MALLARD, Iowa – Iowa livestock producers face tumbling prices after hundreds of meatpacking workers have tested positive for COVID-19, resulting in Midwest processing plants significantly slowing production or closing.
The situation could turn tragic for pork producers, who face the possibility of euthanizing thousands of animals backed up on farms across the state.
"Producers face horrible choices," said Dermot Hayes, an Iowa State University agriculture economist.
Pork processing capacity has shrunk by about 25%, crushing hog prices, which have tumbled about 50% since January. That's especially troubling in Iowa, the nation's largest pork producer, with nearly 25 million pigs in confinements across the state.
U.S. Sen. Chuck Grassley said Tuesday he's heard estimates that the country has about 100,000 pigs that should be slaughtered each day but aren't. "Apply that over 10 days, and with a million pigs, you’ve got a big problem," the Iowa Republican said in a call with reporters.
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Cattle producers face big losses and tough choices, too, but have more flexibility to hold animals on their farms longer than pork producers do.
Farmers face widespread disruption from the pandemic.
Across the country, dairy farmers are dumping milk and chicken producers are destroying eggs. Lost meatpacking capacity has contributed to falling prices for cattle producers, as well. And corn and soybean prices are below the cost of production at the same time as farmers look to plant crops.
Iowa grain, livestock and ethanol producers could lose an estimated $6.3 billion this year because of the coronavirus, a new Iowa State University study shows.
Craig Hill, president of the Iowa Farm Bureau Federation, said no farmer wants to consider destroying animals. "That’s not what we do," said Hill, an independent pork producer who farms with his son near Ackworth. "But it may be the harsh reality that we face."
"The thought of it causes a huge amount of anxiety," said Hill, who has some pigs that will be ready for processing in a couple of weeks. "Farmers feel rather helpless."
Plants shutting down due to COVID-19
Iowa pork producers lost access to four major pork processing plants at least temporarily as workers became ill with COVID-19: Tyson plants in Columbus Junction and Perry, a Smithfield plant in Sioux Falls, South Dakota, and a JBS plant in Worthington, Minnesota, both just across the Iowa border.
Tyson's Columbus Junction and Perry plants are reopening, but new coronavirus cases are being reported at a Tyson plant in Waterloo, a JBS plant in Marshalltown and at a Prestage Foods plant in Eagle Grove. Some Iowa lawmakers have pushed Tyson to close the Waterloo plant. And processing plants elsewhere across the country also are struggling with COVID-19 outbreaks.
"My calculation is that we need to move 2.5 million pigs a week from now until Memorial Day, but we'll be lucky to process 2.1 million" nationally, given plant slowdowns and closures, said Steve Meyer, an economist at Kerns and Associates in Ames. "We'll have pigs backing up on farms."
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Here's the problem producers face: When pigs reach market weight, they're moved out of a confinement for slaughter, making way for new animals. But now, market-weight hogs remain as hundreds of piglets arrive.
Farmers can juggle both sets of pigs in barns for a while, including putting market-ready pigs on a diet to slow their weight gain, Meyer and others explained.
"You can multiple-stock barns (with piglets) to absorb the shock," Meyer said. "But when that runs out, you've got to destroy market hogs to create space – or you've got to destroy the pigs that are forcing them out.
"Neither of those are choices that anyone wants to make," he said.
The Iowa Pork Producers Association says some members are talking with veterinarians about euthanasia, but the group said it didn't believe producers had started destroying animals.
"We’ve had a breakdown in the supply chain, and pork producers have had to deal with it," said Pat McGonegle, the association's CEO.
Mike Naig, Iowa's agriculture secretary, said producers are asking questions about how to dispose of pigs if they're forced to euthanize them. They're considering rendering, composting and burial.
Producers also would like to take some animals to nearby meat lockers to process for donation to local food banks. But, Naig said, the facilities aren't big enough to handle the number of pigs ready for processing.
"Our producers are in the business of caring for animals," Naig said. "It would be heart-wrenching to go through this, and it underscores the seriousness of this situation."
