Supply Chain Disruptions Affecting Decisions by Arkansas Cattlemen
LITTLE ROCK – Disruptions in the food supply chain affect more than the quantity of products on the grocery store shelves. They have forced Arkansas cattlemen and farmers to make financial decisions today that will affect the supply and demand of food over the coming months and years.
The impact of the coronavirus outbreak on meat supplies was the topic of a recent meeting of the Senate and House Committees on Agriculture, Forestry and Economic Development.
They heard from top officials in the University of Arkansas System’s Division of Agriculture. Also, they heard from a representative of the Arkansas Cattlemen’s Association.
First of all, the university’s vice president for agriculture emphasized that consumers should always keep in mind that the coronavirus does not come from any food products.
The speakers discussed erratic fluctuations in prices of meat; some increased supply and some increased demand at different stages of the supply chain.
For example, at the beginning of the coronavirus outbreak, some consumers were panic buying and there was little or no meat on grocery shelves. That drove up demand.
Next, government orders shut down or severely limited the restaurant and food service industry. That drove down demand significantly, because about half of the nation’s beef supply had been bought by restaurants.
Another set of issues affecting cattlemen resulted from bottlenecks at processing plants caused by labor shortages and shut downs. Outbreaks of Covid-19 among employees have caused bottlenecks in the supply chain for beef and pork processing plants.
The drop in broiler chick placements will hurt poultry growers, because they will be able to raise fewer flocks during the coming year.
Arkansas cattle are mainly cows and calves that are sold and sent to feed lots in other states. Feed lots are keeping calves longer because of the bottleneck at processing plants, which is causing a glut upstream in the supply chain.
At the beginning of March, cattle producers saw a drop of $88 a head for 550-pound calves. Other cattlemen and some sale barns have to navigate legal issues with processing plants, which no longer want delivery of cattle which they have contracted to buy.
When prices drop, cattle growers often have to reduce the size of their herds. Those decisions will affect the long-term supply of beef in months and years to come.
The solutions discussed included debt relief for producers who have fixed loans that need to be paid, no matter what disruptions the coronavirus causes.
The cattlemen on the committee discussed legislation to set up a state inspection system for meat, allowing local Arkansas producers greater access to local markets. Tennessee is the only neighboring state that does not have its own system of state inspectors.
State inspections would not be a “silver bullet,” the Cattlemen’s Association spokesman said, but it would benefit Arkansas producers by expanding their markets and creating a buffer from negative trends that disrupt the beef industry on a national scale.
A senator on the committee said he would sponsor legislation setting up a system in which state inspections take the place of federal inspectors.