US pork farmers met with ‘financial crisis’ as pandemic rages on

Dive Brief:

  • ​U.S. pork farmers were expecting to have a profitable year after struggling with trade disputes and labor shortages, but the coronavirus quickly changed that outlook. The National Pork Producers Council said hog farmers are now facing a “financial crisis.”
  • The closing of restaurants and other foodservice outlets because of the pandemic are contributing to an estimated $5 billion in losses for the pork industry in 2020. Millions of hogs now have little value and some farmers are killing piglets because falling sales means there’s not enough room at their operation to hold more animals, ​the Associated Press reported.
  • “We remain committed to supplying Americans with high-quality U.S. pork, but face a dire situation that threatens the livelihoods of thousands of farm families,” Howard Roth, a hog farmer from Wauzeka, Wisconsin, and president of the NPPC, said in a statement. “We are taking on water fast. Immediate action is imperative, or a lot of hog farms will go under.”

Dive Insight:

Even as consumers stockpile food at home, demand for many agricultural commodities has plummeted as the virus has forced the closure of foodservice operations. Several industries have taken a hit from the loss of business, with farmers dumping tens of thousands of gallons of milk, destroying vegetables, breaking eggs and now culling piglets. Restaurants, schools, hotels and other businesses purchase about 25% of pork, including nearly three-quarters of bacon produced in the U.S., according to the Associated Press. 

Before the pandemic, the pork industry was hoping to have a better year after a rough stretch. In recent years, pork has faced high tariffs and reduced international sales to China and Mexico, as well as hurdles obtaining workers due to immigration reform. But now the coronavirus has shutdown a huge part of its business and closed processing plants, adding another challenge to the industry. 

Slaughterhouses can process as many as 20,000 hogs a day, but some have closed, temporarily or indefinitely, as the coronavirus has impacted plant workers. Tyson Foods and JBS recently announced they were temporarily closing meat processing facilities after employees tested positive for the virus. And Smithfield Foods closed several plants as hundreds of employees got sick, including one of the biggest processing plants in the U.S. — which produces about 5% of all pork products in the country.

“The closure of this facility, combined with a growing list of other protein plants that have shuttered across our industry, is pushing our country perilously close to the edge in terms of our meat supply,” Kenneth Sullivan, president and CEO of Smithfield, said in a statement at the time.

The entire industry slaughters roughly 10 million to 12 million pigs a month, AP reported. As facilities close, farmers have nowhere to send their animals, creating a surplus and further driving down prices for farmers. 

Last week, the U.S. Agriculture Department said it would spend $3 billion to buy fresh produce, dairy and meat that will be sent to food banks. The USDA planned to give $1.6 billion in direct payments to pork farmers with limits of $250,000 per individual. NPPC’s Roth said in a statement when the aid was announced that it was appreciated but just wasn’t enough to significantly help the industry.

The industry group had asked federal policy makers for equitable direct payments to producers without eligibility restrictions, as well as more than $1 billion in pork purchases by the USDA.

“We fear the lifeline so desperately needed will fall short of what is truly needed,” Roth said. “While the direct payments to hog farmers will offset some losses for some farmers, they are not sufficient to sustain the varied market participants, including those who own hogs as well as thousands of contract growers who care for pigs… Many generational family farms will go bankrupt without immediate financial aid.”

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