By Jacob Bunge, Sarah Nassauer and Jaewon Kang
U.S. grocers are struggling to secure meat, looking for new
suppliers and selling different cuts, as the coronavirus pandemic
cuts into domestic production and raises fears of shortages.
Covid-19 outbreaks among employees have closed about a dozen
U.S. meatpacking facilities this month, including three Tyson Foods
Inc. plants this week. Other plants have slowed production as
workers stay home for various reasons.
Grocery executives at retailers including Walmart Inc. and
Costco Wholesale Corp. worry supplies of some products could run
short just as demand is surging.
"I have not seen beef sales and all protein behave this way
since the Atkins Diet days," when shoppers bought up meat as part
of the low-carb diet, said Jeff Lyons, senior vice president of
fresh food for Costco. The warehouse chain is considering new
suppliers to shore up its meat supplies, he said.
Tyson, the biggest U.S. meat company by sales, on Thursday
temporarily closed a Washington state beef plant, after closing two
Midwestern pork plants on Wednesday that produce millions of pounds
of meat, together slaughtering nearly 35,000 hogs daily. Smithfield
Foods Inc., Cargill Inc., JBS USA Holdings Inc. and Hormel Foods
Corp. have closed plants over the past month, leading to
significant declines in overall U.S. meat production.
Last week U.S. beef production fell 24% compared with a month
earlier, with pork off 20% and poultry down 10%, according to
estimates from CoBank, an agricultural lender.
Some meat orders are arriving incomplete as suppliers pull back
on variety and major plants remain closed, grocery executives said.
Ground-beef supplies are declining, a regional grocery executive
said, and wholesale prices are creeping up after a fall that
occurred when closed dining rooms clipped restaurant demand.
Meat inventories are likely to become tight within two weeks
because of the recent processing-plant closures, and temporary
shortages are possible, said Pat LaFrieda, chief executive of his
namesake meat wholesaler, based in New Jersey. The company
typically supplies food to Shake Shack Inc. and other restaurants,
but now is selling most of its inventory to grocers, he said.
The spread of Covid-19, the disease caused by the new
coronavirus, among U.S. meat-plant workers has thrown the $213
billion industry into disarray. Meat companies are trucking poultry
and livestock to be processed at other plants, and bringing in
welders to install shields between processing-line work stations.
On farms, some pigs now are being euthanized because
slaughterhouses have closed, farmers said. In Iowa, Gov. Kim
Reynolds this week dispatched as many as 1,000 National Guard
members to help deliver Covid-19 tests to meat plants.
"We haven't seen a situation in our lifetime where the industry
has contracted as quickly as we have seen in the last month," said
Will Sawyer, a CoBank economist who researches meat production.
At Costco, Mr. Lyons is focused on supplies of pork and chicken,
which the chain requires to be raised and processed to certain
specifications. Those industries have less room for closures or
surges in sales inherent in their supply chains because animals are
bred in precise quantities to meet expected demand, he said. Costco
is meeting demand now, he said, but is considering working with new
suppliers to fill orders if needed, with some of its U.S.
suppliers' plants expected to be down for about two weeks, Mr.
Lyons said.
For chicken, where Costco specializes in boneless, skinless
breasts that are 99% fat-free, the company is working with plants
to temporarily supply those products for additional days each week,
Mr. Lyons said.
Walmart is buying more products ordinarily destined for
restaurants, working to help convert plants used for food service
to retail, as well as narrowing meat assortment to focus on the
fastest-selling items such as basic steak cuts to simplify the
supply chain, said a person familiar with the situation. Sales of
vacuum-seal bags are also rising at Walmart, a sign shoppers are
buying food they intend to preserve, this person said.
Todd Allen, director of meat and seafood at the Raley's grocery
chain in West Sacramento, Calif., said the company is receiving
about 80% of its chicken orders while its meat sales have increased
about 67% since March. It recently removed purchase limits on
chicken items and has been able to keep more inventory in its
warehouses to meet the demand, but it is paying higher wholesale
prices for some products, including 30% more for beef shoulders and
around 80% higher for inside leg parts.
"If we have to lose money to be competitive, we do," he
said.
A few closed plants reopened this week. Cargill's Hazleton, Pa.,
plant closed on April 7 after nearby Covid-19 cases spiked. Over
the past two weeks the company installed plastic PVC sheeting
between stations on the processing line, set up plans to check
employees' temperatures in the middle of shifts, and laid out
one-way entrances and exits for cars and workers.
Early this week, about 60% of day-shift employees had returned
to work and 70% for the night shift had done so, above
expectations, Cargill said.
Write to Jacob Bunge at jacob.bunge@wsj.com, Sarah Nassauer at
sarah.nassauer@wsj.com and Jaewon Kang at jaewon.kang@wsj.com
(END) Dow Jones Newswires
April 23, 2020 18:25 ET (22:25 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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