GLENWOOD, Iowa (DTN) -- The food supply chain is breaking, the chairman of Tyson Foods warned over the weekend amid an increasing clamor for a rapid federal response to restore operations to the country's meatpacking plants.
Tyson Foods ran full-page advertisements in the Arkansas Democrat-Gazette, the New York Times and the Washington Post on Sunday. The company defended its efforts to protect workers from the coronavirus, but also called for federal assistance.
"The food supply chain is breaking," John H. Tyson, chairman of Tyson's board of directors stated in the letter. "We have a responsibility to feed our country. It is as essential as healthcare. This is a challenge that should not be ignored. Our plants must remain operational so that we can supply food to our families in America. This is a delicate balance because Tyson Foods places team member safety as our top priority."
Tyson said the coronavirus was forcing its plants to shut down.
The company called on "national, state, county and city levels" of government for a comprehensive strategy to ensure packing plant workers could "work in safety without fear, panic or worry." Tyson added, "As a country, this is our time to show the world what we can do when working together."
Tyson also warned that closing plants is forcing "millions of pounds of meat" to disappear from the markets, reducing what's available on grocery store shelves and raising prices. Farmers may have to kill and dispose of cows, pigs and chickens that were bred for the closed slaughterhouses, the company claimed, and those animals' meat would go to waste.
FEDERAL GOVERNMENT STEPS UP ENGAGEMENT
Tyson's letter came as the federal government over the weekend began getting more engaged with the challenges facing meatpackers and their workers. On Sunday, the Centers for Disease Control (CDC) and the Occupational Safety and Health Administration (OSHA) released a "joint coronavirus-related interim guidance" for the packing industry to reduce the risks of work-related infections for those essential workers.
Tyson, JBS, Smithfield Foods, Cargill and other major poultry, pork and cattle packing plants have struggled with thousands of workers becoming infected with COVID-19. The federal government deemed packing plants essential operations early on. But state and local officials have taken actions to close plants, or the companies themselves have taken actions as infections grew and spread throughout communities.
Ken Sullivan, CEO of Smithfield Foods, had warned on April 12 that packing plant closures would put the meat supply at risk when Smithfield announced it would close its Sioux Falls, South Dakota, plant due to a high rate of COVID-19 infections. On Fox News, South Dakota Gov. Kristi Noem said Monday that officials are trying to get the plant to reopen as soon as possible.
Late Friday, USDA announced it was working with federal agencies to help packing plants remain open or reopen. USDA's Animal and Plant Health Inspection Service (APHIS) stated it was creating a "national incident coordination center" to help livestock producers either find a market for their animals or depopulate them if necessary.
PORK PRODUCERS FACE CRISIS
The National Pork Board on Sunday held a webinar with USDA staff for producers to detail some of the practices and procedures to help euthanize hogs. The National Pork Board has established an emergency command center. The pork industry is working on finding federal funds to help offset some of the costs. The pork board has created a website for more information: www.pork.org/COVID19.
Randy Spronk, a pork producer from Edgerton, Minnesota, and former president of the National Pork Producers Council, said in a phone interview with DTN on Monday that his market hogs are on "allocation" as producers essentially wait for processing space to open up at plants. Like other producers, Spronk has been shifting finishing hogs from high-energy diets that would drive gains to maintenance diets that focus more on fiber that will reduce gains.
Spronk said he was aware of at least one 3,000-head barn in Minnesota last week that had to euthanize hogs, but those efforts are now going to increase dramatically this week. The JBS plant in Worthington, Minnesota, has opened up a CO2 chamber to haul in hogs for euthanasia. Because rendering plants are now going to be overwhelmed, state and industry officials are working on sending carcasses to landfills and other disposal methods.
The challenges facing pork producers and the industry right now from the volume of hogs on farms is quickly becoming overwhelming. The pork industry processes about 2.7 million hogs during an average week, and as much as one-third of pork capacity has been lost because of plants closing or slowing down production. And then most pork producers are set up for a set of weaning pigs that would follow right behind once finished hogs leave the barn.
"So we're short roughly 900,000 (in capacity right now)," Spronk said. "So you are either going to have to euthanize some weaners or euthanize butcher hogs. That's the dilemma we're facing here."
Spronk lobbied for funds in the CARES Act, but said the politics over restricting funds to U.S. companies affects a significant part of the meatpacking industry with JBS based out of Brazil and Smithfield's ownership in China. The producers and workers are in the U.S., though.
"Those are U.S. citizens and U.S. employees, and now we're playing games here," Spronk said, expressing his frustration over the situation.
Spronk added the USDA payment limitation also doesn't begin to manage the losses pork producers and others in the livestock industry may be facing. A farmer with a 2,400-head barn with a $135-a-head break-even cost is looking at a minimum $324,000 loss if faced with euthanizing those animals.
"There are a lot of independent producers out there who only get two 2,400-head barns of hogs a year," Spronk said. "If you euthanize those butcher hogs, there's no indemnity insurance you have got on that. That's your net worth that just took a hit for over $300,000."
Like packing plant workers, farmers were deemed as essential early in the coronavirus pandemic and told to keep doing their work. The supply chain and government oversight to ensure functions continued, then began to break down around them. Farmers will become more leery about their risks if such events can wipe them out and there are limits to disaster aid.
"We're a modern society and we let this occur?" Spronk said. "With the risk that takes, people aren't going to invest into something if you can have catastrophic losses like this. This is a time when the government should step in -- that they should be able to anticipate, that they should be able to understand the consequences of their actions."
CALLS FOR TRUMP ADMINISTRATION PLAN
On Sunday, Sen. Mike Rounds, R-S.D., joined a growing number of people who have written to Vice President Mike Pence, raising concerns about the state of the packing industry.
Rounds noted roughly 25% of beef capacity and 30% of pork capacity is idle right now. He called on the Trump administration to develop a plan that protects workers and addresses the emergency facing the livestock industry.
"Unfortunately, due to the slowdown and closure of meat processing plants over the past three weeks, we have reached the point where we are going to need to emergency euthanize millions of healthy pigs in the coming months," Rounds wrote. "The scale of this on-farm and on-ranch tragedy will be written in history books as a failure of epic proportions."
Rounds stated USDA needs to issue an emergency order to activate its command center and also needs to help offset the costs for euthanizing animals. State and federal resources need to be brought to bear, Rounds said, and he also called for mobilizing the National Guard "to help farmers, ranchers and industry expedite this action with some semblance of humanity."
Chris Clayton can be reached at Chris.Clayton@dtn.com
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