What the pork industry learned from the coronavirus debacle
COVID-19 dealt a body blow to the pork industry. The year started with many of the largest pig producers expanding sow numbers to meet global demand opportunities. By April, restaurants were closing, packing plants shutting down, and pigs backing up on farms. Today, producers and other experts in the swine industry are taking stock of what lessons are still being learned from the coronavirus pandemic. We’ve gathered some experiences and reflections here.
A crazy time
Rob Brenneman, owner of Brenneman Pork, Washington, Iowa, calls the pandemic, “the craziest time I can ever remember.” On two of his farms in Missouri, where 67 employees live in a company-owned trailer court, 40 tested positive for COVID-19 in the spring. For a few weeks, the company had only seven out of 33 employees working on one farm. “We never missed a breeding, never missed a farrowing,” says Brenneman. “Live born on those sows was the same. We learned how to prioritize what we had to get done on a daily basis.”
Brenneman Pork added 500 sows this past year, for 33,000 total, but cut back on the number of weaned pigs it usually buys. The company did not have to euthanize market hogs, he says, even though most of its pigs are processed at Tyson Foods in Columbus Junction, Iowa, which was hit hard and early by COVID-19.
“That was the first plant to go down, so we had the privilege of figuring it out real quick,” says Brenneman. Almost 100,000 pigs on his farms were backed up, but he managed through it. “We double-stocked right up front. We were fortunate we had six new buildings come on exactly when that happened, so we loaded those up.”
By late August, his pig flow was finally back to normal. “Our first pigs it affected were on April 2 when Columbus Junction closed,” says Brenneman. “I didn’t think we’d be caught up until January. We were fortunate.”
He also slowed pigs down by changing rations. “Once we realized what was going to happen and we stocked up the finishers, then we basically went to corn and DDGs and a little bit of salt just to keep them from chewing on each other,” says Brenneman. “We learned a lot, so I think it is something we can use in the future if we want to go from an April market to a June market. It was educational.”
Brenneman did not see cannibalism with his pigs like some other growers did. “We didn’t slow anything down under 200 pounds,” he explains. “Other guys were slowing them down at 100 pounds and they were just deflating those pigs. It just trashed them.”
Coping with COVID-19 repercussions was educational, says Brenneman. “We came out of it with the opportunity to be better, no question. We learned how to slow pigs down. We learned how to improvise on the sow side. We didn’t wash farrowing rooms for two or three turns and that worked fine.”
On the marketing side, lessons were learned, too. “We learned that we have a good relationship with Tyson,” says Brenneman. “We both had to give and take. It was consistent communication, and it made our relationship stronger.”
Overstocking pigs for short periods didn’t hurt them much, he says. Farm staff learned how to wash trailers faster.
“It was a very, very difficult time, but our team got stronger,” says Brenneman. “The community was awesome; they understood what we were going through. A lot of people volunteered to take a pig here and there and that was great. It didn’t solve the problem, but at least it showed they cared. You find out who your friends are.”
The network of pork producers in Iowa is tighter today, he says. “We helped each other. There are a dozen of us who talked every week last spring. We are all trying to learn from each other, because we are all in the same situation. You realize how few of you there really are. You can talk to 10 guys and cover half the industry.”
Risk management strategies in marketing “saved us last year,” says Brenneman. “When the opportunity knocks in 2021 we definitely want to take advantage of it.”
Scrambling to sell hogs during a pandemic
COVID-19 exposed how important your downstream marketing strategy is, says Pat Joyce, president of Standard Nutrition Services, Emmetsburg, Iowa. “When plants go down and there is no place to take pigs, it’s a really tough situation.”
Standard Nutrition, which has 44,000 sows owned or managed, did not euthanize a pig this year, says Joyce. “We did sell a lot into other markets at highly discounted prices.” The company scrambled to help producers in its system market hogs in small numbers at local lockers and small plants. “We marketed pigs to Tennessee, Florida, Oregon, Washington, and California,” says Joyce. “There were cattle ranchers with yards that would take 1,000 pigs. Opportunists out there who were willing and able to take pigs allowed us to keep barns moving. Our only option would have been to euthanize them because there was no place for them to go.”
