COVID-19 has been complicated in many ways by uncertainty. Unlike many disease outbreaks, it is not about food safety or consumer confidence with food products – but rather about the effects of social distancing strategies and their impact on food production, distribution and consumer lifestyle factors.
As the pandemic unfolded, meat-processing sectors in Canada and the USA experienced rolling plant closures and slowdowns as industry invested over $50 million to ensure the safety of plant workers and protect against COVID-19. However, measures to address distancing requirements reduced production efficiencies and added costs to every aspect of operations. The reliance on human proximity in meat-processing sectors proved to be the weakest link in the supply chain, coupled with employee interaction away from the processing facilities.
Reduced slaughter volume created supply challenges in the retail sector and an estimated backlog of 125,000 head as of the end of May causing North American cattle prices to plummet as the log-jam grew. The lack of processing capacity and competitive bidding due to temporary closures or reduced output caused livestock in all sectors to back up on both sides of the border in the face of unprecedented demand.
Cow calf producers and backgrounders are able to keep their animals on grass or silage longer, and feedlot operators are able to switch to holding diets based on higher roughage and lower energy rations to slow the growth rate of animals. The type of animal, the weights and age all factor into the quality, value and market destination of the beef in the box. All these measures represent a significant increase in costs and resources for producers to slow down a system designed to deliver market-ready cattle 52 weeks a year.
The shutdown of restaurants combined with consumer buying trends to stockpile food added to the problem resulting in out-of-stock situations in food stores. This added fuel to the perception of a pending food shortage in Canada. Demand increase for beef across the board soared 100% at the highest point, with a huge run on ground beef. Processors could not provide the trimmings needed to keep up to ground-beef demand, resulting in higher-value cuts being utilized, which pushed prices higher and further reduced inventory for other beef cuts also in high demand. Imports of beef increased 14%, YTD May 30 vs. same time last year while exports went down 13% YTD April 30 vs. same time last year.
The pandemic continues to have an enormous and worldwide impact on agriculture and agri-food industries, although it is too soon to know the long-term impact of COVID-19 and how the changes made will affect future meat-processing systems. Canada is better equipped to handle the next pandemic or a resurgence of COVID-19 this fall.
“I hope the meat-processing industry will consider innovation, automation and robotic technologies to reduce the dependency of human contact to reduce the risk and increase productivity,” says Michael Young, President of Canada Beef. “The Canadian beef industry has a very bright future, post COVID-19. We have a high-quality product that’s in high demand in Canada and around the world.”