile

May 5, 2020 1:08 PM

Source:  forbes.com

About five years ago, I was giving a lecture in my livestock handling class at Colorado State University about animal welfare, and when I turned to write on the whiteboard, I had a light bulb moment. I immediately was triggered to recall a moment during the floods of 2013 when I was driving home to Fort Collins from the Denver airport. Interstate 25 was flooded so I first drove east to get around it. Then I drove north, and everywhere I went, I found roads impassable. Finally, I got out past Greeley, the agribusiness hub where JBS’s American division is currently headquartered, and went around the huge Kuner feedlot, which at the time was owned by JBS. The cattle were all dry but the flooding lapped around the edge of the feedlot. The water stayed out because JBS had done an excellent job of rebuilding it. And it was there that I finally found a bridge that was dry. It was only a foot out of the water and closed an hour later.

My students are often concerned that large corporations are bad, but my answer has always been badly managed is bad. I was thinking about that when this new epiphany struck me. Big is not bad, it is fragile. 

That’s important now more than ever, because everything is bigger. When I first started my career as a designer of cattle handling systems in the early 1970s, the meat supply chain was more diversified with many smaller packing plants. In the city of Denver, there were several slaughterhouses and Los Angeles even had a whole row of companies on a single street. Each one of these plants processed 500 to 1,000 cattle per day.

But almost all of these smaller, independent plants have now closed. What drove these packers out of business was the transformation of the entire industry in the 1980s from selling retailers carcasses to packing and shipping meat in boxes. Most of these independents were located in major cities. There was no room to build the additions required for all the extra cutting and they couldn’t afford to build new plants outside the city. It ushered in an era of closures and acquisitions. And today the big companies are running plants that are really massive: a single plant may process 2,000 to 6,000 cattle per day if it runs two shifts. A large, double-shifted pork plant may process 20,000 pigs per day.

Because today’s system is so concentrated - and slaughter and processing is done in fewer, larger plants - the pandemic we’re facing has overwhelmed this supply chain. There is an old saying “do not put all of your eggs in one basket.” When a supply chain becomes more concentrated, there is greater loss of supply when a single plant is closed. A Tyson beef plant in Kansas closed last year due to a fire, and it did cause some production disruptions, but other plants ran Saturday shifts to compensate. The supply chain was able to compensate for the temporary closure of a single large plant.

But without sufficient slaughterhouse space to process all the pigs and chickens that are growing today, farmers have been forced to euthanize poultry and pigs. This is both a tragic waste of food and if euthanasia is done poorly there could be great animal welfare problems, and it can be really traumatic for the farm workers who have to do this.

A disruption or plant shutdown at any point along the chain is more likely to cause shortages that consumers can eventually see. Meat is not the only industry with a concentrated supply chain. Other food processors have shut down recently. And the pharmaceutical industry’s supply chain for common generic drugs may be even more concentrated. The raw materials are made in China and the pills are manufactured in India. There is a major difference between pigs and raw materials for manufacturing generic medicines. The system can handle a short disruption of several months because a supply of chemicals can be stored. Pigs cannot be stored because their numbers would quickly overcrowd the buildings.

Big operations are extremely cost efficient. That’s why they’ve been built this way. The downside is the fragility of the supply chains, as Covid-19 proves. This pandemic is going to be a wakeup call and I expect many to become a lot more interested in more distributed local supply chains. Local production provides the opposite: it will always be more expensive because fixed costs such as labor, electricity, and water to process each pig will be higher. But a local supply chain is less prone to disruption. It also has a lower dependence on long distance trucking. During the floods in Colorado, semi-trucks had a difficult time re-supplying many stores.

The bottom line is, there will always be a tradeoff. Big suppliers are low cost, efficient and fragile. More numerous local producers are more expensive, but the entire supply is more robust. It will be less prone to disruption from floods, fires, electric power failures, storms or diseases like coronavirus or others in the future.

Coronavirus threatens to trigger new round of global food crisis: China official

April 20, 2020 12:50 PM

Source:  Sunday, April 19, 2020 9:35 p.m. EDT by Thomson Reuters

By Hallie Gu and Emily Chow

BEIJING/SHANGHAI (Reuters) - The global coronavirus pandemic threatens to cause a huge shock to international food trade and trigger a new food crisis, a top agriculture official in China said on Monday.

The comments came as coronavirus outbreaks roiled global agriculture supply chains and upended trade, and after some countries restricted exports of main grains and increased procurement for reserves.

"The fast spreading global epidemic has brought huge uncertainty on international agriculture trade and markets," said Yu Kangzhen, China's deputy agriculture minister.

"If the epidemic continues to spread and escalate, the impact on international food trade and production will definitely worsen, and might trigger a new round of food crisis," Yu said during a video conference on the country's agriculture outlook.

The pandemic and measures some countries took to secure domestic supplies have inhibited normal trade and supplies, and caused some major price fluctuations, Yu added.

The coronavirus pandemic, which started in the central Chinese city of Wuhan late last year, has infected 2.3 million people and killed 159,000 people worldwide.

Strict lockdowns and quarantines to control the coronavirus outbreaks have disrupted China's supply chains and made it difficult for many industries to find enough workers, delayed poultry and pig production in the world's top meats market.

Though China has sufficient grains to meet domestic demand, some other import-reliant farm products like soybeans and edible oils may be impacted by the global pandemic, Yu said.

China's exports of aquaculture, vegetables, and tea will be affected due to the disease, Yu added.

