Meatpacking Plant Closures Breed Uncertainty For Hog Barn Producers
A handful of pork processing plants in the upper Midwest are closed after COVID-19 cases infected their workforce. Crews will clean and disinfect plants in South Dakota and Minnesota with no clear word on when they might reopen. SDPB's Lee Strubinger reports.
The moves will affect farmers at every level of the pork industry.
Adam Krause has a barn full of piglets at his ‘nursery’ operation near Clear Lake, South Dakota.
He’s farmed with his dad for years, and now has an operation of his own. Krause contracts with a company that owns the piglets. When they reach a certain size, they move to a different facility.
But some major Midwestern meatpacking plants have shut down temporarily to respond to COVID-19 outbreaks. That’s creating ripples throughout the industry. The more days a plant is offline, the bigger the ripple.
“What might happen is, we’re going to get a smaller sow herd, not as many pigs being born,” Krause says. “Eventually, down the line, there might not be as many pig spaces needed.”
The Smithfield Foods meatpacking plant in Sioux Falls had one of the hottest outbreaks of COVID-19 cases in the country. There is still no indication when that plant will reopen.
The JBS plant in Worthington, Minnesota--an hour east of Sioux Falls—is also closing its doors.
Both plants slaughter 20,000 hogs a day.
Glenn Muller is the executive director of South Dakota Pork Producers Council. He says the JBS closing will have a strong impact on South Dakota pork producers.
“With the proximity to South Dakota, there’s a substantial amount of hogs that are being harvested at the Worthington plant that originate from South Dakota,” Muller says. “This just kind of compounds the issue of hogs are getting to a heavier weight and we’re having a more difficult time getting them entered into the food chain. Because of the fact we’ve lost another harvesting facility.”
Seaboard Triumph, a packing plant in Sioux City, has two confirmed cases of COVID-19, but hasn’t closed its doors yet.
This kind of slowdown creates a tremendous backlog in the supply of animals.
South Dakota has more than 750-thousand hogs at more than 140 hog barns permitted by the state. Not all hog barns need a state permit.
Farmers see limitations in their butchering options – especially hog farmers in east river.
Lee Shulz is a livestock economist with the Iowa State University extension office. He says everyday processing plants are offline, the supply backs up.
“When you look at the hog industry, bottlenecks and backlogs are particularly acute,” Shulz says. “The hog industry relies on a continuous flow of hogs. When you have market ready hogs, they need to go to market because there’s feeder animals right behind them that need those finishing spaces.”
Shulz says if only one plant in the region closed, the industry could adjust.
But when multiple plants are affected, it leads to a slowdown across the board.
Because of that, hogs are staying on the farm, which has other consequences.
The price for market ready hogs is down. Shulz says the outlook for feeder hogs--those in line right after hogs in finishing barns--is even worse.
“In a situation like this you can see those prices go to effectively zero because there’s no place to put those hogs. That’s what we’ve seen here. Those animals have approached zero value because there’s no place to continue them in the supply chain.”
In an effort to address that supply chain issue, an executive order from Governor Kristi Noem lifts penalties for farmers with more animals than their permits allow.
“These folks have been absolutely devastated by the situation we see,” Noem says. “Where they were planned to, where they had contracts, where they were going to be hauling their hogs the next several weeks have been completely dried up and eliminated.”
Noem says the state is working with the CDC to reopen the Smithfield plant. She says a report from a recent federal inspection should be released soon.
Livestock economist Shulz says letting farmers keep more animals is only a short-term solution. He says that works for younger animals, but…
“As those animals become larger and closer to market weight, that becomes much more difficult,” Shulz says. “That’s one way to help in the delay of those marketing’s is to stock those buildings more densely.”
As for hog farmer Adam Krause, he’s taking it one day at a time.
“It’s hard to make economic decisions on how to move forward, especially in our industry, which is so tightly pipelined with futures and numbers in mind.”
Krause says he’ll have to move forward without that timeline in mind.