The welfare of the workforce and of the animals were the top concerns, he says. After that, what is best for the environment and best economically were considered. “These are heavy things to weigh in the midst of a lot of confusion and unknowns,” says Joyce. “I hope we don’t have to revisit that ever again in my career. That was a pretty tough period of time. I am proud of our team and pleased with the results they were able to attain through that period. It was quite a period, but we got through it.”
Standard Nutrition had a 5,000-sow project planned for 2020 that did not materialize, and another older farm was liquidated, says Joyce. “If you are looking to grow or add sows right now, it better come with some scrutiny in terms of whether it fits within your business,” he says. “New sows right now are not what we need as an industry.”
Too many pigs
The U.S. industry needs contraction because there are too many pigs, says Malcolm DeKryger, president of Belstra Milling Company, DeMotte, Indiana. “We are not getting them out of here, and we can’t eat them all. Until something changes, this is not a very fun industry to be in.”
Belstra has 19,000 sows and did not have to take drastic measures during the pandemic last spring, says DeKryger. “We placed some pigs that we couldn’t find a home for, but we didn’t euthanize a single pig. Happily we dodged that bullet. We didn’t have any finishing pigs that we had to do something drastic with. We had two or three weeks when it was a little bit wonky, tight and short, then things opened back up and we caught up and we are pretty good right now.”
The company did change feed rations to slow pigs down, but DeKryger says, “That was one of the biggest mistakes I’ve made in many years. I don’t think our industry knows very well how to affect the growth of a pig. You are trying to change a well-oiled machine. We only did it for a couple of weeks and I didn’t like it at all. It was the wrong strategy for our company. We hadn’t thought through all the implications on what that would all mean.”
He is concerned about all the pigs in the industry still waiting for a shackle space. “Whether they are going to be backed up or whether the packers can chew their way through them during the course of the next five months, I don’t know. There is a lot of uncertainty on a lot of different levels right now,” says DeKryger.
Read more: Pork Powerhouses 2020
Get meat moving overseas
The U.S. pork industry began this year encouraged and expanding, says Norman Bessac, vice president of international marketing with National Pork Board. Exports were doing well, as was domestic consumption both in food service and retail. Boom. COVID-19 hits. Restaurants close and packing plant workers fall ill with the virus.
Since then, it’s been “very tough from a customer service and disruption standpoint,” says Bessac. The export market is a bright spot. “We believe that the key to bringing the pork value chain back into good health is to sell our way through this and create the value that increases the value of pork and helps that translate into the value of hogs for producers.”
The recent outbreak of African swine fever in Germany has added to the uncertainty in the market as Asian countries have temporarily suspended the importation of German products. The U.S. opportunity that presents itself the strongest is Korea, says Bessac, where German pork was the No. 2 supplier behind the United States. “We probably will get a bit of a small bump there, but I wouldn’t characterize it as a windfall.”
What have we learned from meat chain disruptions?
The COVID-19 disruptions have had a long tale, and it has taken the industry many months to adjust and redirect. Eastern packing plants are still backed up, with plants in North Carolina running at 75% capacity. “Things have stabilized, but there may be pockets that get affected,” says Bessac. “We are better able to deal with these issues and get back up to speed. We are not out of the woods completely yet, but I am encouraged with the performance and the industry.
“We certainly learned as we went through COVID that our biggest strength is the skill and the labor of our workers,” says Bessac. “That can also be our weakness when you have an issue like COVID. The health and safety of our workers is extremely important, and that created some disruption. I can’t think of a time in my 38-year career when I have seen the industry work together to solve problems in a more cohesive and collaborative way. We will come through it stronger, we will learn from it, and be better able to be a strong competitor moving forward.”
How many pigs are still backed up?
