Livestock farmers in dire straits; USDA mulling aid

By: Sundeep Goyal
Sundeep Goyal
Sundeep Goyal is an investor and trader in stocks, commodities and forex. He has professional accounting qualifications and extensive… read more.
on Apr 16, 2020
Updated: Apr 28, 2020
  • As meat plants shut, the backup in livestock is assuming serious proportions
  • Farmers face culling their animals and financial losses
  • USDA considering an aid package for meat and dairy farmers

Livestock farmers in the U.S. are in trouble as major meat processing plants across the country suspend operations due to rising cases of coronavirus. Without ongoing, just-in-time slaughter, livestock animals are gaining weight and piling up on farms. Farmers are staring at the twin, grim realities of financial losses and culling of animals unless meat plans come back on line.

Euthanasia on the horizon

“We’re in complete havoc right now,” said Jen Sorenson, incoming president of the National Pork Producers Council to the FT. “The closure of packing plants across the country is putting pork producers in extreme peril.” She added that a situation was fast approaching when pens would reach capacity and hog farmers would be forced to kill animals in a “devastating last resort.”

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Pig values have fallen significantly, and currently, according to Jim Monroe, a spokesperson for the National Pork Producers Council, many farmers are caught in a bind: It costs more to feed and house a hog than its market value.

Moreover, as slaughter backlogs, farm animals gain weight and size. So farmers have to put additional meat up for sale (in terms of weight) besides the rise in numbers. This depresses meat prices, leading to additional financial pressure on the farmers.

A similar situation looms for beef.

Cattle producers face plant closures

Plant closures have impacted cattle breeders, too, as they must pay to feed and care for the cows that await slaughter.

“Whenever you have a packing plant shut down, it means that you basically stop the flow of cattle and you start backing up the flow of cattle,” said Colin Woodall, CEO of the National Cattlemen’s Beef Association to CNN. “There is a cost associated with that.”

Separately, there are reports that dairy farmers have had to dump milk because the surge in its production during spring has timed with the closure of restaurants and schools due to the pandemic.

Plant closure status

MSN Money, which quoted a Bloomberg article, summarized downed meat plants as below:

Closed U.S. Meat PlantsOwnerTypeDaily CapacityReopen
Sioux Falls, SDSmithfieldPork primary19,500Unknown
Greeley, COJBSBeef primary5,400Apr-24
Hazleton, PACargillBeef products  
Souderton, PAJBSBeef primary1,950Apr-16
Columbus Junction, IATysonPork primary~10,000 
Tama, IANational BeefBeef primary1,100Apr-20

USDA actions

Sonny Perdue, the US agriculture secretary, said Thursday that the food supply chain was safe and resilient and that the CDC was cooperating with closed meat plants to get them reopened as soon as possible.

He said the administration would extend an aid package worth $15.5 billion to farmers, including the purchase of milk and meat products.

“We want to purchase as much of this milk, or other protein products, hams, and pork products, and move them into where they can be utilized in our food banks, or possibly even into international humanitarian aid,” he said in a Fox Business interview.

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