Beef about meat

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Beef about meat

Fri, 05/15/2020 - 18:13
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Industry challenges raise grocery bills, federal eyebrows

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Industries all over the world have been impacted by COVID-19. One that comes close to home is the cattle industry.

The market has dropped, drastically. Cattle are now worth 25 to 30 percent less than just weeks ago, which may come to a surprise since beef prices at the local grocery store have dramatically increased.

The problem originates from the way packing and processing plants have been affected.

According to some in the agriculture industry, the efficiency of the plants has been hit hard by the pandemic.

The beef industry starts with the farmers and ranchers. They raise cattle and then sell them to the feed yard through auctions at places like OKC West. After going to the feed yard, the cattle are sold to processing plants.

Michael Kelsey, executive vice president of the Oklahoma Cattlemen’s Association, said every processing plant in the nation has been negatively impacted by COVID-19. A few plants have been temporarily shut down.

“We need packing houses at full capacity,” he said.

“But we’ve got to do it safely, of course.”

Calling the virus “the real enemy,” Kelsey said the employees of these packing plants work in close quarters, making social distancing difficult. Because of this, the plants now have fewer workers, which means they can’t process as many cattle as before.

Before the pandemic, around 650,000 head of cattle were processed every week across the nation.

Kelsey said the number last week was a shade over 450,000 — 40 percent less. Because of this, cattle are backing up the system at the feedyards. In addition, many cattle ranchers now have too many animals. In other livestock industries, such as pork and poultry, some producers have been forced to euthanize masses of surplus animals.

Kelsey said cattle producers have not yet turned to that drastic measure.

Last month, the United States Department of Agriculture announced initial details for the Coronavirus Food Assistance Program, a $19 billion package intended to soften the blow to the food and agriculture industries. Some $16 billion of that will be directed to farmers and ranchers, with $5.1 billion going toward cattle.

The program itself is a part of the Coronavirus Aid, Relief and Economic Security (CARES) Act passed in March.

Cattle are still being sold. At a May 6 sale at OKC West, 13,500 animals were sold.

Bill Barnhardt, OKC West president, said the monetary value of that sale was about $12.5 million, normal for this time of year. As a whole, however, he said the market is suffering.

“The market was higher at that sale,” Barnhardt said. “It perked up, but it’s still bad.”

He attributed the sale’s success to pressure from the government.

Because of the disparity between the current value of cattle and the price of beef, many people have been calling for investigations into certain packing plants. While Kelsey said most of it can be chalked up to problems caused by the pandemic, the difference in price is so great that some are wondering whether laws are being broken. The word collusion has surfaced.

“We’re seeing a difference in prices larger than anything we’ve seen in recent history,” said Kelsey. “We wonder if there’s anything illegal going on there.”

The concern is whether the pricing has been fixed to benefit the processing and packaging companies.

Those calling for investigations include numerous cattle associations as well as state attorneys general.

Like others, the Oklahoma Cattlemen’s Association has sent a letter to U.S. Attorney General William Barr and U.S. Secretary of Agriculture Sonny Perdue. The letter asks both the Department of Justice and the USDA to look into the matter. The USDA was already investigating these concerns before COVID-19 became a reality.

Last August, a fire at a Tyson Foods beef processing plant in Kansas caused cattle prices to go down as the price of beef went up. This incident shined a light on the disparity between cattle and beef prices.

From the farms to the processors, the industry is facing problems on all sides. Packing and processing plants have to contend with diminishing worker numbers and difficult social distancing issues.

Heather Buckmaster of the Oklahoma Beef Commission has collected a substantial amount of information on what’s happening with beef processing.

“According to the USDA, while some processing plants are still operating near normal capacity or slightly reduced capacity, there are several plants operating around 50 percent of their normal capacity to allow for worker protections and distancing requirements that will help keep plant workers safe and on the job.”

Buckmaster said less than 10 percent of the processing capacity has gone offline as additional protective measures and cleaning practices are being implemented. But the production has gone down significantly. Buckmaster said for the five weeks before May 11, beef production in the United States was down 687 million pounds (on a basis of carcass weight) from the same period last year.

Buckmaster said despite the current hardships in the industry, the most important thing is ensuring the safety of both workers and consumers.

“While the beef industry is doing everything possible to increase supply, the primary concern is ensuring the health and safety of those who produce, process and deliver beef, as well as the safety of beef.”

Buckmaster said there is not a shortage of cattle. Beef is available through retail or restaurants, but there may be instances when store shelves are stocked at a level below usual.

“We expect these supply chain disruptions will be temporary and will begin to ease in the near future,” she said.

Before the virus, over half of food spending occurred in restaurants and cafeterias. When the food service industry was mostly shut down, demand went up at grocery stores. Disruptions to the supply chain may temporarily limit the availability of certain cuts. Some retail and restaurant chains may be forced to limit purchases to continue availability of beef for consumers.

Farmers and ranchers have been significantly impacted by the beef production issues. The cattle are ready for harvest, but the processing facilities can’t take in the usual amount. As a result, some of the farmers are left with too many cattle and they may or may not be able to provide for the increased numbers. If they can’t keep them all, they are forced to sell them cheap.

“They’re at the market’s will,” said Kyle Worthington of Canadian County OSU Extension Office.

“They don't have the ability to maintain or keep them and they need the cash flow.”

In addition to increased beef prices, consumers are faced with a new world regarding how they eat. Worthington said things are noticeably different now that people are staying at home. His office has been getting an influx of calls from people seeking advice on how to prepare their own food.

“Some people used to eat out for all three meals,” he said. “Now a lot of them are forced into making their own meals.”

Office employees at OSU Extension are working from home, but they have forwarded their phones and are still receiving calls. Worthington said they are now reaching a bigger audience through social media as well.

Still, Worthington said the organization misses its hands-on connections with the public through things like livestock shows.

“We miss seeing people and presenting educational programs. It’s been a change for us all socially and professionally.”