Capacity
Food production has been significantly disrupted during the COVID-19 pandemic, especially at livestock processing facilities, where labor shortages and worker protection measures are slowing output in plants around the country and even causing some facilities to shut down. In late April, President Trump signed an executive order designating these companies as critical infrastructure and instructing them to remain open when possible and abiding by CDC guidelines to protect workers. More than two dozen livestock processing plants closed due to issues with COVID-19 for periods ranging from a few days to two weeks or even indefinitely. In some cases, the closures were due to outbreaks among workers at the plants. In other cases, it is a struggle to keep workers who are afraid of getting sick coming into the plant.
This has caused a significant decrease in the slaughter capacity for beef, pork, and poultry. Estimating the overall impact of slaughter capacity is difficult to gauge, however one useful data point is overall weekly slaughter of cattle and hogs. The graph above shows the drastic drop in slaughter numbers for hogs and cattle. Weekly total cattle slaughter has decreased by 38% since its March high and 34% from the previous year. Weekly hog slaughter has dropped 45% from its earlier high and 35% from 2019.
Slaughter rates are returning to near normal and weekly beef and pork production is exceeding year ago levels, but it wasn’t that long ago that consumers were emptying grocery store shelves and processing facilities were closing due to labor and COVID-19 issues – leading to daily dire predictions of meat shortages in the U.S. Due to COVID-19-related labor issues, slaughter facility capacity dropped sharply in April and May. At its worst in early May, cattle slaughter dropped 35% from 2019 and hog slaughter dropped 35% from the previous year. Slaughter capacity has largely recovered to near normal levels — more quickly than most in the industry anticipated. We are by no means out of the woods yet and face a large backlog of animals in the system that will remain with us through at least the early fall. Fed cattle slaughter has settled around 95% of full capacity, but this may be the most that the industry can accomplish given the measures put in place at facilities to combat the spread of COVID-19. Hog slaughter has returned to above 2019 levels and is mostly in line with its pre-COVID-19 trajectory. Maintaining these higher slaughter levels will be critical to working through the backlog of animals.
Congressional Activity
With concern over the continuity of the meat supply, bipartisan legislation has been introduced in Congress called the Small Packer Overtime and Holiday Fee Relief COVID-19 Act. The purpose of the legislation is to alleviate overtime inspection pay for small and medium-sized meat packers. This legislation helps address the same issue without sacrificing USDA Food Safety Inspection Service (FSIS) inspection and alleviating pressure on small and medium-sized packing plants. These plants have seen an increased demand for their services as larger-scale meatpacking facilities have closed or reduced capacity due to worker outbreaks of COVID-19. Under the legislation, meatpacking plants with fewer than 10 employees would be required to pay only 25% of overtime and holiday fees and FSIS would pay the additional 75%. Plants with 10 to 500 employees would be required to pay 70% of overtime fees with FSIS paying the additional 30%. Farm Bureau supports the Small Packer Overtime and Holiday Fee Relief COVID-19 Act.
Introduced on July 2, the Requiring Assistance to Meat Processors for Upgrading Plants(RAMP-UP) Act would establish a program to make facility upgrade and planning grants to existing meat and poultry processors to help them move to federal inspection, which will allow them to sell their products across state lines. The legislation would also require USDA to work with states and report on ways to improve the existing Cooperative Interstate Shipment program. Here is a link to the press release about this legislation from the House Agriculture Committee Chairman Collin Peterson. Farm Bureau supports the RAMP-UP Act.
With decreased slaughter capacity, there has been much attention on HR 2859: Processing Revival and Intrastate Meat Exemption Act (PRIME Act), which would allow for non-FSIS inspected meat to enter commerce. Current federal law requires all meat products produced in the United States and offered for retail sale be subject to inspection by FSIS. The law also allows fully equivalent state programs to inspect according to FSIS standards to apply USDA seals of inspection. Currently, 27 states have state inspection programs that are fully equivalent to FSIS and allow for the intrastate sale of meat products. Tennessee does not have a state inspection program. FSIS or a fully equivalent state program provide ante- and post-mortem inspection of all meat products produced and sold commercially in the United States. The PRIME Act would remove the federal requirement for states to have an inspection program at least equal to that of FSIS for products offered in intrastate commerce. States would even have the option to waive inspection requirements for meat produced and sold within the state whether to individuals, restaurants, or grocery stores. Farm Bureau does not have policy on the PRIME Act and is not supporting/opposing the legislation.
It is important to remember FSIS helps to protect food safety which is key to maintaining consumer confidence and safeguarding animal health. Federal and state inspection programs are a key component in protecting animal health by ensuring every animal offered for commercial slaughter is inspected for signs of disease, specifically animal diseases that pose a significant threat to the entire livestock sector.