While meats face packer bottleneck, consumers keep buying at the store

May 29, 2020  | 4 min  | Ep4541

To date, over 1,000 animal processing plants in the United States have seen COVID-19 infections among their employees. Twenty-six of those plants are in North Carolina, the second largest producer of pork by value, and the third largest producer of chicken.
While the backlog of animals waiting for slaughter was not as severe as in the Midwest, processing in the southeast is 20 percent behind 2019. Producers are adjusting to the bottleneck 
Todd See, North Carolina State University: “Initially, you know, um, a lot of things are done to kind of slow the growth, changing the nutritional profiles, hold them back. Um, you know, we're seeing a lot of changes in terms of, of breeding practices, trying to take pigs out of the flow cause we really expect that this is going to go easily through the fall and probably into early next year.”

That means a reduction in the 17 million hogs that are raised in North Carolina each year. As production on the farm is delayed, a potential shortage of pork is being created in the second half of the year. But a reduction in the overall size of the pork herd may not improve the bottom line on the balance sheet.
Todd See, North Carolina State University: “Profitability is going to be dramatically affected. If we're not going to be breeding as many or producing as many pigs, it means each farmer's going to be producing less pigs. And you know, a lot of animal agriculture is a low margin, high volume business. And so the profitability really hinges for most producers on that ability of throughput and volume and that's going to be the disadvantage for the rest of this year.”

On the other end of the supply chain, consumers have adjusted to an increased amount of cooking at home. The Chicago-based food research company IRI has found grocery store customers are trying unfamiliar cuts from the meat counter as replacements for their standard recipes. 
According to IRI market research, the meat department in many grocery stores has struggled to find gains in recent years. Since the pandemic forced lockdowns in major cities 10 weeks ago, sales from the cooler have risen 48 percent. 
The shift away from restaurants and other venues continues to stress the food industry, but while grocery store sales are up, the time when Americans will return to eating in restaurants is unknown.
Chris DuBois, Protein Research, IRI:  “The big question is how much more will people go out to eat? You know, do they go back to the regular patterns of going up the Friday, Saturday night, or even during the week and, and take out or will it be restrained? I don't have that answer. Everything in our consumers surveys say it's going to be a slower recovery back into food service.”

DuBois sees one positive effect on the industry as a whole that has been brought on the closure of places to eat and various stay-at-home orders.  
Chris DuBois, Protein Research, IRI: "If I think back to my 30 years in the business, almost every meeting in an association had been around how do we get people to cook more at home? How do we get them to have family meals around the table? How come, how can they only track three or four dishes and only buy three or four cuts of meat? And the answer is yeah, it's hard. So the whole industry has been working on recipes and innovations and how to make it easier for the consumer. They've worked so hard. And then, you know, this has become everything the industry has wanted, but just people are cooking at home.” 

It remains to be seen if the industry can build on the shift in demand as the country begins to lift restrictions used to control the spread of COVID19. 
For Market to Market, I’m Peter Tubbs.

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