The Meat Of The Matter: Don’t Expect Shortages

Packing plant closures can be disruptive and, for farming, disastrous. But they can be necessary to protect the public

As COVID-19 ravages communities across North America, many analysts believe meatpacking plants, where employees work close to each other, are the next focal point of the spread of the virus.

We’re likely in the worst of it now. More than a dozen North American meatpacking plants have closed over the last two weeks, with at least five in Canada.

The big meat processing operators in Canada have been affected.

Maple Leaf Foods had four plants affected by COVID-19, and two (Brampton, Ont., and Montreal) are back in operation. Protocols are being carefully followed to put plants back in operation as quickly as possible. Closures can be disruptive and, especially for farming, disastrous.

Olymel, controlled by La Coop Fédérée, operates several pork processing plants. Two of its plants – in Yamachiche and Ange-Gardien, Que. – were closed for two weeks.

Given the intense production cycle in hog farming, animals needed to be harvested. While other sectors struggle to manage waste, pork processors made vertical co-ordination work so no animals were euthanized.

Throughout the crisis, we should expect to see more of these scenarios erupt.

But we shouldn’t expect meat shortages.

Meat consumption across the globe is down during the pandemic, relieving some of the pressure on meat packers.

The futures market is telling the story, especially for cattle and hogs, as farmers are being paid less for their livestock. Inventories are high enough to provide comfort to the supply chain. And meat sales in Canada have been unusually high since mid-March, when most Canadians were home.

We expect peak barbecue season to be flattened this year, again alleviating pressure on the entire meat supply chain.

But beef, and one packing plant in particular, offer a different story.

The cattle industry has always had a unique culture. Beef and cattle processing in Canada are dominated by a few large players. Cargill Foods operates in High River, Alta., and Guelph, Ont. Lakeside Packers in Brooks, Alta, is operated by JBS Canada, part of a Brazil-based multinational. Both are private companies and tend not to be too forthcoming.

The Cargill plant in High River has been the focus of much scrutiny in recent days.

Unlike other plants affected by COVID-19, Cargill chose to keep operating in High River after seeing employees contract the virus. But it opted to slow down production to allow for cleaning and physical spacing.

Reports now say more than 350 COVID-19 cases have been identified in households linked to the High River plant. That’s a problem. There are now risks inside the plant and in the community.

Similar circumstances are being reported in the United States.

A few issues merit attention. First, many of our plants need to be retrofitted, particularly in the beef industry. Since the beginning of the crisis, all plants less than 10 years old in Canada have avoided COVID-19. That’s a sign. The virus could eventually get in but modern infrastructure can play a significant preventive role.

Because of automation, robotics and modern maintenance, most European plants have so far been spared the virus. Those with issues have been in operation for decades, with patchwork and provisional operating solutions.

The high-volume, low-margin nature of the agri-food sector puts tremendous pressure on the entire supply chain, particularly in North America. Price volatility also makes things more complicated. There’s barely any room for capital investments.

The High River plant is 31 years old. The Brooks plant is more than 40 years old. They were built before BSE (bovine spongiform encephalopathy or mad cow disease) even existed and when food safety was key.

The region needs more processing, either with newer facilities or with more players. But the economics are very poor for any new entries.

The other issue is worker mobility. Many plants hire workers who commute by bus from urban centres to rural plants. Complying with physical distancing rules on a bus can be complicated, if not impossible.

Part of management’s decisions to deal with the pandemic should be making the safety of the community a priority. Maple Leaf, Olymel and other companies made the right decisions to temporarily close facilities to clean and establish safety measures.

Employees at the Cargill plant have continuously, if awkwardly, voiced concerns about work safety. Despite teleconferences and a few interviews, Cargill has failed to be reassuring about the safety of its employees. One can only imagine how differently the company would react if it was publicly traded.

COVID-19 will ultimately force management to think more broadly about employee safety, in and out of the plant. But Cargill’s efforts now to mitigate risks and keep employees and the community safe don’t appear to be working.

Meanwhile, employees are talking to the media about concerns while the number of cases in the community continues to grow.

Not wanting to close the plant even temporarily probably makes sense for ranchers who deal with Cargill. But public health and the safety of employees must be priorities.

In 2012, XL Foods in Brooks closed for several days amid the largest food recall in Canadian history. Canadians continued to get their beef while prices remained stable. So we know the market can handle a temporary closure.

In the end, the meat processing industry will be fine, if not perfect, and Canadians will get there meat supplies.

By Sylvain Charlebois

Dr. Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.

www.troymedia.com