A major link in the meat supply chain has been broken by the COVID-19 pandemic, and East Texas producers and consumers are paying the price.
While consumers are seeing higher prices for processed meat at the supermarket, producers are being paid less for their animals at the sale barn and feedlot.
The reason: While there are shortages at the consumer end of the chain because of meatpacking plant shutdowns, the supply end of the chain is “full to the brim,” as one area extension agent put it earlier this month.
“We just have a point in the supply chain that is not working,” said Jason Banta, a beef specialist with Texas A&M AgriLife Extension in Overton.
That means selling prices for cattle are being pressured while processed meat is going at a premium.
According to a report Friday from the U.S. Department of Agriculture, beef prices are continuing to jump. For example, this week’s average advertised price for 80-89% lean ground beef is $4.98 per pound, up from $3.66 last week and $2.89 a year ago.
At the same time, producers are getting less, said Lee Dudley, AgriLife Extension agent in Panola County.
“I was doing some numbers a while ago, looking at some things from area sale barns comparing with the most recent sales to sales that happened right after the first of the year before COVID-19,” he said recently. “Some classes, we’re seeing as much as a $20-$30 for a 100-weight decrease in their values.”
Earlier this month, live cattle futures prices hit their lowest levels in nearly two decades.
Other area agents and a Rusk County cattleman shared Dudley’s assessment.
Citing the U.S. Department of Agriculture as his source, Matt Garrett, Harrison County AgriLife extension agent, said beef production recently was down 36% nationally from a year ago.
“What has happened is three of the biggest packing plants in the country have closed in the Midwest because of COVID-19 outbreaks among workers,” he said. “There is still cattle out there to be processed, but we have reduced the number of big processing plants.”
There’s no shortage of cattle to process, though. In fact, they’re backing up.
The pinch happens at the meatpacking stage, said Jason Taylor, who has worked for Hunt Livestock Exchange in Henderson for 25 years. He said it causes a backup that goes all the way back to the small rancher who raises as few as 10 head of cattle.
The process starts with the birth of a calf, which a cow is capable of producing every nine months, Taylor said.
A calf is weaned for six to eight months, and then is ready for auction, Banta said. Calves might spend from three to six months in a stocker operation and an additional 100 to 200 days in a feedlot. The animal is then ready to be taken to a meatpacker.
David Means, a grower in Missouri, put it this way recently: “Those packers may own the product seven-eight days, on the beef end, and are making well over $2,000 a head, whereas the farmer has the animal for a year and is losing $200-$400 a head.”
For weeks, ranchers held off on selling their livestock because of uncertainties in the market, according to a publication of the Department of Animal Science, College of Agriculture and Life Sciences, at Texas A&M. However, the report said people in the industry are seeing auctions now steadying.
Dudley said area plants, like Panola Processing and Caddo Packing, are running full tilt.
“Most of them, they’re all packed out, and if you want to get an animal processed for your own stuff you’re looking at least 30 days out to get a kill date,” he said. “Some of our local sales are smaller ones. The volume of animals coming in to sales has decreased.”
But cattle are still being marketed for a couple of key reasons, Dudley said: It’s an essential commodity and landowners who have been furloughed or laid off from their jobs are selling livestock to pay bills.
“You’re seeing some cattle move in the sale barn that may not have been wanting to go,” Dudley said.
Still he was optimistic about the future.
“I think in time we’ll get back to a normal that we know,” he said. “But we’ll have to get over that innate internal fear, we have that fear that’s been instilled in us with this disease ... it’ll take time to get over that.”
Despite the situation, Garrett said consumers have little to fear beyond higher prices. Food will continue to be available “if people don’t go crazy by hoarding,” he said. “The best thing consumers can do to prevent a shortage is to stay calm.”