Food Supply Chain In Peril As Plants Close Amid COVID-19 Pandemic

As more than a dozen meat processing plants and packaged food companies shutter operations because of infected workers, truck drivers, pork producers and egg farmers say they are running out of options amid the coronavirus pandemic.

Truck driver Mike Baker of Weymouth, Massachusetts, who hauls refrigerated freight, says it's been hard to find good-paying loads the past two weeks for pork, beef and chicken from plants owned by two of the nation's largest meat processors, including JBS USA, headquartered in Greeley, Colorado, and Springdale, Arkansas-based Tyson Foods.

He's hauled meat for both companies that have been plagued by coronavirus outbreaks at some plants, which has forced them to suspend operations after hundreds of workers, who work shoulder to shoulder on production lines, contracted the highly contagious virus. Some employees of both companies have died of COVID-19. 

On April 14, Baker, who is a leased operator for BLC Transportation of Springfield, Missouri, said he was waiting to pick up a load of meat at JBS' Greeley plant when he found out it was shuttering operations for two weeks after more than 102 employees contracted the coronavirus and four died. The plant has more than 4,500 workers.

"I've been in and out of that plant a hundred times, so I wound up deadheading 350 miles to a Tyson beef-packing plant in Holcomb, Kansas,"  Baker told FreightWaves.

Since the outbreaks, Baker, who is deemed essential because he hauls food, admits it's been hard to find high-paying freight.

"Things haven't been great, but I feel like it's not about me right now," Baker, a retired U.S. Air Force mechanic, said. "Some of us out here are determined to feed America or die trying."

He plans to stay out on the road until the coronavirus has been contained because he fears he may infect his family if he unknowingly contracts it. 

While he doesn't have a mask, Baker said he carries a can of Lysol to wipe down his steering wheel and other touchpoints in his truck. He said his youngest daughter is an EEG (electroencephalogram) technician at Massachusetts General Hospital in Boston.

"As long as my kid has a mask, I don't care if I have one," he said. "Contracting this virus out here is a roll of the dice, no matter what, so worrying about it doesn't do anything for my odds."

More plant closures

On Wednesday, Tyson Fresh Meats suspended operations at its Waterloo, Iowa plant, after more than 180 workers contracted the coronavirus and one employee died. The plant processes more than 19,000 hogs per day and accounts for nearly 4% of pork production in the U.S.

"What I can tell you is that we will continue our efforts to divert animals where we can, but with the current situation we are backing up hogs significantly due to harvest limitations," Liz Croston, executive communications manager of Tyson Foods, Inc. TSN told FreightWaves.

However, Tyson announced it resumed limited operations at its pork facility in Columbus Junction, Iowa, on Tuesday, after it was shuttered for two weeks after 186 employees fell ill and two died of COVID-19.

"Our first priority is protecting our team members while they fulfill their critical mission of feeding families across the country during this challenging time," Dean Banks, president of Tyson Foods, said in a statement about the plant reopening. "We plan to increase production at Columbus Junction gradually, with the safety of our team members top of mind." 

Despite COVID-19 outbreaks at Tyson facilities around the country, some remain open, like the plant in Goodlettsville, Tennessee, where 120 workers tested for the coronavirus, according to The Tennessean. Nearly 1,600 people work at the facility.

The nation's largest meat processor, JBS, was forced to cease operations at its Worthington, Minnesota, pork facility indefinitely on Monday after 26 workers contracted the coronavirus.

Cameron Bruett, head of corporate affairs at JBS, declined FreightWaves' multiple interview requests.

Smithfield Food Inc. is the world's largest pork processor and hog producer. Smithfield, headquartered in Smithfield, Virginia, employs over 40,000 workers in the U.S.

On April 15, Smithfield announced the closures of its Cudahy, Wisconsin, after 28 employees tested positive for the virus, and nine cases were reported at the Martin City, Missouri, facility.

The company said the facilities were closed after a "small number of employees at both plants have tested positive for COVID-19," the company said.

On April 12, Smithfield announced the closure of its Sioux Falls, South Dakota, facility, after more than 775 cases, including two deaths, have been linked to the plant. This plant provides four to five percent of U.S. pork production. It supplies nearly 130 million servings of food per week, or about 18 million servings per day, and employs 3,700 people, according to the Smithfield website.

"From farm to fork, our nation's food workers, American family farmers and the many others in the supply chain are vital to the security of our country. This is particularly evident as we battle COVID-19 together," Kenneth M. Sullivan, president and chief executive officer for Smithfield, said in a statement.

On April 17, Conagra closed a plant in Darien, Wisconsin, and a day later, shuttered a facility in Marshall, Missouri, indefinitely after 20 employees at each site tested positive for the coronavirus. 

At meatpacking and manufacturing plants, more than 2,200 workers at 48 plants in the U.S. have tested positive for the coronavirus and many of those plants remain open, according to a USA Today report. 

So far, more than 802,500 people have tested for COVID-19 and 44,575 people have died in the U.S., according to the latest numbers provided by the Centers for Disease Control and Prevention.

Hog producers consider euthanasia as pork industry faces $5 billion loss

As meat processing facilities continue to close because of COVID-19 outbreaks, plant capacity has been reduced by around 24%, said Jim Monroe, assistant vice president of communications for the National Pork Producers Council (NPPC).

The pork industry is facing a $5 billion loss as a result of the COVID-19 pandemic as NPPC estimates that hog farmers will lose an estimated $37 for every market-ready hog, he said.

At the beginning of 2020, Monroe said, industry analysts were hopeful that most pork producers would make a profit of about $10 per hog after two years of trade disputes with key export markets like Canada and Mexico.

Then the coronavirus hit.

