From the Ground Up: Plant Closures Bottle Neck Beef Production

Published: Apr. 23, 2020 at 8:34 AM CDT
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Workers in meat processing plants pretty much work shoulder to shoulder and the Coronavirus outbreak has triggered the closing or slowdown of plants across the country. Pete Scarmardo is a local rancher and cattle buyer and says that the number of beef animals that are harvested daily has dropped from around 120,000 to around 90,000 and is creating a bottleneck in the beef supply chain.

“We have ample supplies of cattle in the feed yards and ample supplies of cattle to be harvested for the beef. It’s just that we don’t have enough processing facilities that can run at full capacity now to be able to handle the volume of cattle that we need to go through them now, so it’s backing up some cattle to the producer.”

Texas A&M AgriLife Extension Economist David Anderson says that results in prices going in different directions depending upon where you are in the food chain.

“It’s fair to say we’ve lost some demand for fed cattle because that plant is no longer buying. And so immediately when you see that when you see a plant shut down, we get lower fed cattle prices because we’ve lost buyers. We’ve lost demand for the live animals. The other thing that happens is that those plants are buying cattle but they’re selling beef.”

Anderson says demand for beef is still there.

“And so, what happens then is not only do we have reduced demand for the live animals, we’ve got reduced supplies for beef to consumers and actually to grocery stores and restaurants that are still open. So, what we end up with is lower fed cattle prices and higher wholesale beef prices to retail outlets.”

Scarmardo points out that ranchers stand to get hit the hardest.

“So, the producer’s the one that is going to be getting more squeezed on it. The processors are going to be able to pass that along to the consumer because there is still demand for the product.”