The US meat industry has been crippled by COVID-19, but that’s unlikely to happen here

A series of coronavirus outbreaks has crippled the United States’ meat supply chain, but industry leaders in Australia say the same situation is unlikely to unfold here.

In the US, a number of major meat processing plants have had to shut down, leading to shortages of some products on one side of the supply chain and animals being euthanased instead of processed on the other.

In Australia, a COVID-19 cluster at the Cedar Meats facility in Melbourne’s west has seen case numbers in Victoria spike over the past few days.

But key differences between the Australian and US industries mean coronavirus is unlikely to cause the same issues here.

What’s going on in the States?

By last Friday, the US Centers for Disease Control and Prevention (CDC) reported 4,900 out of an estimated 500,000 meat processing workers had tested positive for COVID-19.

Twenty people had died.

In the same report, the CDC said workers had tested positive in 115 facilities across 19 states.

Tyson Foods, which has closed three of its six facilities, recently told investors pork processing had dropped by 50 per cent.

A Smithfield Foods plant in South Dakota, which was the epicentre for one of the largest outbreaks of coronavirus in the US, has just started to reopen.

The reason these shutdowns have such a huge effect in the United States is because the meat processing industry is highly concentrated.

“Just two firms control over 40 per cent of the market in beef and pork, and nearly 40 per cent of the market in chicken,” Michigan State University Professor Phil Howard said.

Decades of mergers and takeovers have created vertically integrated, highly efficient meat production systems that have not stood up well to the disruption caused by coronavirus.

In the US, milk is being dumped, vegetable crops are being ploughed in, and animals are being euthanased at the same time as long lines form at foodbanks.

“These companies have supply chains that are ‘just-in-time’ — so if there’s a bottleneck they completely fall apart,” Dr Howard said.

“Meanwhile the foodbanks are a way for the big food companies to offload excess product, and the US Government pays them for that, but the system was never designed to get food to everyone who is hungry.”

Lamb ribs and lamb steaks sit in a butchers counter with price tags above them
Outbreaks of coronavirus won’t disrupt Australia’s meat supply chain, according to the Australian Meat Industry Council.(ABC Rural: Clint Jasper)

Why that won’t happen here

Australia’s meat processing industry is far less concentrated than in the US.

Market research firm IBIS World reports that in 2019–20 “the industry’s four largest players accounted for over 40 per cent of industry revenue”, while the remining share was made up of minor players.

Regardless, part of the reason meatworks in the US have become coronavirus hotspots has been due to the close proximity of workers during shifts and, as the CDC noted, the fact that many of those workers share transport to and from the plant.

Australian Meat Industry Council chief executive Patrick Hutchinson said countries like Australia and New Zealand had adopted stricter control measures in the community and hygiene measures in meatworks.

“Three months ago all processing facilities doubled their hygiene and screening procedures, moved to allow essential workers on site, and 90 per cent of them had early plans to deal with an outbreak,” Mr Hutchinson said.

“So with all of those things in place through the industry, coupled with what was happening in the community and the geographical spread of processing facilities, it ensured that we could maintain the supply chain.

While some supermarkets had to ration supplies, Mr Hutchinson said 70 per cent of Australian butchers had introduced online shopping and delivery.

Fourteen men standing on the catwalk in the sale yards selling pens of cattle.
Industry analysts expect producers to send less livestock to market this year.(ABC Rural: Cara Jeffery)

Will Australia run out of meat?

No, but it is unlikely to get cheaper.

We started the year with the smallest cattle herd since the early 1990s and the smallest sheep flock since 1904.

In 2019 Australians were already paying record retail prices for beef and lamb, according to the Red Meat Advisory Council.

Because of the drought, producers were sending livestock off to market in droves, which would usually send prices south, but high export demand meant prices stayed firm, breaking saleyard records right up until March.

But rainfall this year means that, instead of sending livestock to market, producers will instead choose to rebuild those numbers, which makes big price drops unlikely.