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Already Hurt by Tariffs, Pork Producers Get Guidance During COVID-19 Crunch

‘America’s farmers are in a crisis’

Friday, May 15, 2020

As COVID-19 forces some of the country’s largest pork producers to curtail operations, pig farmers throughout the U.S. are facing a chilling choice: reconfigure their entire operation to keep stocks intact; or euthanize thousands of animals and dispose of them on their own property.

According to a recent report from the Time magazineas many as 700,000 pigs a week will soon have to be euthanized. It’s a staggering number, one that has profound implications for the industry—and the people who’ve made it their livelihood. And it’s not been the only setback.

“For the last few years, we’ve been one of the main targets of China’s retaliation to U.S. tariffs,” says Michael Formica, assistant vice president, domestic affairs and counsel for the National Pork Producers Council. “At one point, we were facing a 72 percent tariff in China. U.S. pork producers were at the tip of the trade retaliation spear in China and other countries for more than two years, losing $20 off the price of every hog.”

Even so, business was looking up in 2020. Then came COVID-19.

Crisis control 

While there was a hit to the restaurant industry—where one-quarter of U.S. pork ends up—producers were seeing a boom in grocery sales, as consumers, fearing a prolonged shut down, began stocking up on meat. Also helping the industry, pork farmers and pork-production workers obtained “essential” status, and for a moment, it seemed the pork industry might escape the coronavirus relatively unscathed.

Then, on April 12, the day before Easter, Formica received a call from a colleague at NPPC. Following a string of positive COVID tests, the Smithfield Foods plant in Sioux Falls, South Dakota—one of the country’s largest pork production facilities—was closing indefinitely.

“Once the plants are reopened, farmers are still going to have a massive backlog. If they can’t depopulate their farms, they’re at risk of losing them. Millions of hogs are going to be euthanized.”

“That created a whole new set of issues,” Formica says. “Once they hear that someone in the plant is sick, workers are going to get nervous.”

A week later, another large producer, JBS, shuttered its Worthington, Minnesota plant. More closures soon followed. By early May U.S. pork production had fallen by 40 percent. Across the country, millions of hogs that would’ve normally been sent for processing into food now had nowhere to go.

Hard choices 

While plants are beginning to reopen in hopes that better testing and clear federal guidance will make it safer for workers, Formica says it will take months before the plants are running at full capacity—and not just due the coronavirus.

“Because of the immigration laws that have been passed, plants were already struggling to find workers,” Formica says. “In more rural areas, these are solid, well-paying jobs that can give someone a foothold into the middle class. But its tough work and not everyone wants to do it.”

Taken together, these macroeconomic factors are forcing America’s pig farmers to consider the unthinkable: culling their own animals. Even if farms do everything in their power to maintain stocks—switching to low-protein feeds, building extra pens—Formica doesn’t believe the measures will be enough.

“Once the plants are reopened, farmers are still going to have a massive backlog. If they can’t depopulate their farms, they’re at risk of losing them,” Formica says. “Millions of hogs are going to be euthanized. It’s going to happen … you’re talking about hundreds of millions of dollars in losses for American hog farmers.”

The right way

For the thousands of farmers at the center of the crisis, the challenge now becomes how to ensure the safe disposal of millions of carcasses. Unlike with past outbreaks (foot and mouth disease, for example), farmers will likely have some degree of liberty in how they dispose of the carcasses since there is less risk of disease being spread.

Formica says NPPC staff are assisting hog farmers, together with their veterinarians and state departments of agriculture, on how to safely and humanely euthanize and dispose of the animals. Some of the greatest concerns, he says, are environmental ones—particularly those involving water pollution and public health.

One idea gaining traction involves creating massive compost piles that can eventually be turned into fertilizer.

“The question is, how do you do that efficiently?” Formica says. “You need a lot of land, you need wood chips, you need things that can break down the material. And like any compost bin, you need to turn it. So there are a lot of logistical issues to work through.”

And plenty of legal ones as well. In addition to ensuring compliance with federal state laws on how to euthanize and dispose of the animals, attorneys and producers are engaging with federal agencies, such as FEMA and the Department of Treasury, to secure federal resources.

Restoring the balance

According to Formica, the crisis has shed much-needed light on his industry’s delicate economics. For example, some have questioned why farmers can’t simply maintain their current stocks. After all, if the pigs add more weight, that’s more money for them when production capacity returns. Not so, Formica says.

“Once a pig gets above 325-350 pounds, these plants are no longer able to process them,” he says.

As for changing the feed to slow the rate of growth, Formica is quick to point out that the main source for these grains—ethanol producers who make the feed as byproduct—have had to curtail their own operations, making feed harder to source. What’s more, these same ethanol producers are one of the biggest sources of the CO2 in used in dry ice, a key component to keeping meat fresh inside the packing plants.

“It’s all interrelated,” Formica says. “The bottom line is, there’s a flow of pigs that continues to come to these farms, and they have no place to go. America’s farmers are in a crisis.”

For the latest stories on how the legal community is responding to COVID-19, please follow Vanguard’s dedicated LinkedIn page. The stories are hosted on Vanguard’s blog

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