In April USDA released the Annual Livestock Slaughter summary. You’ve probably heard about chicken shortages popping up. We all experienced the impacts of low meat processing capacity last year at the onset of the pandemic. With all of these disruptions, how did total production pan out in 2020?
Dates and Deadlines
5/11/2021 – Carbon Farming in Texas
5/12/2021 – May WASDE
6/3-4/2021 – AFPC Fed Cattle Marketing Workshop
What I’m Reading
Chicken prices rising, supplies low – AgriLife Today
AgriLife Extension to offer three prescribed fire workshops in May – AgriLife Today
EPA administrator won’t return to Obama-era WOTUS rule – Feedstuffs
COVID-19 changed the way consumers feel about their grocery store. It was the first time many of us (for better or worse I am a Millennial) ever saw empty grocery shelves. We probably all faced challenges finding things like toilet paper, fresh fruit, and cleaning supplies. I’m sure I was more lucky than most. These COVID-19 induced challenges highlighted weaknesses in on-time delivery systems and limited-inventory supply chains. We became acutely aware of these supply chain issues as a nation when they hit a particular part of the store; the meat case.
If you’re reading this you’re probably engaged in agriculture in Texas. Knowing that, you’re probably also more in tune with how meat gets from the pasture to the plate than the average American. But I think the absence of meat in the store was a lot more shocking to our unengaged friends than we realize. I had pretty unsettling calls from friends in Austin, Dallas, and Chicago asking about the shortage and how they could manage around it. Most of them stockpiled. Some of them looked for local producers. Similar trends across the country led to increased demand for whatever protein was available. Coupled with plant shutdowns across the country, we began to see those meat cases go empty.
For an overview of the early pandemic’s impact on the cattle market take a look at this article by me and colleagues from Mississippi State and University of Tennessee. I also recommend this article detailing the impacts of packing plants on COVID-19 in rural counties.
The graph above is one we’ve all become familiar with; huge slaughter declines in April, May, and June. The graph is similar for poultry, pork, and lamb. Those plant shutdowns I mentioned led to a collapse in slaughter capacity. So, considering the challenges posed to the meat production system in 2020, how did we end the year? Meat as a derivative product of livestock is an important indicator of the price we can expect for live animals in the future.
First, demand. What are people eating? In general, the picture for red meat and poultry consumption is positive. Consumption in pounds per person was up in 2020, even though where we ate that product changed. I’ve even seen price signals that cooking at home pushed people to try new products, cuts, and even species like lamb and goat.
Estimates of domestic per capita red meat and poultry consumption show very small declines in turkey and pork consumption offset by very small increases in chicken and beef consumption. In total, meat consumption grew very slightly in 2020 over 2019, despite pandemic disruptions.
U.S. Red Meat & Poultry Consumption
It is important to remember that consumption does not equal demand. Demand is actually a function of price and quantity consumed. So, it is important for us to look at expenditures on meat as a measure of demand. Unfortunately, data on expenditures lags slightly. However, you can see from the bar chart below that the trend in domestic per capita expenditures on meat is an increasing one. We are likely to see that trend continue into the near future. As incomes rise from the economy reopening we may see deviations in what cuts people eat and where they eat them, but all-else-equal more money in the consumer’s pocket means more expenditures on meat. I do continue to hear concerns over alternative proteins, but the reality of the moment is they are niche products. Price being equal, consumers still appear to prefer farm raised meat products.
U.S. Expenditures for Meat & Poultry
Now, to production. In April of each year, USDA releases the Annual Livestock Slaughter Summary This year’s report details a system that made up the deficits caused by spring and summer disruptions. The top-line takeaway; total red meat production for the U.S. totaled 55.8 billion pounds in 2020, record high levels.
The chart below shows total meat and poultry production by type of meat. Beef production was up in 2020 over 2019 to 27.2 billion pounds. Pork production rose 2% over the previous year to 28.3 billion pounds. Lamb and mutton production fell 7% to 143 million pounds. The decline in lamb and mutton production is likely contributing to the steep increase in price in the sheep and goat complex.
U.S. suppliers achieved these production increases despite commercial cattle slaughter falling 2% from 2019 through a 29 pounds per head increase in average live weights. Some of the added weight was a function of longer periods on feed for cattle lingering in the system as a result of the previously mentioned COVID-19 disruptions. You can see these impacts in the percent of production graded prime as well.
Acute disruptions from the pandemic in spring and summer had different impacts on different species. For example, though total cattle slaughtered fell, commercial hog slaughter rose 132 million head, up 1% over 2019. The increase in slaughter coupled with heavier weights contributed to the increase in pork produced.
Commercial Meat & Poultry Production
In general, the meat processing sector appears to have recovered to levels that suggest a return to normal economic trends; for cattle this means a decreasing herd size and higher calf prices year over year. I think one note from the Annual Livestock Slaughter report is worth highlighting. Calls for more meat processing capacity, particularly in the cattle and beef sector, may be yielding results. There were 858 plants slaughtering under federal inspection on January 1, 2021 compared with 835 on January 1, 2020. Of the 835 plants operating, 683 (80%) slaughtered at least one head of cattle in 2020. However, the 13 largest plants slaughtered 54% of all beef cattle slaughtered. This means the ‘Big 4’ still hold a lot of market power, but we may have more options for custom harvest. Either way additional competition for fed/slaughter cattle, coupled with a decreasing herd size and stable meat demand, signal support for feeder/fed cattle prices in late 2021 and beyond.