By Megan Webb Ph.D., Contributing Editor
The only thing constant in life is change. Cattlemen are no strangers to transforming challenges into opportunities and shifting the paradigm for improvement. Let’s recall the “transportation revolution,” beginning in the 1890s when railroads replaced weeks-long cattle drives, and then trucks displaced railroads for transporting cattle. Later, local auction markets made viable by trucks and trailers caused terminal markets to go out of business. Finally, packing plants moved from terminal markets closer to new commercial feedyards. During each of these transitions, cattlemen adapted, overcame and persevered to create a dynamic supply chain fitting the reformed business model.
The past year has undoubtably produced industry-wide impacts and exposed the fragility of America’s meat distribution system and the volatility of the market when it is in high demand but disrupted from the traditional form. Recall last August when Tyson Foods’ Holcomb, Kan., plant caught fire, causing volatility in wholesale beef and cattle prices, and market pressure for producers. Now, six months after the first community transmission of COVID-19 was detected in the U.S., producers have not only felt, but experienced just how fragile the nation’s livestock market can be.
Packers – are they too big to fail?
You may be familiar with the old saying, “you’ve got to make hay when the sun shines.” Well, that’s exactly what packers are doing while health professionals are using the Centers for Disease Control/Occupational Safety and Health Administration (CDC/OSHA) guidelines to assess meat facilities’ COVID-19 control plans to aid in employee safety. More than 24,000 cases of coronavirus were found among meat-packing employees. But the plants had to remain open following federal orders of being a “critical infrastructure.” Cattlemen should be thankful for the heroic acts on the harvest floor, processing and packing lines that have helped the beef industry regain stability and strive forward. Can you imagine wearing a mask and additional sanitary equipment all day in addition to your normal personal protective equipment while working on a hot harvest floor and keeping up with the chain speed? With the federal executive orders and the CDC supportive guidance, I think it’s worth asking if packing plants are really too big to fail? They, too, are dedicated and passionate, just like cattlemen.
Proper planning prevents poor performance
During the whiplash of 2020, producers and agriculturalists, also deemed “essential,” pulled themselves up by their bootstraps and toiled on. Through the continuous toil, we have to remember than an ounce of prevention is worth a pound of cure. I’ve noticed more consideration among ag entities preparing farm workers to ensure their safety by conducting employee trainings, increasing personal protective equipment, installing office sneeze guards and implementing sanitization practices. The CDC released guidance that encourages ag businesses to create a COVID-19 assessment and control plan to prevent and slow the virus’ spread.
Taking the time to create and provide agricultural employees a written plan with actionable steps can aid in employee comfort so they remain at work and, ultimately, offer more business stability. A well-documented plan can also come in handy for local health departments for the purposes of contact tracing and OSHA review.
In addition to safety guidelines, there are several programs that have been passed to support ag businesses, including the Paycheck Protection Program, the Small Business Administration Economic Injury Disaster Loan Program and the Coronavirus Food Assistance Program. It would be worth the time to take a look at each of these programs to determine if and how your ag entity may qualify; they are timely and handy in offsetting expenses incurred during business model shifts.
April and May 2020 beef processing was almost 50 percent below 2019 and placed enormous pressure on the beef supply and fed cattle market. Beef processing increased in June and July and became more stable. Harvesting the backlog of cattle will take place during the rest of 2020 and perhaps into 2021. Cattle prices have been higher than in previous months as slaughter capacity recovers. According to the USDA Economic Research Service Agriculture Outlook Report, July slaughter estimates were more than 680,000 head, surpassing 2019 estimates for that same month by 10,000 head. Beef production is about 6 percent below 2019 and is expected to exceed 2019 by 3.4 percent as 2020 comes to a close. Other countries, including Brazil and Europe, have been struggling with similar disruptions.
Despite the supply chain disruptions, the remainder of 2020 beef export numbers are optimistic, given that the U.S. is well positioned to trade with Mexico and South Central Asia as they begin reopening. During the height of the U.S. pandemic in April, Japan trade remained strong due to the newly implemented U.S. Japan Trade Agreement. Taiwan and China also remained steady as foodservice quickly learned how to navigate catering and hospitality safely.
Focusing on what we can control and prioritizing how we invest our time will help ease daily tension. Some may devote more time for family and at-home projects, secure more feed or hay resources, source more bunk or grazing space, or refocus on what is essential to operation survivability.
Determining how to market and being rewarded for those decisions is innovative. Permitting the shift in an operation to be innovative during these stressful times is important. Charles Darwin stated, “It’s not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.”