The shutdown of a Smithfield Foods Inc. hog-processing plant in Sioux Falls, South Dakota, affects hog producers in three states and threatens the availability of 18 million servings of pork a day.
The plant, which has 3,700 employees, is linked to hundreds of cases of coronavirus in the state. Laid-off workers are being paid for the next two weeks, Smithfield said.
The processing plant gets 30%-35% of its hogs from 550 independent family farms in South Dakota with the rest from neighboring Iowa and Minnesota, said Glenn Muller, executive director of the South Dakota Pork Producers Council.
“Insecurity in the food supply has not been a concern for this generation,” Muller told FreightWaves. “Until now, we have had little concern about availability.”
The plant, which is responsible for 4%-5% of U.S. pork production, will close until further notice, Smithfield said Sunday. A few workers will clear inventory of processed pork amounting to millions of pork servings on Tuesday.
When the plant is operating at capacity, it takes in 100 semi-trucks daily of hogs weighing about 280 pounds each.
“The closure of this facility, combined with a growing list of other protein plants that have shuttered across our industry, is pushing our country perilously close to the edge in terms of our meat supply,” said Kenneth Sullivan, president and CEO of the Smithfield, Virginia-based company. “It is impossible to keep our grocery stores stocked if our plants are not running.”
At greatest risk are livestock farmers like Shane Odegaard, whose family farm in Preston Lake, South Dakota is about 90 miles from the Smithfield plant.
After a difficult 2019 because of bad weather and the U.S.-China tariff dispute, Odegaard is financially behind. In recent weeks, the price per hog he receives has dropped to about 25% of the $140 to $160 before the coronavirus outbreak.
Odegaard raises about 15,000 hogs a year from birth to market.
“Our barns hold about 1,200 to 1,300 head of pigs,” Odegaard told FreightWaves. “That’s how many pigs we raise over 28 days. For every pig that goes to market, there’s one being born that needs a place to go.”
A semi-truck scheduled to pick up 170 of his hogs last week canceled because of a shortage of labor at the Smithfield plant, That left Odegaard with two problems: lost revenue and a backup of pigs. Two more loads scheduled this week are in jeopardy.
Odegaard’s options are few and unpleasant.
“There’s other processing plants out there, but they are running full capacity or nearly full capacity,” he said. “When you take that Sioux Falls harvest [of] roughly 19,000 pigs a day, that’s a lot of pigs that need to find a different place to go. We just don’t have the capacity to offset those pigs that can’t go to Sioux Falls.
“If the pigs can’t be sold or marketed and harvested for food … worst-case scenario, we will have to euthanize them,” he said.
If it comes to that, the choice would likely to be sacrifice newborn piglets rather than market-ready hogs.
“These piglets have about $30 invested in them,” said Steve Meyer, a consulting economist with the National Pork Board. “It goes against every fiber of our being to kill these animals, but if there is going to be euthanizing, those are the animals that will be euthanized.”
However, most pig farmers have more square footage than they use and could “double and triple stock” their barns temporarily, Meyer said.
South Dakota farmers raise about 3 million hogs a year, but the Smithfield closing is a regional issue because hogs come from other states.
“We know that a lot of hogs are shipped to packing plants via semi-trucks,” said Bryan Humphreys, vice president of producer engagement for the National Pork Board. “While they may not be hauling those pigs to the harvest plants, they may still be moving those animals.”
Separately, Tyson Foods suspended production at a large processing plant in Columbus Junction, Iowa, on April 6 for a week. More than two dozen workers at the southeastern Iowa plant had tested positive for coronavirus.
Tyson did not return a request Monday from FreightWaves about the status of the plant.
Consumer demand for convenience in getting food is a mismatch with the current environment, Muller said.
“We haven’t seen that since the Dust Bowl or the Great Depression when everybody went inward and produced food on their own farms and supplied their friends and neighbors in the city.
“I don’t foresee that we’ll get to that point,” he said. “The main concerns are a lot different. [Consumers] demand convenience. We need to make sure we’re able to supply their needs and that could be challenged if we continue down this path.”
Muller’s concerns are not yet being felt at one food rescue organization in Detroit, whose fleet of straight trucks is still picking up and delivering 138,000 pounds of surplus food per day six days a week for distribution to needy families.
“We have redundancy in our partnerships,” Kirk Mayes, CEO of Forgotten Harvest, told FreightWaves. “But if there is continuing stress on the overall food system and challenges with the supply chain, it is going to affect everybody. Ultimately, if we don’t have food, we can’t help people.”