Smithfield Foods CEO Kenneth Sullivan warned that shutting down the Smithfield Sioux Falls plant to stanch the worst coronavirus outbreak in America would bring “severe, perhaps disastrous, repercussions” for the ag supply chain and push America “perilously close to the edge in terms of our meat supply.”
Blogger John Tsitrian, an expert on agricultural markets, says Sullivan was exaggerating and perhaps fearmongering:
No doubt Sullivan is right about a tightening of supplies, but “perilous” is a pretty strong, panic-inducing modifier that might be overstating the situation.
…Learning how the supply chains work during my days as a cattle trader associated with the Chicago Mercantile Exchange, I know that meatpackers are doing everything they possibly can to keep their plants operating while all this supply exists at a time of exceptionally high retail prices.
As Texas A & M’s Stover notes, there will likely be some short term supply shortages here and there, but the underlying supply of available meat in this country is immense. Meat is expensive to store in quantity and American consumers are nimble enough to make-do with what is likely to be an adequate, if not abundant, supply of it until things get back to something close to normal [John Tsitrian, “Well, We Ran out of Toilet Paper. Now Comes teh Smithfield News. Will There Be Meat Shortages? Possibly, But Not Likely,” South Dakota Standard, 2020.04.15].
While Sullivan tries to manufacture public fear and pressure to restart its plant (let’s see what the CDC team touring the plant today says about that), Tsitrian points to this Tuesday Forbes article that says the meat supply chain is facing constraints but not collapse:
“There will be pulses of supply disruption like this, and associated corrective action, but I am thankful our food system is diversified as it is,” says Robert Brown, a cofounder of San Francisco-based private equity firm Encore Consumer Capital.
The industry is likely to experience constraints in the weeks to come, and experts say some cuts of meat could end up being limited on shelves. Inventory heading to supermarkets is still strong, according to USDA data, which in 2016 identified 35,000 food and beverage manufacturing facilities in the U.S. and more than 30 states with at least 300 factories.
“Despite the fact there has been tremendous consolidation of large food companies over the least 20 years, there has been an equal amount of innovation as well,” says Brown. “This diversification should serve us well in this time when our food system is working overtime to keep up with today’s stockpiling of food at the household level. These facilities also tend to be located in geographies outside of major population centers that are experiencing the most rapid spread of COVID-19″ [Chloe Sorvino, “Fears of a Meat Shortage Are Rising. The Threat Is Far Less Likely,” Forbes, 2020.04.14].
Don’t let Smithfield propagandize a hasty return to production. Everyone is sacrificing normal operations right now to prevent two million deaths. Smithfield already squeezed more than its quota of coronavirus-recession production out of its workers, to detriment of the health of its workers and the general public. Smithfield needs to spend the next few weeks protecting the public and the Sioux Falls regional hub healthcare infrastructure from an even worse coronavirus outbreak. We can all afford to skip a couple sausages (or buy meat from a local locker, or make spaghetti instead) for the sake of public health.