As restaurants and schools closed in an effort to contain the spread of the coronavirus, hog prices plunged. Now that some plants are closed because of COVID-19 outbreaks, hogs are backing up at farms, creating a challenging situation, Monroe said. 

"Our farmers are so committed to animal welfare and specifically avoiding animal suffering. The challenge that we have now is you have an overcrowding situation and the hogs access to feed and water," he said. "Euthanasia is something that you can't dismiss and it's something that is a distinct possibility as plants continue to go down and with harvest capacity continuing to be reduced."  

Photo: National Pork Producers Council

Last week the U.S. Department of Agriculture (USDA) program rolled out a $19 billion relief program called the Coronavirus Food Assistance Program (CFAP) to provide aid to farmers, ranchers and consumers. 

However, Monroe said the amount isn't nearly enough to help struggling hog farmers. 

The USDA package included $3 billion in commodity purchases, including pork, which he said means the agency will make significant pork purchases that will be delivered to food banks.

"This will clear out a backup of meat supply and create new plant capacity so we can start moving hogs through the plants again," Monroe said.

The USDA also allotted $1.6 billion to pork producers, which he said is "nowhere close to the losses" hog producers have incurred.

"So if you're strictly a hog farmer, the most you can get is $150,000, but if you grow crops or other commodities, the limit increases to $250,000," he said.

"This relief package in terms of direct payments is nowhere near close enough to sustain the industry throughout this period of challenge," Monroe said.

Livestock haulers take a hit

Owner-operator Bobby Davis owns 2D Livestock Hauling in Wharton, Texas. 

He's hauled livestock for nearly 30 years. After a farmer buys cattle via an online auction, Davis said he picks up the cattle from the ranch and hauls the livestock wherever the buyer needs to go in the U.S.  He sometimes takes cattle to feedlots but doesn't haul livestock to meat processing plants.

Davis has noticed a significant decline in his business the past two months because of the coronavirus.

He is trying to diversify his trucking operation and is hauling grass and equipment with his flatbed trailer.

"Things have really slowed down," Davis told FreightWaves. "I'm just taking some time off, but it's killing me, pretty much."

Billy Schwertner of Wharton, Texas, owns three livestock auctions. He said the auctions have been allowed to continue amid the pandemic, but only buyers and consignors are allowed to attend.

"We have been deemed an essential part of the food chain, so we are just using a little common sense and it's working out really well," Schwertner told FreightWaves.

While numbers are down, it's historically a slow time for cattle right now, he said. 

Calving season starts in late spring or early summer and that's when numbers should pick up, Schwertner said.

He said there's no way to predict how the cattle industry is going to fare in the next few months, but that restaurants and processing plants need to reopen soon.

Billy Schwertner owns three livestock auctions in Texas. He owns four trucks to haul cattle. Photo: Billy Schwertner

"I can tell you what happened yesterday and I might could tell you what's going to happen at noon today, but after that, I haven't got a clue," Schwertner said. "The uncertainty is the future we have and you just don't know what it's going to be. There's no stability, it's a mess."

Besides his three auction houses, Schwertner also owns four tractor-trailers that he uses to haul his herd and customers' cattle in and out of the sale barns. 

For livestock haulers, he said it's not easy for them to diversify because of the steep cost of the trailers, which can run as high as $90,000.

"Some may park their trailers and lease on to a company with their tractor if things don't pick up, but once a cattle hauler, always a cattle hauler," Schwertner said.

60,000 chickens euthanized

As demand for industrial liquid eggs designated for restaurants and schools dropped amid the pandemic, so did the value of Kerry and Barb Mergen's flock of over 60,000 chickens.

The Mergens of Albany, Minnesota, are contract egg farmers for Daybreak Foods, headquartered in Lake Mills, Wisconsin. 

Photo: Christopher Stumm/flickr

Daybreak supplies the birds and the feed and the Mergens care for the flock in their barn, Barb Mergen told FreightWaves.

On April 7, she said a Daybreak field manager showed up and said the birds were going to be euthanized because of the slowdown in demand for liquid eggs and the temporary closure of an in-state Cargill fluid egg plant that is one of Daybreak's customers.  

The same field manager showed up again two days later with trucks and some Daybreak workers, who loaded the chickens into cages and put them on a conveyor belt into the back of the trailers, where they were gassed with tanks of carbon dioxide, she said.

Barb Mergen is a common practice when chickens no longer produce eggs, but that their contract with Daybreak wasn't up until Sept. 15, when they would get another flock of chickens to raise. Her flock produced around 4,500 dozen eggs per day.

"On that day, we lost 100% of our income," she said.

After her chickens were euthanized, Barb Mergen said, Daybreak asked if it could rent out their egg cooler, which can hold more than two trailer loads of eggs.

The price they were offered was $350 per month. The money didn't even cover the cost to run it, so they rejected the offer.

"What gets me is they knew we had no income coming in and thought we were desperate and would take it for that price. They weren't looking to help us survive until this fall until things got better," Barb said.

The Mergens went to their local bank and applied for assistance through the Small Business Administration's (SBA) Paycheck Protection Program, but the $349 billion set aside for small businesses was already depleted. 

Barb Mergen said she is looking into other programs to see if there's money available to help them survive the economic fallout from the pandemic. 

"We're not quite as savvy as big companies that have people to handle all of this paperwork," she said. "We still have our work outside to do as we still farm cropland. I can't afford to spend eight hours a day looking into programs."

The Mergens also have a 280-acre farm and raise corn, soybeans and wheat.

"I feel for people who are on the frontlines dealing with coronavirus, so not having anything for a while is OK," Barb Mergen said. "Birds are replaceable, income is replaceable, but people are not. This is just another stepping stone, I guess."

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