COVID-19 tangles the supply chain
Annual U.S. pork production in February (latest data) was up 5.6 percent from the prior year and in an accelerating growth trend before the COVID-19 shutdowns dramatically changed the economic landscape. The latest data for U.S. animal slaughtering and processing production — which includes beef, pork and other non-poultry meats — was exceptionally strong. Monthly production in March increased 4.9 percent from the prior month, the most robust increase since 1976.
COVID-19 outbreaks in some slaughtering and processing plants, however, have resulted in the selected closures of approximately 20 facilities. With nowhere to send their pigs, farmers have been culling their herds. The national media are reporting that daily production of pork has been cut by about one third. A recent executive order from President Donald Trump called for meat processing plants to stay open, but it may take time for the supply chain to untangle.
At the same time, the food and beverage industry has been uniquely affected because of a shift to cooking at home. In March, U.S. food services and drinking places lost approximately $19.6 billion in sales because of COVID-19. Meanwhile, food and beverage stores gained approximately $12.8 billion in retail sales. This dramatic shift has posed problems for the food production supply chain, which has been unable to rapidly switch from food service to retail production. Firms that can help smooth this production shift stand likely to profit from the industry upheaval. NP