U.S. Reels Toward Meat Shortages and the World May Be Next

(Bloomberg) — Plant shutdowns are leaving the U.S. dangerously close to meat shortages as coronavirus outbreaks now spread to suppliers across the Americas.

Almost a third of U.S. pork capacity is down, the first big poultry plants closed on Friday and experts are warning that domestic shortages are just weeks away. Brazil, the world’s No. 1 shipper of chicken and beef, saw its first major closure with the halt of a poultry plant owned by JBS SA, the world’s biggest meat company. Key operations are also down in Canada, the latest being a British Columbia poultry plant.

While hundreds of plants in the Americas are still running, the staggering acceleration of supply disruptions is now raising questions over global shortfalls. Taken together, the U.S., Brazil and Canada account for about 65% of world meat trade.

“It’s absolutely unprecedented,” said Brett Stuart, president of Denver-based consulting firm Global AgriTrends. “It’s a lose-lose situation where we have producers at the risk of losing everything and consumers at the risk of paying higher prices. Restaurants in a week could be out of fresh ground beef.”

New U.S. shutdowns are hitting at a dizzying rate. Smithfield Foods Inc., the world’s No. 1 pork producer, said Friday it was closing another operation, this one in Illinois. That news hit less than an hour after Hormel Foods Corp. said it was idling two of its Jennie-O turkey plants in Minnesota. A big hog-slaughter facility in Indiana is also shutting. Friday’s news added to a flurry of other halts announced in the space of just a few weeks.

“During this pandemic, our entire industry is faced with an impossible choice: continue to operate to sustain our nation’s food supply or shutter in an attempt to entirely insulate our employees from risk,” Smithfield said in a statement Friday. “It’s an awful choice; it’s not one we wish on anyone.”

Prices are surging. U.S. wholesale beef touched a record this week, and wholesale pork soared 29%, the biggest weekly gain since 2012.

Jersey Mike’s Franchise Systems Inc., which has 1,750 stores across the U.S., is working with its ham supplier Clemens Food Group to ensure its supply of pork, something they sell quite a bit of in their sub sandwiches.

“We’re backing it up already because of the coming — we feel — the coming shortages,” said Peter Cancro, chief executive officer.

To be sure, some plants have restarted after testing workers and improving conditions, and most Brazilian facilities are still operating. Another point to consider: There haven’t yet been big shutdowns in Europe. The European Union accounts for about a fifth of global meat exports, U.S. government data show.

Still, executives from Tyson Foods Inc., JBS and Smithfield have all warned that consumers are likely to see impact at the grocery store.

It should be noted that the output from a plant where infection pops up doesn’t pose health concerns because by all accounts Covid-19 isn’t a food-borne illness. Products from a farm or a production plant with a confirmed case can still be sent out for distribution. But a production halt means that there’s no new supplies.

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Source: Yahoo Finance