Resilience Reigned in 2020: How Livestock Producers Navigated the Pandemic
USFR 01/02/21 - Livestock Review
The onset of the COVID-19 pandemic in the U.S. hit the livestock industry especially hard. When U.S. Farm Report visited a Missouri cattle producer this spring, his concerns about the industry were vivid.
“Our largest challenge today is survival,” said Bruce Mershon of Mershon Cattle Company in Buckner, Mo.
COVID-19 cut into outlooks and balance sheets as cattle ranchers, hog producers and dairy farmers watched some demand sectors disappear and prices plummet.
“I’ve been in business for 32 years, and for the first time, we had to dump milk in the fields,” Arnie VanDieden, a dairy producer from Texas, told U.S. Farm Report in the beginning of April.
From Texas to Pennsylvania, the scene was similar: perfectly good milk being dumped.
“Our dairy told us on Monday [we would need to dump milk],” said Paul Hartman, a dairy producer in Pennsylvania. “They gave us a letter that the driver dropped off and said we were supposed to dump our milk for the next two days; they weren't going to pick it up.”
Dairy farmers were forced to dump milk, some for the first time ever, as shock and confusion set in.
“Right away when we heard it, it was kind of shocked,” said Hartman. “all we hear is you know who the milk is in demand, the stores are having trouble getting it and then all of a sudden they're asking us to dump our milk. So that was kind of confusing.
Even with a flood of demand by shoppers during the pandemic, restaurants shutting down in March and April crippled the dairy industry.
“The decline in the food service business has not been offset by the increase in the retail side of business,” said Michael Dykes, CEO of International Dairy Foods Association (IDFA) in April. “So overnight, we saw a paradigm shift and the business turned upside down.”
Reduced Pork Processing
And for pork producers, it was a pinched processing capacity causing unprecedented actions.
“Since meat is a perishable good, you can't just stack it like number two yellow corn,” explained Glynn Tonsor, economist with Kansas State University.
As COVID-19 cases spread through packing plants, processors couldn’t keep up.
“The longer this goes on, the worse it is,” said Tonsor at the beginning of the pandemic. “So, in some sense, it's not as big of a deal as the number of plants for a two or three day period. I think the industry can make like day-by-day day adjustments for a bit, but the duration is a real challenge.”
The protein processing bottleneck didn’t last just days, it went on for several weeks. Tonsor says looking back, the processing pinch started April 11th, when cattle slaughter slipped 17%. But it accelerated quickly, and by late April and early may, both cattle and hog processing was down 35% nationwide.
“It was a grueling turn of events for pork producers, some left with no home for their pigs.
“We’ve never seen these kind of times before, said Chad Leman, an Illinois pork producer who faced tough decisions this spring.
Pork producers like Leman were forced to navigate through unprecedented times during the pandemic as they faced a sudden loss of markets.
“1998 is probably the year that stands out in most pork producers minds when hog prices got down to $8 and you call your neighbors to see if they wanted to come and pick out pigs. But since then, we've never seen prices at that level, and we've certainly never been in a situation where we don't have a home for pigs,” Leman said.
Leman and others took it day by day, doing what they could to slow the growth rate of their pigs.
As the pandemic plagued livestock producers, cattle ranchers didn’t escape the processing pain, either.
“I hate to see us liquidate cows as an industry and shrink our industry, but at this point, guys can’t sustain this.” said Mershon in April.
Cattle producers like Mershon did what they could to stay afloat, knowing the strain may have been too much for some operations to withstand.
“I'm afraid we are going to lose more producers that especially as it lingers out for months, that just financially they don't have the equity to stay,” he said.
An initial study by a group of economists showed the possible price tag of COVID-19 on the cattle industry was $13.6 billion dollars.
“We also have less demand for cattle coming in,” said Derrell Peel, Oklahoma State University livestock specialist in April. “We simply can't process them. And again, depending on how bad that is, exactly where it happens and the combination of plants that might be involved, that could be a very significant disruption in demand and at least for some period of time costs significantly lower cattle prices.”
As the painful pandemic story played out for producers, it also unveiled some vulnerabilities of the food chain.
“I think it does reveal just how much of a bottleneck there is in the processing sector,” said Jayson Lusk of Purdue University. “In good times, these large packing plants serve us well. They efficiently process animals, provide affordable meat to food consumers. But, you know, when you have 60% of all hogs going through the top 15 plants and 60 percent of all cattle go into the top 10 plants, that gets to be a real choke point when you start getting a one, two, three or four, these shut down.”
As the protein processing pinch sent more consumers searching for locally raised and processed beef, larger meat and dairy processors also pivoted quickly, adding in safety measures. And since the first of June, both cattle and hog processing capacity was back to at least 90%.
The story of resilience not only played out among processors, but also producers, especially pork producers able to slow the growth rate of pigs.
“I don't think any of the industry observers really appreciated to any degree was that we could stop and hold these pigs like we have, and that's the reason we haven't euthanize so many,” said Steve Meyer of Kerns and Associates. “Many producers and there are nutritional advisors have been really, really resourceful in this situation.”
As 2020 came to a close, it showed livestock producers did what they could to survive, while saving the animals and the products they produce.