New York(CNN Business) Concerns about the US food chain supply made their way into the mainstream this week, as more meat processing and packaging plants suspend operations temporarily due to coronavirus outbreaks in the workforce.
Some of the country's largest abattoirs (processing plants or slaughterhouses) have been forced to cease operations temporarily after thousands of employees across the country have tested positive for the virus.
Pork processing plants have been hit especially hard, with three of the largest in the country going offline indefinitely— Smithfield Foods in Sioux Falls, South Dakota, JBS pork processing in Worthington, Minnesota and Tyson Fresh Foods in Waterloo, Iowa. Together, the three plants account for approximately 15 percent of pork production.
Several other small and medium-sized pork slaughterhouses are also closing for various periods of time to deep clean their facilities and run tests on employees.
When Smithfield Foods announced it was shutting its Sioux Falls plant indefinitely, CEO Ken Sullivan warned that doing so would create a ripple effect that would eventually hit grocery store shelves.
"The closure of this facility, combined with a growing list of other protein plants that have shuttered across our industry, is pushing our country perilously close to the edge in terms of our meat supply," he said. "It is impossible to keep our grocery stores stocked if our plants are not running."
The US has about 2,700 slaughter plants, 800 of which are federally inspected. In March, the country saw meat, beef and pork production reach record highs, according to the US Agriculture Department (USDA). The United Food and Commercial Workers International Union, which represents more than 250,000 meatpacking and food processing workers, said on Thursday at least 13 processing plants have closed over the past two months, resulting in a 25% reduction in pork slaughter capacity and 10 percent reduction in beef slaughter capacity.
As many Americans remain under stay-at-home orders, industry experts say the demand for meat has increased. At the same time, meat processing is on the decline. Beef processing in the US was down 27%, and pork processing was down almost 20%, compared to this time last year, according to USDA data.
With meat processing plants closing and reopening on a weekly, sometimes daily, basis, experts warn production will likely continue on this current volatile roller coaster, as long as Covid-19 outbreaks continue to plague the plants.
The numbers are startling, but Julie Niederhoff, an associate professor of supply chain management at Syracuse University, says the country's food supply is not in a crisis, but it is vulnerable.
"The definition of a supply chain problem is when we have supply and demand that can't reach each other," Niederhoff said. "We're not going to run out of food. We're going to run out of maybe your one particular favorite foods."
She added that it is unlikely people will start seeing empty meat sections at the store, but it is likely there will be less variety.
"We have so much food in America and we have so much choice that I am not worried that there will not be enough food. There might not be enough of one particular brand, or one particular cut, but that the state of our food supply chain, in general, is robust. The state of some specific items within that supply chain is vulnerable and it's at risk," explained Niederhoff.
It is possible there could be brief shortages of a certain brand or type of meat. For example, instead of Tyson pork sausage, you might have to eat Perdue chicken thighs for a time.
The sentiment is echoed by the North American Meat Institute (NAMI), an industry trade association that provides guidance and regulatory assistance to meat packers and processors, which points out that a few days with fewer options does not equal a shortage.
Both Niederhoff and the institute acknowledged that the rigid structure of the food supply chain has created interruptions.
The reduced meat output from processing plants came as consumer demand increased at grocery stores. With restaurants and schools closed because of the virus, the demand for meat that is packaged for food service and industrial use is down.
According to the institute, when demand in the food service sector dropped, the industry had to try to remake its processing facilities, trucking, everything down the line away from food services to retail products. That's something not all facilities are able or willing to do, creating a further disconnect in the food chain.
"There is a disruption currently in some percentage of our meat processing and that is potentially going to cause some short term disruption to the availability of meat, but it's not going to cause a long term disruption because the animals are still there," Niederhoff said. "It's just a matter of figuring out how we can get that processing back online or at increased capacity at open facilities in safe and healthy ways, or find other ways to get that meat processed and into the consumer supply chain."
Niederhoff said the current situation is like a toll booth at rush hour. The number of vehicles on the road remains the same, but toll booths are closing quickly and without warning, causing the flow of traffic to slow down and back up. Add in the complication that only certain vehicles can go to certain booths, and traffic may suddenly get worse for certain vehicles.
And while the country's frozen food inventory is often mentioned as a cushion to bridge any food gaps, the monthly figures released by the USDA show a 4% drop in frozen pork inventory from February to March, before the plants started closing. It's the largest drop since March 2014, according to USDA records.
Agriculture Secretary Sonny Perdue announced last week the department would be buying substantial amounts of meat to build up frozen storage supplies, help keep food banks stocked and ease the financial burden facing American farmers.
"The bigger impact is on the farmers. The farmers are going to have a much longer-term impact in terms of missed revenue and decrease the prices on their investments that they've already made," Niederhoff said.
Jim Monroe of the National Pork Producers Council said the current USDA bailouts for farmers related to pandemic aren't enough to save an already struggling industry at the front end of the food supply chain.
"It's created two crises, a financial crisis and an animal welfare crisis. The financial crisis is because there's too many hogs with nowhere to go. Their values had dropped," Munroe said. "You've got an overcrowding challenge on farms, around each animal having enough access to water and feed. And at what are you forced into a really tragic decision because you can't properly care for all these animals?"
Munroe said the industry is hitting that point, where farmers may have to start euthanizing hogs that have grown too large to fit on the processing lines.
NAMI, Munroe and Niederhoff all stressed the importance of the federal government allowing for flexibility in the industry and providing official Covid-19 related regulations. They suggested the federal government stepping in to assist with increased Covid-19 testing of processing plant employees, noting that without that, plants will likely keep shuttering due to massive outbreaks, potentially causing irreversible damage.
"It is a desperate situation for the farmer and for the long-term good of the pork production system. We need to help our hog farmers now, otherwise I think there could be long term consequences, a less competitive industry. That's never good for consumers," Munroe said. "I think we're looking at a complete restructuring of the industry if we don't get a handle on this soon."