Impact on the global pig production sector

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Covid-19 update: 2 US pork processors change course

US packing plants are now in their second month of required continued operation under US law, and pork exports to China are under heavy scrutiny. 2 major pork processors have reversed course in response.

In the United States in recent weeks, temporary packing plant closures due to Covid-19 outbreaks among workers have caused widespread processing backlogs. Experts put the number of hogs ready for slaughter (but not able to be processed) at the end of April at 1 million. Many hogs had to be euthanised. In the state of Minnesota, reported AgWeek, a large site was created to receive thousands of dead hogs each day for composting.

Covid-19 Up-date
What impact is the pandemic having on the global pig sector and how are they dealing with it.

Pork exports from US strong

As Covid-19 began to emerge in early 2020, export demand for US pork was very strong in many markets. The US Meat Export Federation stated that during the first quarter of 2020, because of African Swine Fever (ASF), shipments to China/Hong Kong and Vietnam were extremely high. Exports to New Zealand during that period were also very strong. Japan, Mexico and Central America represent other significant current export markets for US pork. However, it’s the shipments to China that are under heavy scrutiny.

ASF has left China with a large pig and pork deficiency. Gilts are being shipped to China to fill that gap

Chinese consumers over US consumers?

Reuters news agency’s Tom Polansek wrote this week that US meat packing plants “have increasingly been exporting to China while US consumers face shortages”.

Defense Production Act

At the end of April, US president Donald Trump invoked a decades-old piece of legislation called the ‘Defense Production Act’ which disallows meat plants from closing. “Now he is facing criticism from some lawmakers, consumers and plant employees for putting workers at risk,” stated Polansek, “in part to help ensure China’s meat supply”.

Warnings of shortages in the US

Warnings of shortages in the US for pork and other meat have been common in recent weeks. Will Sawyer, lead animal protein economist with US financial services company CoBank, stated that ”meat supplies for retail grocery stores could shrink by nearly 30% this Memorial Day” (a holiday on May 25 in the US). Sawyer added that “while we expect pork processing to pick up in the coming weeks, US hog producers may still be forced to euthanise as many as 7 million pigs in the second quarter alone…[which] would further diminish meat supplies.”

Meatpackers reversing course

So far 2 of the 4 largest US pork processors (Cargill, Chinese-owned Smithfield Foods, Brazilian-owned JBS USA and Tyson Foods) have responded to these concerns. According to US Today, Smithfield will renovate its pork processing plant in Smithfield, VA to supply more pork products for the US market, after making changes last year for making products specifically for the Chinese market. JBS is reducing its pork exports levels.

The Smithfield Foods processing plant in Smithfield, VA. - Photo: Wikipedia
The Smithfield Foods processing plant in Smithfield, VA. - Photo: Wikipedia

However, experts also point out that much of the pork exported to China are those without a place in the US market, such as pig feet and organs.

Compensation for pig culls

On May 12, the US House of Representatives Committee on Appropriations announced new provisions for livestock agriculture to deal with Covid-19. In a press release, the US National Pork Producers Council (NPPC) expressed its appreciation for the funding, which includes “compensation for euthanised livestock that can’t be processed into the food supply due to Covid-19-related packing plant capacity reductions.”

Direct payments to livestock farmers

The funding also expands direct payments to livestock farmers who have suffered a severe drop in the value of their livestock. In the implementation of this programme, “NPPC continues to seek the removal of payment caps to ensure much-needed aid is extended to those farmers who need it most.”

Canada: some aid but pig producers still struggling

In Canada, pork producers have been affected by Covid-19 in much the same way as their US counterparts. Temporary plant closures, combined with distancing measures within packing plants and the need to quarantine infected workers has resulted in a backlog of pigs and some euthanasia. While the federal government last week offered some aid to Canada’s entire agriculture industry, pork producers declared that for them, it was completely insufficient. As explained in a Pig Progress report last week, 2020 industry losses could reach $ 675 million.

Extreme risk for Canada’s hog producers due to Covid-19

Processing plant funding

For Canadian meat packing plants and other food plants affected by Covid-19 outbreaks among workers, the federal government recently promised CAN$ 77.5 million (US$ 55.1 million). However, national broadcaster CTV reported that this money may not be available for months. In addition, the requirements to qualify for the funding are not yet clear.

Strong supply chain

Overall however, several industry experts interviewed in a recent CBC report said that Canada’s supply chain for pork and other meat has proven resilient and adaptable in recent days. They note that meat availability and prices have remained steady, although pork and beef prices are expected to temporarily rise this summer.