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Smithfield Overdoing Talk of Food Supply Disaster

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].

Besides, do you really need to eat that much meat?

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.

16 Comments

  1. mike from iowa 2020-04-16

    Forget the hogs, another 5.25 million Americans filed for unemployment last week.

  2. Donald Pay 2020-04-16

    I think Sullivan has a point, but I don’t think corporate ag is willing to admit they have failed America. If you don’t value your workforce, you end up killing them. It’s almost as if Smithfield’s product was dead humans, more than dead hogs. That attitude has to change, as does the “get big or get out” attitude. These plants need to get smaller and more numerous, and be more localized. Having 5 percent of the nation’s hog kill at one plant is lunacy. Sure, it’s economic to do that. It’s not safe and it’s not smart. There has to be far better regulation going on, as well. People need to know their food is safe.

    Smithfield should space out the workforce, and corporations need to really listen to the workers and their unions. Needed changes probably will have some impact on the amount of meat they can push through.

  3. grudznick 2020-04-16

    This is going to make the cost of breakfast skyrocket.

  4. mike from iowa 2020-04-16

    What part of 4-5 dollar a dozen eggs doesn’t Grudzilla’s skyrocket claim not understand?

  5. jerry 2020-04-16

    CUDAHY, Wis. | Smithfield Foods will temporarily close its plants in Cudahy, Wisconsin, and Martin City, Missouri, because of the coronavirus pandemic.

    The plant near Milwaukee will be closed for two weeks while the facility in Missouri is closed indefinitely. The Missouri plant receives raw material from the company’s Sioux Falls, South Dakota, facility, which is also closed.” Rapid City Journal 4.16.20

  6. jerry 2020-04-16

    Mr. Pay, COOL has been languishing for years on Rounds, Thune’s and republicans desks. They refuse to do it and make all kinds of silly excuses why. Now would be the time to enact that bill for starters. The next thing would be to find local/regional locations to manufacture first responder’s needs as well as food for us all. You’re correct, anything else is lunacy.

  7. Debbo 2020-04-16

    Rep. Jim Hagedorn, R-MN, is chatting up Perdue about ag assistance. Hagedorn says in a FB post,

    “In a matter of just weeks, livestock markets have dropped through the floor. Hog and cattle farmers are on the brink, and through no fault of their own. Adjusting current livestock reference prices as producers sell into this artificially depressed market would provide a short-term lifeline to American farmers dealing with the effects of the coronavirus.

    “This policy could also serve as a blueprint to develop a long-term solution to avoid the possibility of future market dips associated with infectious animal diseases such as African swine fever.”

    Hagedorn is a fervent trumpista, so may be heard. Guess we’ll find out next week when Economic Oaf is scheduled to bring out an ag policy.

  8. o 2020-04-16

    grudznick, I would have thought that too. Our HyVee has cases of bacon on sale for $2.50 a pound and pork chops for $1.00 each. Actually, it seems like pork has bee non sale a lot.

  9. Debbo 2020-04-16

    Jeff Danziger’s cartoon of Kruel Kristi and Smithfield pigs.

    is.gd/gkxBWQ

  10. Moses6 2020-04-16

    Do not worry Grud worked at the banquet a lot I am sure if you stop by they will give you a container of food. People care more about themselves than others trying to get by

  11. mike from iowa 2020-04-16

    According to the Blacvk Crowes, some women talk to angels. Noem talks to cartoon pigs.

    Good find, Debbo.

  12. John 2020-04-16

    So long as the US can “waste” millions of acres of agricultural production to growing fuel — there is no worry that the US could have a food supply disaster. The US merely has its priorities out of wack.

  13. Clyde 2020-04-16

    Some very good discussion here but not a lot of recognition that Smithfield and its competitors have virtually completely taken over the pork industry top to bottom. The mention of hog farmers keeps being made but the reality is that virtually all hogs are owned by these multinational oligopoly’s with the farmer only a contract grower. They have taken their business plan from the chicken broiler industry. These industry’s are destroying what is actually “farming”.

    John also has an incorrect opinion on ethanol but I can’t blame him for that because a search by me to confirm my memory of just how little of the actual corn crop is consumed by ethanol production was fruitless. Almost nothing on the I net but negative stories. You would think that a simple question of what % of corn is actually consumed in the process would be answered but I was unsuccessful. Only a percentage of the starch is consumed and the rest is made into other products consisting mostly of high protein animal feed. What yellow dent corn was destined for in the first place. Most people when they see the story about the huge amount of corn used for ethanol, I believe, assume all of it disappears into alcohol.

  14. Richard Schriever 2020-04-17

    A local hog farmer friend of mine has resorted to just shooting some of his previously contracted for and ready for market hogs, as there is no market and he has pens coming through the process. He tried to find a butcher shop that would accept and process some either for distribution or storage. None would accept – too busy. If you know how to butcher a hog, or know someone who could – or even if you just want a pet/yard pig, he would probably just give ’em to you rather to waste a bullet and time burying.

  15. mike from iowa 2020-04-17

    I raised broilers for myself, family and friends for a number of years. Not for some korporation. I could not allow myself to take a free hog from a distressed farmer. Not cricket. I pay as I go or I don’t go.

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