If pork and beef producers had one image to sum up 2020, it might be a wrench gumming up the gears.
North America’s meat sector became a flashpoint as pandemic conditions put food supply chains to the test this spring. March and April saw a growing list of major meat plants, particularly in the beef and pork sectors, either go down temporarily or be forced to cut production due to COVID-19 cases among staff.
At one point the two Alberta beef plants representing 70 per cent of Canada’s beef-processing capacity were either closed or deeply affected, along with pork plants in Quebec, and a long list of U.S.-based plants that process Canadian livestock.
By April 23, [email protected] Marketing estimated that about 15 per cent of U.S. pork capacity was down due to the pandemic, while another list of plants had slowed production.
Canadian weanling prices went into dramatic free fall as the U.S. pork market clogged. In Manitoba — normally a major exporter of piglets with about three million animals shipped to the U.S. annually — producers watched as U.S. finisher spaces failed to clear. Buyers for open-market piglets dried up. By mid-April, the Manitoba Pork Council said some producers were selling ISO weans at a loss in the cash market. Reports spread of producers taking no price for their ISO weans, while also paying for transport, to avoid culls. Contract prices, while not quite as dire, still took a dramatic hit, the pork council reported.
The hog market in general also saw downturns. Throughout late spring and summer 2020, the Canadian Pork Council estimated their producers were losing around $30 a head.
At the same time, both pork and beef producers expressed frustration with the gap between value of animals going in, and meat going out. While plants struggled with closures and live animal prices tanked, Bloomberg reports in mid-March put wholesale U.S. beef prices at their highest since 2015 as early pandemic buying cleared grocery shelves.
By mid-April, both beef and pork sectors were calling for federal aid. The Canadian Pork Council pleaded for a federal “fire crew” to douse a market in flames, while calls rose for a cattle set-aside program to cover the costs of holding back market-ready animals, similar to what was introduced in the wake of BSE. Feedlots and backgrounding operations were losing hundreds of dollars per head, the Canadian Cattlemen’s Associations argued at the time. Although the sector is largely cow-calf centred in Manitoba, local backgrounding operations backed up those loss numbers.
In early May, the federal government promised $125 million in AgriRecovery for 2020. Of that, $50 million would go to a cattle set-aside, $50 million was earmarked for pork, and another $25 million was left unallocated. The same announcement jumped AgriRecovery coverage from 70 to 90 per cent of losses. Those funds would be available regardless of if provinces pitched in (normally, provinces trigger AgriRecovery and contribute 40 per cent of program costs), although provinces would have to indicate they were participating. A further $77.5 million was slated for processors to update their facilities to protect workers against COVID-19.
Critics argued that those numbers were insufficient to the need. The pork sector had previously asked for $20 per head in compensation, while the beef sector estimated that 100,000 animals were still backed up to the farm gate at the time. The Canadian Federation of Agriculture had also asked for $2.6 billion in aid.
Both Alberta and Saskatchewan quickly confirmed their participation in the AgriRecovery program, as well as committing to fund 40 per cent of program costs.
The Manitoba government eventually opted into the cattle set-aside as well, although the resulting $2.5-million program was solely funded by the federal government.
Local processors join casualty list
Manitoba’s processors were not immune to virus concerns, although staff cases did not lead to shutdowns.
In August, workers at Brandon’s Maple Leaf Foods first tested positive for COVID-19. In late August, the union representing Maple Leaf workers in Brandon estimated about 300 workers were in self-isolation and 74 cases among staff had been confirmed. In the face of requests by the union to close the plant, both the province and company repeatedly argued that cases were exposed outside of the workplace. Prairie Mountain Health, and Brandon in particular, were hotbeds for COVID-19 at the time.
The Manitoba Pork Council said at the time that contingencies were underway to find space for the pigs, should the plant go down.
Looking into 2021
The pricing fallout of the COVID-19 pandemic on pigs may very well spill over into 2021. Pork industry groups, including the Manitoba Pork Council, have met with some of Canada’s major processors with an eye to revamping the pricing formula for live hogs — a move that was, at the least, accelerated by the gap between live animal prices and cut-out values earlier this year.
The phrase “cut-out value” has been a repeated concept in those producer discussions. A formula leaning more heavily on cut-out values would keep live animal prices and meat value moving in the same direction, some in the industry have argued. HyLife Foods actually introduced such an option earlier this year, and has seen widespread adoption from producers selling to the company, HyLife Foods representatives have said, although they noted it did mean they have paid more for those pigs. Those options, as well as the Quebec system — which includes a cut-out value price floor — will likely continue to draw attention as talks between processors and industry groups continue.
The market issues of 2020 also have the sector wondering, again, if it’s time to divorce the Canadian hog market from the U.S. With much of the market hit this year linked to prices south of the border, the COVID-19 pandemic has breathed new life into the concept of a Canadian-based price, although leaders of the pork sector have pointed out that there might be little difference between a U.S.- and a Canadian-based price.
The COVID-19 pandemic may also not be done with the meat sector yet.
In October, news broke that another outbreak was underway at Exceldor Co-operative, a poultry plant in Blumenort in eastern Manitoba, as reported by our staff member Geralyn Wichers. According to the union representing those employees, two workers had died of COVID-19 as of Nov. 1 and confirmed cases had reached several dozen.
In Quebec, meanwhile, Olymel once again found itself fighting COVID-19 cases in two plants in October, but had no plans to close.