The coronavirus has disrupted the supply chain for meat -- and industry insiders expect a shortage to hit grocery stores.
Tyson Foods Inc. temporarily shut down its largest pork plant -- the sixth major meat facility to close during the COVID-19 outbreak -- and meat processing has slowed across all segments of the industry, reported Bloomberg.
“Meat shortages will be occurring two weeks from now in the retail outlets,” said Dennis Smith, a senior account executive at Archer Financial Services. “There is simply no spot pork available. The big box stores will get their needs met, many others will not.”
About 15 percent of the hog-slaughtering capacity is completely offline, and additional slowdowns are hobbling beef and poultry companies.
Meat prices are starting to surge as slaughterhouses close, but farmers don't have a market for their animals -- and the drop in hog futures could force farmers to euthanize their hogs and bury them as supplies back up.
That could, in turn, push grocery stores to ration pork chops, driving up retail costs.
Frozen pork inventories dropped 4.2 percent from February to March, the biggest drop for that month since 2014, but that decline came before slaughterhouse shutdowns began this month as workers got sick from the virus.
“For all the talk of cold-storage supplies, it’s just never a lot,” Bob Brown, an independent market consultant in Oklahoma. “It’s roughly a week’s worth of production in the freezer.”
The prices for pork belly -- which gets turned into bacon -- have more than doubled over four days this week, but the prices for hogs have plummeted because there's nowhere to process them.
That dislocation has driven up profit margins for meatpackers by about 340 percent since April 1, because the animals cost less but the finished product is far more valuable for plants that haven't been hit by the virus.
Some meatpackers have given raises and bonuses to workers to fight a high rate of absenteeism over illness concerns.