Headlines about dairy farms dumping milk and livestock being euthanized are a sharp contrast to empty meat cases. The novel coronavirus outbreak has disrupted the nation’s food supply chain, resulting in increased prices for panicked shoppers and major losses for Iowa and Illinois farmers.
The usual rules of supply and demand between farmers and consumers have been disrupted by a problem with the middleman: processing plants and slaughterhouses.
“Our system is so efficient and streamlined that everything moves at the same flow,” Travis Meteer, a University of Illinois Extension commercial agriculture educator, said. “But when you have a kink, all of a sudden, that flow stops.”
Meat processing plants are considered critical infrastructure and have remained open. But with several commercial packing plants in Illinois and Iowa closed or working at a reduced capacity, thousands of cattle and pigs are waiting to be processed. Small-scale regional processors are still operating, but most are booked well into fall.
Cases of COVID-19 in the work force have forced plants to close to follow Centers for Disease Control recommendations for cleaning and inspections, and some staff are simply not reporting for shifts out of fear of getting sick, Meteer said.
“The price of meat is going up but the price (farmers) are receiving is going down,” he said.
The beef cattle industry nationwide is projected to lose $13.6 billion due to COVID-19. Those who can find a buyer are taking losses of $216 to $146 per animal. Illinois Extension commercial agriculture educator Teresa Steckler has heard as high as $700.
Livestock managers can use different feeding strategies to hold animals at a certain weight or slow gains until processing plants are ready.
“With packing plants closed, fat steers are sitting in the feedlot with nowhere to go,” Steckler said. “So, you have to keep feeding them.”
Holding and feeding market-ready animals incurs extra costs producers may not be prepared for. At Southern Illinois’ Dixon Springs Agricultural Center, where Steckler works, recent dry falls and cool, wet springs have reduced the quality of the local hay supply. "Some of these guys are finding that their supply of feedstuff is dwindling,” she said.
And as shoppers’ food budgets shrink, they are buying less expensive cuts, such as hamburger, over prime cuts, resulting in less profit for producers. Dale Hadden runs a grain and cattle farm with his family in Jacksonville and serves on the Cass-Morgan County Farm Bureau board.
“There’s not a place to market our calves, so we continue to hold them with grass and hay and get them to weights a little heavier than usual,” Hadden said. He’s also looking ahead to September when he’ll be selling most of his 280-head herd. “If this doesn’t turn around, that’s going to have a huge impact on how I generate any income.”
Dairy: In the U.S., 60% of butter goes to restaurants. When schools and restaurants closed to slow the spread of the virus, the sales of food-service dairy products plummeted, and there were suddenly too many cows producing too much milk.
Hadden said dairy manufacturing facilities are set up with lines to package milk into jugs for grocery stores, cartons for schools, or bags for food service. Dairy has a short window for processing and there are only so many gallons that can be held. “They’re dumping it because the processors don’t have demand for those products,” Hadden said.
Pork: The Illinois pork industry contributes an estimated $13.8 billion to the state's economy, according to the Illinois Pork Producers Association.
Toni Dunker is a price risk manager with Advance Trading in Quincy. She works with hog farmers to sell pigs for the best price once they reach market weight, starting around 260 pounds. As of April 28, plants they ship hogs to were working at a 60% capacity.
“That hog continues to grow every day, and once it gets past a certain size, they can no longer process it,” Dunker said. “It’s too big for the equipment.”
Hog producers have a tight timeline to maintain productivity and safety for their animals. They cannot be held like cattle, leaving some producers with no other option but to euthanize animals. Holding market-ready swine also means there are fewer places to raise piglets, reducing the future supply, Dunker said.
Eggs: University of Illinois animal sciences professor Ken Koelkebeck specializes in poultry production. With 6 million laying hens, Illinois is considered a small commercial egg producer.
Wholesale egg prices jumped from 94 cents to $3.01 a dozen from March to April. The demand for consumer eggs has skyrocketed with people cooking and baking at home more, causing grocery stores to limit shopper’s purchases.
“There has also been a disruption in the supply of cartons,” Koelkebeck said. “Demand was so high and there’s only two or three companies that make these cartons. They couldn’t keep up.”
Egg plants are highly automated and need fewer workers, so they haven’t had issues with shutdowns like pork and beef plants. With dozen-sized cartons in short supply, eggs are stockpiled at plants on 30-count flats, which usually go to restaurants. Now, some eggs may be sold in generic, unlabeled cartons.
Poultry: Some states have culled flocks of laying hens because of the lack of demand of eggs from the service industry.
Illinois does not have any commercial poultry processing plants, so chickens and turkeys are trucked to Iowa or Indiana. Illinois farmers raise 5 million turkeys a year under contracts with companies. They have scaled back poults by 15%.
“It’s more of a market disruption rather than completely shutting down,” Koelkebeck said. He expects as pork and beef products become less available, consumers will buy more poultry, so producers will raise more birds.
Concerned about COVID-19?
Sign up now to get the most recent coronavirus headlines and other important local and national news sent to your email inbox daily.