Pork plant closings send wholesale prices soaring -- a signal of costlier hams, bacon and chops to come

Hog farmer Chad Leman, third-generation owner of Leman Farms in Eureka, Ill. stands near corn bins used to feed pigs.

By Dave Ress

The (Newport News, Va.) Daily Press

Wholesale prices for pork are soaring as big packers, including Smithfield Foods, close plants because of coronavirus outbreaks. That means supermarket prices are likely to follow in the next few weeks.

Bacon prices doubled just over the past week, while hams rose by 32%, port butts by 34%, ribs by 26% and loins by 12%, U.S. Department of Agriculture reports show.

Smithfield this month has closed two major processing plants, in South Dakota and Illinois, after workers in them tested positive for the coronavirus

Those two together account for 7% to 8% of the nation’s fresh pork production. Along with other packers’ plant closings in Minnesota and Iowa, nearly 20% of the nation’s capacity is closed. Smithfield has also closed plants in Wisconsin and Missouri that produce ham, bacon and sausage from pork cut at the South Dakota facility.

Meat-packing plants have been virus hotspots because large numbers of meatcutters work in close proximity. More than 600 Smithfield employees among 3,700 workers in South Dakota have the virus, while it says a small portion of the 1,700 workers at its Illinois plant have tested positive.

Smithfield has not said if anyone in its hometown plant in Isle of Wight County has tested positive. Of the six outbreaks in the Western Tidewater Health District, five are in nursing homes or other long term care facilities and one is in a correctional facility, according to the state Department of Health.

Changes in the price of meat coming out of packing plants normally show up on supermarket shelves in two to six weeks, said Glynn Tonsor, a Kansas State University economist who makes a special study of the meat industry.

But the coronavirus has introduced lots of wildcards. Wholesale bacon prices, for instance, were hit early on because a large portion of sales are to restaurants and food-service companies, in 18- to 20-pound packages, while supermarket packages are usually for one pound, Tonsor said.

Shifting from one to the other has been a big cost, and that’s reflected in the wholesale price rise.

Prices for live hogs, meanwhile, have slumped. One reason, Tonsor said, is that plant closings, and reduced staffing at plants that are still operating, as employees call in sick, along with new safety procedures in the plants have slowed production lines — fewer cuts coming out of a plant means the packer can’t buy the same number of hogs to go into it.

The other is that last year’s high prices led farmers to sharply increase the number of hogs they bred, he said.

Those high prices for live hogs were reflected in last year’s generally higher wholesale prices for pork cuts — except for loins, U.S.D.A. market reports show prices at this time last year were 27% to 53% higher.

“This is happening because we have a lot of pork, and meat in general, in cold storage,” said Olga Isengildina Massa, an agricultural economist at Virginia Tech. She said supermarket price increases and temporary availability disruptions are a possibility, depending on how extensive the plant closures become.

Workers at some Smithfield plants have complained they were pressured to work when sick, which Smithfield has emphatically denied. The federal Occupational Health and Safety Administration is investigating one worker’s allegation that he never received a face mask, the Milwaukee Journal Sentinel reported.

Meat packing plant employees are deemed essential because of their critical role in the nation’s food supply.

Meanwhile, Gov. Ralph Northam said concern over cases of coronavirus among poultry plants on the Eastern Shore and Shenandoah Valley prompted him to join with the governors of Maryland and Delaware to ask for federal help to coordinate a response.

The Centers for Disease Control is dispatching teams of specialists including epidemiologists and contact-tracers to work on containing outbreaks in the plants.




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