{"id":1214,"date":"2020-04-17T15:56:56","date_gmt":"2020-04-17T15:56:56","guid":{"rendered":"https:\/\/agrilife.org\/agnewsandviews\/?p=1214"},"modified":"2020-04-17T16:02:28","modified_gmt":"2020-04-17T16:02:28","slug":"covid-19-and-impact-on-meat-and-milk","status":"publish","type":"post","link":"https:\/\/agrilife.org\/agnewsandviews\/2020\/04\/17\/covid-19-and-impact-on-meat-and-milk\/","title":{"rendered":"Meat and Milk Producers Impacted by COVID-19"},"content":{"rendered":"
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\"Winter-born
A winter-born calf with its mother standing by at the Texas A&M AgriLife Extension Service Center in Overton. (Texas A&M AgriLife Extension Service photo by Adam Russell)<\/figcaption><\/figure>\n<\/div>\n

Disruptions to the nation\u2019s supply chain and final destinations for meat and milk products due to COVID-19 are causing anxiety from farms to markets, said a Texas A&M AgriLife Extension Service<\/a>\u00a0expert.<\/p>\n

David Anderson, Ph.D., AgriLife Extension economist, College Station, said the nation\u2019s food supply chain, the most efficient and reliable farm-to-market system in the world, is dealing with unprecedented disruptions and uncertainty.<\/p>\n

Anderson said empty shelves at grocers and retailers are a result of distribution, not low supplies. Production of products like ground beef and milk is the same, but unexpected demand has strained the logistical farm-to-market process.<\/p>\n

Anxiety has\u00a0stirred panic-buying<\/a>, as seen with meat products and household items like toilet paper, he said.<\/p>\n

\u201cIt adds an element of anxiety that Americans are not used to when they see the meat section empty,\u201d he said. \u201cBut we are still producing record amounts of chicken, pork and beef. In reality, it is just a temporary inconvenience that we are not accustomed to.\u201d<\/p>\n

Dairy disaster as demand falls<\/strong><\/h3>\n

Two major destinations for milk and milk products like cheese and butter \u2013 schools and restaurants \u2013 are gone because of shutdowns across the nation.<\/p>\n

Orders for tens of millions of single-use milk cartons stopped when schools across the nation emptied. Orders for bulk cheese and butter became a fraction of what they had been as \u201cstay-at-home\u201d orders temporarily shuttered many restaurants or reduced them to takeout only.<\/p>\n

Many dairy producers only have one choice \u2013 dump their tanks \u2013 because milk is perishable and their cows must be milked daily, Anderson said.<\/p>\n

Anderson said prices for milk have collapsed.<\/p>\n

\u201cYou have a highly perishable product with no place to go,\u201d he said. \u201cIt\u2019s a complete disaster.\u201d<\/p>\n

Bleak milk market during peak production<\/strong><\/h3>\n

The U.S. Department of Agriculture Agricultural Marketing Service April 3 report on the state of U.S. dairy markets was bleak. The report noted \u201cthe pandemic is creating anxiety among nearly all dairy market participants.\u201d Markets for most dairy products are depressed, though some products like organic milk and butter realized demand and price increases.<\/p>\n

To make matters worse, this time of year is known as the \u201cspring flush,\u201d a time when dairy cows produce the most milk of the year, Anderson said.<\/p>\n

\u201cYou\u2019ve got good grass in pastures and weather improves, and so cows are producing more milk,\u201d he said.<\/p>\n

Anderson said the COVID-19 is showing Americans how complex the farm-to-market system can be. He said it is a logistical impossibility to quickly divert millions of pounds of milk from 8-ounce, single-serving cartons destined for schools to gallon or half-gallon cartons in grocery stores.<\/p>\n

Dairy operators had been seeing an upward price trend following several years of \u201cterrible milk prices,\u201d Anderson said. Bad prices led to many dairy closures during that time.<\/p>\n

\u201cDairy farms were seeing prices recover recently, and now this,\u201d he said. \u201cThis is looking pretty bad.\u201d<\/p>\n

Meat prices for producers and consumers<\/strong><\/h3>\n

Anderson said prices should fall with the costs of production. Lower fuel costs for production, processing and distribution should ripple into lower prices at checkout.<\/p>\n

But so far, prices on products like beef have surged at grocers who are dealing with unexpectedly high demand, he said. Prices for wholesale choice beef was up 25%, from $2.05 to $2.57 per pound.<\/p>\n

\u201cThat is all driven by grocers and all their purchases to keep up with these rushes on products,\u201d he said. \u201cThey will come back down as purchases slow down and some calm returns or when people have filled their freezers and feel they don\u2019t need as much meat.\u201d<\/p>\n

The ripple effect of higher beef prices at grocers hasn\u2019t reached beef cattle operations, Anderson said. It probably won\u2019t because of changes in a range of markets that utilize different cuts from beef, pork and poultry.<\/p>\n

Anderson expects \u201chigh value\u201d animal cuts like filets in beef to go down as \u201clower value\u201d cuts like chuck and round that go to ground beef stay static or go up due to demand.<\/p>\n

Chicken wings, a high-value poultry cut, took an immediate dive due to COVID-19 closures, Anderson said.<\/p>\n

\u201cYou think, no sports, no restaurants, well, that\u2019s pretty much the chicken wing market,\u201d he said. \u201cThe prices have collapsed. But then we are seeing and will probably continue to see demand stay strong for historically lower priced cuts.\u201d<\/p>\n

Filet and ribeye steaks and bacon will likely go down because demand from the food-service industry has plummeted, he said. This could mean good deals for consumers, but the end result will be lower sale prices at market for producers.<\/p>\n

\u201cThe whole value of the animal goes down when the prices for these high-value cuts go down,\u201d he said. \u201cThat\u2019s bad for farmers and ranchers but might help consumers. I don\u2019t know that we\u2019ll see grocers drop prices on lower value cuts because there\u2019s no incentive if people are buying them up. But consumers could see good features on higher-value cuts in the future.\u201d<\/p>\n

Complex system deals with uncertainty<\/strong><\/h3>\n

Overall, disruptions by unpredictable demand has created volatile market prices and strained processing\/supplier logistics, Anderson said.<\/p>\n

\u201cWe have a complex system that we overlook unless we are inconvenienced by it,\u201d he said. \u201cA big part of the system is getting items from production to market. Trucking, processing, storage, all these steps in the total system are easy to take for granted until normalcy is disrupted.\u201d<\/p>\n

Anderson said exports to other countries like China add another wildcard to the supply\/demand guessing game for producers and distributors. Products like pork were poised to see notable export increases because of Chinese demand.<\/p>\n

But Anderson said China could expect second and third waves of economic problems due to lower demand for products the country produces for global demand.<\/p>\n

\u201cThere are just too many variables in play to predict how the situation plays out economically because the situation with COVID-19 is so fluid,\u201d he said. \u201cWhat I do know is that America\u2019s farmers and ranchers are doing what they\u2019ve always done to meet consumer demand now and in the future. At some point, the rush is going to end.\u201d<\/p>\n

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Adam Russell<\/p>\n<\/div>\n