Wider effects on agriculture
The pandemic is ravaging nearly every sector of Iowa agriculture, the ISU study shows: Iowa ethanol plants, which use a huge proportion of the state's corn crop, could lose $2.5 billion this year. Ethanol prices often move with those for oil, which plummeted below zero Monday, the first time in history, as a dearth of commuters and other travel took its toll.
Pork producers could lose an estimated $2.1 billion, and cattle producers could lose $692 million, the study says.
"Things could get better but also worse than what we show here," said Chad Hart, who along with Hayes is among five ISU economists who looked at the pandemic's impact on agriculture.
That's money "that's coming out of rural Iowa," said McGonegle, the pork producers association's CEO.
Iowa agriculture faces a negative "economic tidal wave," he said. "Losses are going to grow significantly."
Grassley said Tuesday that farmers face "uncertainties that rival the 1980s" farm crisis, which forced many growers and lenders into bankruptcy. Thousands of Iowa food processing and farm equipment manufacturing workers lost jobs.
The U.S. Department of Agriculture plans to send $16 billion directly to farmers to help offset pandemic losses, plus spend $3 billion buying meat, dairy products, vegetables and fruit for food banks.
But Hill said farmers will need more assistance to get through the pandemic, which follows two years of trade wars. The U.S. Agriculture Department in the past two years already has spent $28 billion helping farmers with direct payments to offset trade losses as well as buying commodities for schools and food banks.
"We’ve been good at always producing abundance," Hill said, "but if you let this system fail, you may not have abundance. … Food security is very important."
Justin Reiter, a cattle producer near Cascade in eastern Iowa, estimates that with the current market disruption, his family will lose $250 to $300 per head.
Cattle prices have fallen 25% to 30% since January. National Beef Packing Co. closed its Tama plant for a week because of COVID-19 illnesses in its workforce before reopening Monday.
Grassley and others have called for an investigation into the nation's four largest beef packing companies – Tyson, National Beef, JBS and Cargill – alleging they've manipulated the market during the pandemic to tamp down beef prices even as demand surged.
Reiter is frustrated that cattle prices have fallen while meat processing companies' prices for wholesale beef are near record highs. "The market is broken, and we'd like to get it fixed," he said.
Still, Reiter could be considered lucky. His animals won't begin the trip to Tyson's meatpacking plant in Joslin, Illinois, for about a month. He hopes that by then, capacity – and prices – will improve.
Unlike pork producers, cattlemen have some flexibility in moving market-ready animals to pasture or continuing to feed them in lots, experts say. However, producers likely will be paid less the larger an animal gets.
"Everything is so volatile. It's just hard to know what to do next," Reiter said. "I have a few knots in my stomach. I'm probably not the only one."
The struggle to keep producing
Meatpacking companies, along with local and state public health officials, are pushing to test workers for the coronavirus.
Wright County, Iowa, officials said they asked the state last week to provide nearly 1,000 tests for workers at the Prestage plant and immediately received them. Gov. Kim Reynolds on Monday announced newly formed "strike teams" that are helping companies track down people who have been in contact with infected workers as well as helping make the plants safer.
Companies say they've taken significant action, including taking workers' temperatures as they enter and leave plants, beefing up already intensive cleaning routines, adding space to cafeterias and other commonly used spaces, and creating added distances and barriers between workers on the processing lines.
Many companies also are offering employees higher wages or bonuses for their work.
But Latino groups and unions say meatpacking companies need to do more to protect workers, including adding more space on production lines, increasing testing and providing appropriate personal protective equipment.
Experts expect meatpacking plants to continue to struggle with having enough workers, because they're either sick or have been exposed to the virus.
In states like Iowa, COVID-19's peak is unlikely to hit until the end of April or early May, Meyer said. "I’m afraid it will get worse before it gets better," he said.
The supply-chain disruption means consumers are likely to see higher prices, Meyer said.
The U.S. has had near-record amounts of pork, beef and chicken in cold storage, but a new report this week could show a different picture.
"Cold storage will help, but it won’t get us through this," Meyer said.
Reach Des Moines Register reporter Donnelle Eller at firstname.lastname@example.org.