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Timeline: COVID-19 and the US poultry industry

COVID-19 pandemic increasingly threatens food supply

Plunging margins and sick workers serve as catalyst for plant closures and leave U.S. poultry companies reeling.

It was beyond stunning to witness how quickly the COVID-19 pandemic became to an unprecedented shock to the global economy threatening the livelihoods of millions of people.

As COVID-19 started exacting a heavy toll on essential workers and unease spread that sheltering at home might last far longer than originally thought, uncertainty spread and turmoil quickly followed.

Plummeting prices

For domestic chicken companies, the first wave of bad news from the pandemic came from a sudden and substantial loss of foodservice business. Downward price pressure was strongest on higher-valued products such as tenders and wings.

The situation appeared dire based just on reported quotes by the U.S. Department of Agriculture (USDA) and Urner-Barry, but anecdotal reports of distressed sales occurring at even lower prices underscored this was nothing short of a catastrophe. Numerous integrators were suddenly incurring losses approaching $0.20 per pound (on a ready-to-cook basis RTC basis) based on LEAP Market Analytics’ estimates.

Sick plant workers

Poor market conditions were enough motivation for production cutbacks, but the effort picked up steam as COVID-19 began spreading rapidly among plant workers.

According to the USDA’s weekly Broiler Hatchery reports, the number of broiler eggs placed in incubators in the US was up nearly 4% from a year earlier in February and March 2020. By the first full week of April 2020, broiler egg sets had already posted a 5% decline from 2019 levels.

broiler-egg-sets-line-chart

Broiler egg sets exceeded year-ago levels by 3.6%, on average, in February and March 2020 but were already posting year-over-year declines in the 4%-to-5% area by mid-April 2020.

Several processing facilities in the U.S. are already running at sharply reduced capacity. This is a fluid situation, however. There is legitimate concerns the broiler industry could soon face multiple closures as the beef and pork sectors did. It appears likely broiler egg sets will be at least 10% below year-prior levels by summer 2020.

Food supply threatened

Drastic cuts to broiler production and elsewhere in domestic agriculture threaten to leave food supplies dangerously short in the weeks and months ahead.

Protecting the health and safety of plant workers and others in food production and marketing is an issue getting much-needed attention now and should have been prioritized earlier on, but growing food insecurity for millions is a problem lurking in the shadows threatening to come to light soon.

The threat feels incredibly daunting given how widespread the impact this pandemic appears to be having on all segments of farming and agribusiness. There is going to be a trade-off between how carefully the well-being of essential workers in the food marketing system is protected and how well a safe and secure food supply is maintained.

It is going to take very strong leadership and innovative thinking to strike that delicate balance and guide us through this crisis with hopefully minimal damage in either direction.

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