C-FARE WEBINAR June 5, 2020 — How Resilient Is the U.S. Meat Supply Chain? Lessons from Covid-19
Despite a steep decline in meat processing and a 92% jump in the price of wholesale boxed beef earlier this spring, the U.S. livestock sector has demonstrated resilience and relative supply chain stability throughout the early months of the Covid-19 pandemic, three agricultural economists say.
The Council on Food, Agricultural and Resource Economics (C-FARE) co-hosted a free webinar June 5 along with the Friedman School of Nutrition Science and Policy at Tufts University to discuss the impacts of the pandemic on the nation’s meat sector. Nearly 250 registered for the presentation. This programming is sponsored in part by the Agricultural and Applied Economics Association and the U.S. Department of Agriculture’s Economic Research Service and National Agricultural Statistics Service.
Council board member and Bergstrom Foundation Professor in Global Nutrition at Tufts University, Sean Cash, moderated a panel that included these experts:
Glynn Tonsor, a professor at Kansas State University, whose particular focus within the wider range of integrated research and extension activities is the cattle/beef and swine/pork industries.
Josh Maples, an assistant professor and extension livestock economist at Mississippi State University with primary extension and research specialties in livestock and meat market analysis, and whose focus is risk management strategies.
Kenny Burdine, an associate extension professor of livestock economics at the University of Kentucky, who focuses his extension program primarily on livestock marketing strategies, price risk management, and profitability considerations.
In April, the beef and pork sectors of livestock processing experienced 35% year-over-year declines.
“We have recovered, and recovery continues, and that’ll be the theme throughout the presentation,” Maples told the audience.
Delayed sales of livestock to processors resulted in larger animal weights and lower prices. About one-quarter fewer head of cattle were placed into feedlots. Broiler chickens experienced similar bottlenecks though not as acutely. Operations yielded sharply lower prices across all producer sectors, and the projection for prices throughout 2020 have dropped.
Meanwhile, Burdine reported that cold storage of meat largely held steady, and while the wholesale price of boxed beef jumped 92% in April, it has since given back nearly 40% of that increase. (Pork cutout values were similar though not as dramatic.)
Because of low unemployment and a surfeit of livestock available in the system, the processing sector was vulnerable to disruption, he said, but processing and production responded by ratcheting up. “The system is efficient,” he said.
Tonsor said that the 35% drop in beef and pork processing in April showed up for consumers in May, but households were cushioned by the hoarding that preceded the disruption. Only 14% of U.S. households entered May with less meat on hand than normal, while 26% reported higher than normal supplies.
“Economists tend to think meat consumption follows macroeconomic trends,” Tonsor said. “To the extent we have a long recession, that’s bearish for meat, ... but that’s not a foregone conclusion.”
The complete 44-minute webinar including illustrations of month-by-month livestock supply and market data is available at the council’s YouTube channel.
