How Christensen Farms worked its way through COVID-19
Oh, what a year for the pig business. Glenn Stolt, CEO of Christensen Farms, Sleepy Eye, Minnesota, shares how the company managed through COVID-19 and the effect it has had on the meat supply chain.
SF: When did you first realize the new coronavirus would have an impact?
GS: I flew to Myanmar at the end of February to attend a conference on worldwide pork supply and demand. When I got there, the hotel was checking the temperature of each person, and if you weren’t below the threshold, you weren’t going in the hotel. I sent an email back to the management team at Christensen Farms saying this virus is coming our way, and it will have an impact. To the credit of our team, that request was taken seriously, and we started doing a lot of preplanning. We were already off and running before there were significant headlines or disruptions in the U.S.
SF: How was the company affected by the meatpacking plant shutdowns?
GS: All the plants we deliver to were impacted. We have commitments to Triumph Foods in St. Joe [Missouri], Seaboard-Triumph Foods in Sioux City [Iowa], and several other packers. We were fortunate that the St. Joe and Sioux City plants never closed entirely, but they did drop below 50% capacity at one point. The other plants we work with were heavily impacted, which backed up our system quite a bit.
SF: Did you have to euthanize pigs?
GS: Our priority was getting as many pigs as possible into the food system. Our contract producer partners helped get over 3,000 hogs into the food supply chain that otherwise would have been sacrificed. I cannot thank them enough for their commitment and support. In addition, we donated hogs to employees. Those pigs were processed at a local meat locker.
Unfortunately, like many other companies in this business, we had to make the heartbreaking decision to sacrifice some market-ready animals. For many years, we have worked hard to deliver the right pig to the right packer at the right time. COVID changed the rules. It was important to ensure that we did not compromise the well-being of our animals by exposing them to overcrowding or other unhealthy conditions.
SF: How did that play out?
GS: As we tried to right-size our system to the packing capacity, we had to free some spaces. We utilized a variety of approaches such as making temporary modifications to diets and stocking densities, after getting approval from regulators, and finding alternative avenues to get as many pigs into the food supply chain as possible through donations. Additionally, we accelerated a plan to make a small reduction to our sow base [now 143,000 sows total], which supported a reduction of pig flow and minimized the number of pigs needing to be sacrificed. We took measures not knowing whether they were the right decisions in the long term or not, but we needed to act.
SF: How long did the euthanizing process take?
GS: The process spanned over a couple months, starting in mid-April. I applaud the team for their swiftness in decision-making. We had to be proactive and understand the risks. It was a very, very difficult time and a difficult decision. There was a deliberate approach as to who we would engage in that process and how to support those individuals from a mental health and safety standpoint. It was a well-thought-out and well-executed process under very unfortunate circumstances.
SF: How did you euthanize the pigs?
GS: We used a variety of veterinary-approved methods that were appropriate for the size of pigs. Employee safety was paramount. We were not going to do anything to endanger our employees due to the type, method, or process of euthanasia.
SF: How did you dispose of the animals?
GS: We did some composting, but the majority was rendered. We were striving to minimize waste and convert as much material as we could to usable product.
SF: How many pigs were euthanized?
GS: It was a meaningful amount of pigs. While many companies made decisions at the sow farm, we chose to have a greater focus on market-ready animals.
SF: Is that situation over?
GS: We certainly hope so. We will see how this pandemic unfolds. We pray that we are at the end of it and we don’t have to resume any of that activity.
SF: What happens going forward?
GS: Short term, we continue to manage the pig flows throughout all levels of our system to create points of cushion, knowing that we may have some shortages of pigs that we’d normally flow through our system. Long term, we can’t be overly aggressive and then come up light on our commitments to the plants. It’s a chicken-and-egg thing as to how you manage through this.
SF: Is there still a backup in shackle space?
GS: I have seen industry analyst reports that packing capacity is still running approximately 30,000 animals a day short of its pre-COVID capacities and 2 or 3 million animals are still out there that potentially will never find a shackle.
SF: What has the pork industry learned through COVID?
GS: We have become more intimate with our legislators than we thought we ever would, particularly those who don’t understand the 10-month life cycle and just-in-time supply chain we operate in. They are of the opinion we should just create large gaps in our flow to alleviate the pressure. They don’t understand the financial ramifications of absorbing the enormous amount of fixed costs we have to manage every day, not to mention our obligations to consumers.
SF: Financially, how has this year been for the company?
GS: Being under break-even levels on the market price of animals you do sell, combined with the write-off costs of what we couldn’t sell, in addition to the disposal costs – it all added up to a significant number. We continue to operate the company with a conservative approach, prudent risk management, maintaining costs and expenses as best we can, and being smart about capital expenditures. We have done whatever we can to maintain a strong balance sheet. While COVID has taken a bite out of the apple, it has not taken the apple away by any stretch.
SF: Will you continue to reduce sow numbers?
GS: As an integrated company, we will always adjust our live production to meet the needs of our integrated plants and of customers. Given productivity enhancements, our sow herd may get smaller over time.
SF: Any other concerns?
GS: ASF [African swine fever] is still looming out there. That threat hasn’t gone away, even though it has been largely ignored as we have gone through this pandemic. We have a tremendous opportunity to learn from the supply chain disruptions with COVID to help us be as prepared as possible for that unthinkable day. Labor is another concern. While we can do some automation on farms and in plants, this business is labor-intensive. Attracting and retaining labor is an ongoing challenge.