There is debate about when the plants will work through the animals that are still waiting to get killed, says ag economist Dermot Hayes, Iowa State University. “That is a crucial number to have because we are looking at trouble between Thanksgiving and New Year’s. If producers could kill some lightweight pigs before that, it would avoid another backlog at plants.”
The European Union had issues at plants, even though those plants were running at below capacity and the workers were cross-trained because the plants are smaller, says Hayes. “They worked through issues without having to back up hogs as we did because they have smaller plants, cross-trained workers, and were lucky enough to have surplus capacity. We were caught at a really bad time when we needed every shackle we owned.”
One outcome of COVID, says Hayes, is the realization that the packing industry needs to move all producers to a cutout-based pricing structure. “I don’t think the packers are interested in operating a lot more of those, because right now it’s better for the packers to have people on the negotiated price. But long term, the industry can’t survive with this kind of volatility. We need something of value that stabilizes risk for both the packers and the producers.”
One thing the industry learned from COVID, says Bessac, is that you have to look at the whole meat chain and how the parts interact with each other. “The producers that are struggling the most are those who didn’t have an agreement or strong marketing strategy. They were on the open market and on the negotiated market. The ones that had a commitment or were on a cutout or other formula were in better shape. That has caused people, no matter where you sat in the chain, to look at how to better manage the risks that you had, so you keep this from having as strong an effect as it did this year.”
The complex meat industry is more like the Titanic than a speedboat, he says. “It’s not easy for us to make supply changes. So when you shock the system and pull out a market like food service, it hurts,” says Bessac. Take bacon, for example. Before COVID-19, about 60% of the bacon business was food service. All of a sudden that shut off and bacon demand shifts to retail. “Those shifts come at a cost,” he says.
Things are improving, says Bessac. “Our industry has demonstrated its resiliency and its creativity. We are not back in balance yet, but we are in a much better place now than we were last spring. How do we learn from this experience and come out a stronger, more focused industry that is even more competitive in the global market?”
COVID-19 has helped the pork industry understand the task it would have if pig movements and export markets were stopped due to ASF, says Bessac. “We better understand now how big of a shock that would be and that we need to be better prepared for that,” he says. The National Pork Board has redoubled investment in contact tracing for pigs, so the industry can get back to normal as soon as possible. “Preventing foreign animal disease is extremely important if not the most important thing as an industry,” he says.
A lot of producers are hedged six months out, says Hayes, “so we could survive a short period of being out of export markets, but if it goes on for years we have to downsize and that is awfully painful. I strongly endorse the Pork Board’s efforts to introduce the contact tracing. If we get ASF, we need to know what pigs that pig was in contact with and we need to euthanize every pig and get back in the export markets as quickly as possible.”
Christine McCracken, executive director of animal protein with global ag lender Rabobank, is focusing on what the industry can do to differentiate pork and create more value in the chain post COVID. “Consumers are telling us with their meat aisle purchases that they are willing to pay for quality and convenience. If you make the case that per capita pork consumption is nearing a peak, we need to look at new ways to add value to the carcass that generate a bigger premium for producers,” she says. “The swine industry has been focused on reducing costs for so long, we have forgotten to look at how to add value and improve the eating experience. If all we do is focus on efficiency, it really is a race to the bottom,” she adds. “The meat case hasn’t really changed much during my 30 years in the industry, but the consumer has and we need to adapt.”
The biggest surprise in the industry for McCracken this year, she says, was how quickly the virus moved through the workforce in our packing plants and how disruptive it was on our boning lines. “It will take months to stabilize the workforce in some plants and that definitely changes the economic argument in favor of automation,” she says. “It definitely made the entire industry appreciate just how critical a stable workforce is in the supply chain.”
Another big aha moment from the pandemic, she says, is how quickly the industry was able to adjust to the plant disruption. “The speed at which resources were pulled together to help producers adjust diets and find alternate channels for their pigs was shocking. The communication from industry leadership in those initial weeks was critical,” says McCracken. “It just shows you that when push comes to shove, the entire industry really can work together to find solutions.”