Speaking at the same conference, Agriculture Minister Han Changfu ruled out a food crisis in China, saying it had the confidence and ability to secure supplies of grain and other major agricultural products.

While the pace of domestic virus transmissions has slowed, China is focusing on infections from overseas arrivals as it guards against a major resurgence and monitors the spread in northeastern Heilongjiang province.

"The risk of imported coronavirus is still huge and will put considerable pressure on livestock production," Yu said.

China is also fighting with the deadly African swine fever, which has slashed its pig herd by at least 40% and is still spreading. The country has reported 13 new cases of African swine fever since March.

"African swine fever risks have significantly increased, as pig production recovery accelerates and more piglets and breeders get transported," Yu said.

China's farmers, lured by good profits and a series of government policies, have sped up efforts to rebuild pig herd.

Pests, drought and floods also present harsher threats than usual to output this year, Yu added.

Loss of Packing Plants a Growing Concern for Oversupplied Hog Industry

April 15, 2020 3:09 PM

Source: ProAg

A backup of hog supplies on farms across the country as restaurants and food services are closed during the COVID-19 pandemic has sent the industry into a tailspin.

With high expectations for exports, analysts had expected 2020 to be a profitable year for pork producers. Instead, the coronavirus now has the industry on track for at least $5 billion in losses, absent a cash influx during the pandemic.

While USDA is considering how to dole out billions of dollars in federal funds to agriculture industry sectors, hog producers told reporters on Tuesday the industry is desperate for help. To immediately stem the financial losses, the National Pork Producers Council wants USDA to buy at least $1 billion in pork for food-aid programs, as well as provide direct aid to pork producers.

“COVID-19 has had a sudden and devastating impact on the industry,” said Howard ‘AV’ Roth, president of NPPC and a hog farmer from Wauzeka, Wisconsin.

“We are in a crisis. Hogs are backing up on farms with nowhere to go, leaving farmers with tragic choices to make. Dairy producers can dump milk. Fruit and vegetable growers can dump produce. But hog farmers have nowhere to move their hogs.”

An analysis conducted by Dermot Hayes, an economist at Iowa State University, and Steve Meyer, a pork industry economist with Kerns and Associates, found U.S. hog farmers can expect to lose nearly $37 per hog, or almost $5 billion collectively for hogs marketed for the rest of the year.

Prior to the COVID-19 crisis, and after two challenging years, hog farmers were generally expecting a profitable year with industry analysts forecasting earnings of about $10 per hog on average for 2020.

Nick Giordano, vice president and counsel for global government affairs for the NPPC, said hog farmers likely are seeing losses currently of about $50 per animal. So it costs farmers more to feed hogs than the price they receive.

“We are hearing, for a lot of producers, they’re hanging on for dear life,” he said. “This is likely to blow out a significant amount of production.”

PORK PLANTS CLOSING

Smithfield Foods announced the indefinite closure of its Sioux Falls, South Dakota, pork plant last weekend after more than 80 employees tested positive for COVID-19. That move leaves more than 550 hog producers in a lurch as to where they can sell hogs.

Iowa Gov. Kim Reynolds said 86 positive COVID-19 cases were confirmed on Tuesday from an outbreak at the Tyson Foods pork plant in Columbus Junction, Iowa, which also is now closed. The governor said the state will continue testing workers at the plant, and officials are reaching out to the other Iowa packing plants to see about testing those workers as well.

NPPC CEO Neil Dierks said retail pork demand remains strong, but the backup in hog supplies has resulted from about a 25% loss of demand when the food service industry shut down dining operations. About 70% of all bacon produced in the United States typically goes to food services.

“Because of COVID, we have seen the idling of packing plants, and pork is time-constrained,” he said. “We’ve tried to run operations in a fashion on an even flow, but we ran into a constraint of getting pigs processed.”

Dierks said consumers will not experience supply or pricing issues despite the difficulties.

For farmers, however, the situation is dire.

“If producers continue to face the current economic situation, in the long term, it hurts the sector,” he said.

Hayes said the supply situation remains strong for pork, probably for several months.

“The only concern is if we lose multiple plants,” he said.

Producers across the country may soon face the decision to euthanize hogs if the supply chain remains backlogged.

Michael Formica, NPPC assistant vice president, domestic affairs and counsel, said EPA granted animal feeding operations a waiver of federal requirements on the threshold for number of animals allowed before being considered confined animal feeding operations, or CAFOs.

So a medium swine animal feeding operation doesn’t become a CAFO — 2,500 or more animals — while holding onto animals during COVID-19.

NPPC OUTLINES NEEDS

As is the situation with many other ag commodity groups, the NPPC has consulted with farmers across the country to identify several measures the federal government needs to take to help the industry.

NPPC is calling for USDA to purchase more than $1 billion in pork to clear the backed-up pork supply and supplement agency food bank programs facing increased demand because of rising unemployment.

NPPC said it wants those purchases to accommodate pork products packaged for restaurants and other segments of the food services market.

In addition, the industry is asking for direct payments to hog producers, without eligibility restrictions.

NPPC also wants Congress to make adjustments to Small Business Administration emergency loan programs for farmers as well.

According to NPPC, about 10,000 family hog farms are in jeopardy because they lack access to capital offered by the Small Business Administration.

The NPPC said it is urging Congress to increase the cap on qualifying businesses to those that employ up to 1,500 workers and to make agricultural businesses eligible for the Economic Injury Disaster Loan program.

Todd Neeley can be reached at todd.neeley@dtn.com

Follow him on Twitter @toddneeleyDTN

Source: Todd Neeley, DTN