- Meat sales, excluding deli meat, jumped 76.9% for the week ending March 15 compared to the same time last year, according to statistics from the National Chicken Council using figures from data insights firm IRI. The data firm noted that the cuts bringing in the greatest profit were ground beef (up $179.1 million), chicken breasts ($89.5 million more), pork loin (up $36.9 million), chuck ($36.3 million more) and ribeyes (up $31.6 million).
- These sales, however, did not increase profits for producers. Fern’s Ag Insider reported despite wholesale prices for processed beef rising nearly 20%, the price paid to ranchers has sunk 11% since January. Futures fell an additional 7% in April over fears of COVID-19 causing a cessation in slaughterhouse operations.
- Processors have ramped up plant production and diverted supply from foodservice, resulting in a 68.7% increase for food retail volume sales for the week ending March 15 since last year.
Fresh meat is yet another grocery item that consumers are purchasing faster than staff can restock. With buyers cleaning out shelves, producers are rethinking production schedules to provide the protein that consumers seek as COVID-19 has forced restaurants to shutter and Americans to stay home.
From beef and chicken to lamb and turkey, sales of animal protein across the board have increased dramatically in the last week. These statistics are in stark contrast to numbers provided by The Wall Street Journal just two weeks ago. The Journal reported U.S. cattle prices had fallen 19% between January and the first week of March this year.
Interestingly, this surge puts fresh meat in the same category as shelf-stable canned foods, hand sanitizer and toilet paper, which have been hard to obtain as consumers stock up on staples to prepare for quarantine measures. While meat is a fresh product, reports show consumers are buying in bulk, freezing extras to have on hand for a later date.
To compensate for the stockpiling, processors are diverting meat that would ordinarily be destined for restaurants and sending it to retail. Producers like Tyson Foods, Perdue Farms, Cargill and Sanderson Farms are among the companies looking to shift operations away from foodservice and toward retail to meet demand. Other meat processors are adding additional weekend shifts to their schedules to keep up, and some are requesting that the government expand the guest worker visa program to offset labor shortages.
In addition to logistical changes, processors are providing incentives for workers to ensure they are present. Reuters reported Maple Leaf Foods, Hormel Foods, Cargill and Tyson will give temporary pay increases or bonuses to employees. Cargill will increase pay by $2 an hour until May 3 with an additional $500 bonus for the completion of weekly shifts for eight consecutive weeks.
This extra cash flow does not, however, trickle down to the farmers and ranchers who provide the animals. Although Tyson announced that it would pay a premium for cattle this week, it is a one-time bonus. Livestock marketing advisory service HedgersEdge.com wrote Tyson margins increased from $580 per head this week from $170 last week, Reuters reported. Meat producers are urging lawmakers to investigate these inflated margins that processors are earning, while those who provide the animals are simultaneously experiencing shrinking profits.
But this is not the first time this alarm has sounded about potential price fixing in the animal protein industry.
Tyson, Cargill, JBS and National Beef Packing Company are four beef-packing companies with a big influence over the industry, since they buy and process more than 80% of fed cattle in the U.S., according to a release. Last year, The Ranchers Cattlemen Action Legal Fund United Stockgrowers of America (R-CALF) and other cattle ranchers filed a class action lawsuit accusing the companies of a conspiracy to minimize prices paid to ranchers for cattle in order to inflate their own margins and profits. While the case, rolled into a massive class action suit in Minnesota federal court, is still pending, the current disparity between commodity and wholesale prices may become new evidence in favor of farmers.
While these inflated prices have not yet been passed to the consumer, it may only be a matter of time before they will if retailers continue to scramble to restock shelves. If that is the case, it may benefit the plant-based industry. With a shortage of animal protein and the potential for prices to skyrocket, consumers could turn toward the expanding options of plant-based protein to feed themselves and their families in this period of shortages in grocery retail.