Source: Rita Jane Gabbett, MEATINGPLACE, 1/31/19


While schools, restaurants, stores and at least a few meat processing plants shut their doors due to unfathomably cold temperatures across much of the nation and particularly in the Midwest, the meat processing industry will likely come out of this polar vortex with little more than short-term disruptions that can be made up for as soon as the temperatures rise.

"Due to the cold weather and concerns about worker and animal safety, six of our plants in the upper Midwest are not operating today," a Tyson Foods spokesman told Meatingplace on Wednesday. "We hope to resume production at these locations Thursday."

In Minnesota, a Hormel Foods supplier also shuttered its doors due to weather.  

“Due to animal welfare and transportation concerns, our third-party supplier, QPP, did not operate on Wednesday and will start a bit later Thursday morning,” Hormel Foods spokesman Rick Williamson told Meatingplace.

Production lost from these types of closures, however, can easily be recouped by adding Saturday shifts, according to Mizuho Securities research analyst Jeremy Scott.  

As for the rest of this week, Sterling Marketing Principal John Nalivka told Meatingplacehe expects to see the typical disruptions caused by trucks dealing with highway conditions and fighting severe weather to bring cattle to the plant and beef product out of it. Plant labor issues are also possible as employees struggle to get to work.

Smithfield Foods issued a statement saying while the company’s facilities and farms remain operational, the company is taking necessary precautions to ensure the comfort and safety of its employees and animals and implementing additional safety measures as-needed. 

In terms of meat processors’ customers, the temporary demand decline from restaurants, hundreds of which closed their doors in Chicago on Wednesday, could be at least somewhat counter-balanced by increased retail demand from consumers stocking up to ride out the week at home, Scott told Meatingplace. 

Restaurants may temporarily lose some of their growing meal delivery business, as transportation firms like GrubHub considered some pauses in service to ensure driver safety in the coldest cities this week.

Livestock impact
Looking at the supply side of meat processors’ business, cold temperatures mean that food animals need more calories to put on weight, decreasing feed efficiencies and possibly resulting in lighter weight animals coming to market.

“The biggest impact is on cattle on feed, as that feed goes toward maintenance rather than gain, which in turn lengthens their time on feed to a market weight. So, this will push closeouts for cattle on feed in those severely affected areas further out,” said Nalivka. 
There could be a higher calf death rate if arctic air persists in areas where calving occurs on the range, where there is little protection from the cold, he said. But Nalivka noted that in the Midwest, where the severe cold is centered, this may not be as much of a problem, as most calving occurs in fairly smaller areas and likely near a barn where cows and their calves could be sheltered.  

This week did see some disruption in the commerce of cattle coming to market, with some livestock auction houses closed midweek.  

“Prices may not be well tested due to likely limited sales receipts the last couple of days,” predicted Lee Shulz, associate professor of economics at Iowa State University, noting some auction markets closed in Iowa and Wisconsin this week. “Receipts are expected to rebound by week's end and next week as auction markets get back to their normal schedules with warmer temperatures.”

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