"Too big to fail" scenario shakes the North-American meat industry
The North-American meat industry is facing a sectorial crisis as the disruptions in the supply chain are resulting in a meat shortage in the market. Too big-scaled operations are now considered too fragile to stand the storm created by the coronavirus outbreak. In the US, pork and beef processing plants are operating at 70% of their capacities, more than 13,000 workers are presumed to be virus carriers and many others have choose to stay at home during this period.
In Canada, beef processing plants are falling following the same model seen in the US and the situation could go even worse. Canada has 22 slaughterhouses and cutting plants but 85% of the cows slaughtered in the country are entering only three major plants owned by Cargill and JBS, according to Financial Times. The need for a change in the supply chain is no longer a matter of "if" but "when". As COVID-19 thrives in crowds one solution to end the long line of disruptions is to have smaller units in the field.
As major exporters of beef and pork, the US and Canadian plants have special lines for cutting parts that meet the requirements in other markets, such as Asia. These are the most crowded lines in a meat factory in North-America as export operations are getting the big bucks. "The part that has the most people is the cut up. On the slaughter side, the people are much further apart and it’s easier to pull them apart, but on the cut-up side they’re shoulder to shoulder," explained Temple Grandin, professor at the Colorado State University. For the industry to change it may take years but the need for improvement is clear. "Will the industry be changed by this? I think there’s no doubt about that. t’ll have to change to mitigate the spread of infection between employees which is something we’ve never had to think about before. Can we do it within the plants we have? I don’t think we know that yet," answered Mike von Massow, a food economist at the University of Guelph.
Shorter supply chains and automation may solve some of the problems but time is needed to make these changes. Experts are expecting radical measures to be adopted in the future, reshaping the whole industry where possible. "There is an awareness that what plants looked like pre-COVID isn’t what they will look like when this is over,", stated Chris White, president of the Canadian Meat Council. For now, producers in both countries brace for big losses due to plant shutdowns and meat prices in retail are spiking. Analysts are expecting the food shortage to be present in the North-American markets until July.
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