‘Turmoil’: Texas ranchers could see ‘significant’ pain from meat packing plant closures

Coronavirus

AUSTIN (KXAN) — Some of the nation’s largest meat processing plants have closed or scaled back production in recent days due to the new coronavirus, and livestock economists say it could impact Texas ranchers as well as prices at the grocery store.

A Smithfield Foods pork processing plant in South Dakota closed until further notice after nearly 300 employees tested positive for COVID-19. The plant accounts for roughly 5% of the nation’s pork supply. The virus has also sickened hundreds at large plants in Colorado, Pennsylvania, Iowa, Mississippi and elsewhere, the Associated Press reports, and companies at facilities still operating face high absenteeism from workers staying home sick or afraid of becoming ill.

That means plants are buying less from producers and selling less processed meat into the retail supply chain.

FILE – In this April 9, 2020 file photo employees and family members protest outside a Smithfield Foods processing plant in Sioux Falls, S.D. The plant has had an outbreak of coronavirus cases according to Gov. Kristi Noem. (AP Photo/Stephen Groves File)

“Turmoil,” Dr. David Anderson told KXAN, “that’s probably the best word for it.”

Anderson, a livestock economist with Texas A&M’s AgriLife Extension Service, said ranchers initially saw higher prices for their animals at the outset of the pandemic because people were buying more meat. But now, with plant closures, prices are starting to fall, which could lead to a “significant amount of pain” for Texas producers.

“What we normally see is lower prices for producers, but higher wholesale beef prices that are going to get passed on to retail,” he said.

The meat economy is a national one, he explained, so ranchers rely on processors around the country to buy and butcher animals. Closures in other states affect local producers’ ability to get their meat to market.

Cattle accounted for nearly half of Texas’ agriculture production in 2017, according to the state’s Department of Agriculture, bringing in $12.3 billion to ranchers.

Impact on consumers

While Anderson believes the price for beef will rise at grocery stores, Jim Schwertner does not. He’s president and CEO of Schwertner Farms Inc., which runs Capitol Land & Livestock east of Jarrell.

“We’re basically what you would call a livestock broker,” he said. “We buy from ranchers from here to Louisiana, all the way to Florida,” then sell the cattle to feed lots mainly in the Texas panhandle. Those feed lots keep cows for about nine months, then ship them off to processing plants to turn them into steaks and ground beef.

Capitol Land & Livestock's president and CEO thinks the plant closures will be short-lived and doesn't expect higher prices for consumers. (Image Courtesy: Jim Schwertner)
Capitol Land & Livestock’s president and CEO thinks the plant closures will be short-lived and doesn’t expect higher prices for consumers. (Image Courtesy: Jim Schwertner)

At the start of the pandemic, he saw cattle prices rise 10% as people rushed to the store to stock up on meat. When their freezers filled up, prices leveled off, and now they’re starting to fall again.

“The problem we’ve got now is some of the processors are finding the coronavirus in some of their plants,” he said.”Which does not make the food unsafe, by the way, because when you cook beef or chicken, there’s no problem.”

The plant closures, he believes, will be short-lived because the companies that run them are making too much money to keep them shuttered. In the end,

“When they get these processing plants back up to 100%, [stores are] going to be pushing beef and they’ll have beef specials,” he said, “so the winner’s going to be the consumer.”

Neither he nor Anderson believes there will be a shortage of meat on the market because before the U.S. was producing at record levels before the virus started spreading.

Time for change?

Judith McGeary, executive director of the Farm and Ranch Freedom Alliance, said the pant closures illustrate the need to change the way to country consumes meat.

“It shouldn’t have disrupted our food system this way,” she told KXAN.

Smaller processors around central Texas are still able to support local producers, she explained. It’s the national companies that supply the majority of the meat in stores that are taking a hit through the pandemic.

The conditions at some of those plants don’t promote workers’ health, she said. As long as COVID-19 is out there, she expects to see more closures.

Anderson wouldn’t be surprised if more of them closed down. “In a packing plant, people work shoulder to shoulder,” he said. “It’s hard to have distance.”

McGeary hopes the crisis encourages people to re-evaluate the current process “so we have a food system that is not so fragile.”

Not just beef

Long-term, cattle ranchers will likely need to reduce their herds to account for the lower prices they’re getting from processors. But the livestock industry is cyclical, Anderson explained, and they’ll be able to increase herd size again once prices come back up.

And other livestock growers will see impacts, too.

“We may talk about beef more, but Texas is the largest sheep-producing state,” Anderson said. “So if you like lamb chops or rack of lamb, boy, this hit at exactly the wrong time.”

Sheep producers count on Easter to move a lot of meat. The pandemic and resulting restaurant closures meant they weren’t able to sell as much. Likewise, east Texas farms produce a lot of chicken. The market will likely see the “ripple effects” of COVID-19 and plant closures for some time, Anderson said.

“I think there’s a lot of bad for everybody in all this,” he said.

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