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Packing plant closures raise specter of meat shortages, higher prices
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Packing plant closures raise specter of meat shortages, higher prices

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Shutdowns and slowdowns at meatpacking plants because of the coronavirus pandemic are starting to lead to much higher meat prices and even shortages in some cases.

Despite an executive order signed by President Donald Trump last week and a pledge by Gov. Pete Ricketts that he would not ask any plants to shut down, three Nebraska operations have done so just in the past week.

Tyson closed its beef plant in Dakota City on Friday and originally was scheduled to open back up Monday. But the company said it will now keep the plant closed until all employees can be tested for COVID-19.

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On Monday, Tyson also announced it is temporarily closing its pork plant in Madison this week, and Cargill said it will close its beef plant in Schuyler.

Those closings and others across the country have led to a huge decline in the supply of meat. According to the U.S. Department of Agriculture's weekly livestock, poultry and grain market report, as of Monday, estimated beef and pork production are both down about 35% from last year.

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That's starting to lead to at least the potential of shortages in the retail market.

Costco, Walmart and Sam's Club are among the large retailers that have put limits on how much meat customers can buy. For example, Costco on Monday started limiting customers to three packages total of beef, pork and poultry.

Hy-Vee plans to institute similar limits. Starting Wednesday, the supermarket chain will limit each customer to no more than four packages of a combination of fresh beef, ground beef, pork and chicken.

"At Hy-Vee, we have product available at our stores but due to worker shortages at plants as well as an increase in meat sales, customers may not find the specific items they are looking for," spokeswoman Christina Gayman said in an email. "Because of this, we are going to put a limit on customer purchases in the meat department."

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Lincoln's B&R Stores, which owns Super Saver and Russ's Market, is not considering putting any limits on what people can buy for now.

"We're asking people not to stock up," said marketing director Marty Jarvis. "Just use what your family needs."

Jarvis said that B&R is seeing higher costs for many pork and beef products and supply is limited. Ground beef is one of the products that's been most affected.

"Cost has really gone up, and supply is down," he said.

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For example, ground round, which comes from leaner beef, averaged $4.99 a pound as of Friday, according to the USDA, up 70 cents from the same time a year ago. Ground chuck, a lower-quality product, also was up about 70 cents from a year ago. Beef patties were up more than twice that amount, nearly $1.50 compared with a year ago.

Several media outlets reported Tuesday that Wendy's has pulled burgers off the menu at about 20% of its locations because of its inability to get enough meat. Local Wendy's locations did not appear to be affected.

Not all stores are having issues, however.

Open Harvest, a local cooperative grocer, said it is not seeing any cost increases or supply chain interruptions, which it attributes to the fact that it gets its meat from local and regional small producers rather than large meat companies.

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“Our meat supply has been steady,” Elizabeth Norris, Open Harvest’s food service manager, said in a news release. “The fact that our pork, poultry, and beef comes from local vendors, such as Plum Creek Farms, Certified Piedmontese, Prairie Preserve Beef, Erstwhile Farms and Common Good Farm, definitely helps, as we have not seen any major disruptions in weekly purchasing.”

While retail prices are going up, the prices paid to producers are going down.

Wholesale beef prices are at the highest levels ever recorded, topping $400 per hundred pounds Monday. On the other hand, the prices paid to cattle ranchers are low by historical standards, with live cattle futures hitting an 18-year low recently, and are decreasing.

Nebraska Attorney General Doug Peterson and 10 other attorneys general from Midwestern states Tuesday called for the Justice Department to investigate large meatpacking companies for suspected price fixing in the cattle markets.

"Given the concentrated market structure of the beef industry, it may be particularly susceptible to market manipulation, particularly during times of food insecurity, such as the current COVID-19 crisis," the attorneys general said in a letter.

The Nebraska Farm Bureau on Tuesday also urged the state's congressional delegation to support additional funding for agriculture in any pandemic response package that moves through Congress, especially money for livestock producers.

Some pork producers in Nebraska already have started euthanizing hogs that they can't sell because of reduced packing capability, and the state Farm Bureau said it estimated the state's cattle producers could sustain more than $800 million in losses because of the pandemic.

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Reach the writer at 402-473-2647 or molberding@journalstar.com.

On Twitter @LincolnBizBuzz.

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Business reporter

Matt Olberding is a Lincoln native and University of Nebraska-Lincoln graduate who has been covering business for the Journal Star since 2005.

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