Pandemic has rattled — not broken — Canada’s meat supply chain, but store prices could still climb
In better times, Canadians didn’t have to give much thought to buying their favourite cuts of meat in the coolers of their local grocery store.
The ease of making such purchases belied the complex system behind it, from farms to feedlots to processing plants and retailers.
But the last several weeks have put this supply chain to the severest of tests. COVID-19 has afflicted workers and spurred processors to slow or temporarily halt production. The resultant backlog of animals has many farmers fearful for their livelihoods.
Yet experts say the system has managed so far.
“I would argue the meat supply chain — and, in fact, our food system generally — has been robust and resilient and bent, but didn’t break, in the face of an unprecedented shock based on demand,” said Mike von Massow, a food economist at the University of Guelph.
“We’ve continued to have meat available on grocery store shelves, and we have not seen yet significant price appreciation.”
There’s some optimism this will largely continue to be the case. Shortages are not expected. But the unpredictable nature of the pandemic has offered few guarantees.
Temporary plant closures are anticipated to be an ongoing challenge in North America. Operating costs are also expected to increase throughout the food system with added precautions for employees and production slowdowns.
Some say this could put upward pressure on prices for a number of goods at the grocery store, though how much appears to be an open question.
There are no reported cases of COVID-19 being spread through food consumption, but the impact on the agrifood industry has still been profound.
First, food supply chains were shaken as demand from the restaurant sector crumbled overnight amid pandemic restrictions. Then, the spread of the virus brought operational hurdles in trying to keep essential goods moving. Those challenges were underscored by the temporary shuttering of meat processing facilities in Canada and the United States.
In Canada, this includes the outbreak at the Cargill beef processing plant near High River, Alta., where more than 940 employees tested positive for the virus. The outbreak has also been linked to three deaths, including two workers and the father of a worker. Pork and chicken processing plants have also had to close for a time.
North America’s market for beef and pork are also closely intertwined, meaning shutdowns of U.S. operations also have a ripple effect on Canadian farmers.
By and large, however, the flow of product for Canadian consumers hasn’t stopped.
Chris White, president of the Canadian Meat Council, which represents meat processors, said while all plants are running slower because of mitigation efforts, they are still producing a sufficient supply of product. When plants have gone down, they’ve come back quickly, he said.
But the slowdown is having an impact on the system.
Sylvain Charlebois, a professor in food distribution and policy at Dalhousie University in Halifax, said interruptions at the processing plants will have some grocery stores looking to new suppliers for meat or ration per-customer meat sales.
Bryon Feener, director of national merchandising, meat and seafood for Sobeys, says as a result of the recent closures and reduced operations across Canada’s beef and pork suppliers, grocers are experiencing an interruption to their usual Canadian supply.
Higher prices in short term
“Consumers can expect to see higher beef and pork prices across Canadian grocers, but this is expected to be a short-term situation until supplier facilities return to normal operations,” Feener said in a statement to CBC News on Friday.
Feener said the supply chain is “varied and strong,” with customers looking for beef and pork still having plenty of options.
There are a few wild cards when it comes to consumer prices.
Guelph University’s von Massow said if plants close for longer periods or experience significant reductions in capacity, and the same happens at two or three U.S. operations, there could be upward pressure put on prices.
“But unless circumstances change substantially, I don’t think that we’re going to see 25 per cent increases in price or anything like that,” he said. “We might see a couple of percentage points.”
Charlebois, meanwhile, said meat prices had been on the rise at the start of the year and he expects they will, in fact, stabilize over the next little while.
He said Canadians who eat meat have options to buy beef, pork or chicken. Chicken is a pretty stable commodity in Canada, and so are the prices.
“If one product is too expensive, consumers typically would move on,” Charlebois said. “People will always be able to find something that is affordable to put on the barbecue.”
But it’s the arrival of the barbecue season that Barry Prentice says could push grocery store prices for beef higher this summer, especially if there are significant U.S. plant closures.
“There’s a whole bunch of people out there with a barbecue that want to use it,” said Prentice, a professor of supply-chain management at the University of Manitoba.
“I think we’ll see the price of beef certainly being bid up.”
‘It’s a sad deal right now’
Regardless of how busy barbecue season becomes, beef and pork producers may be dealing with the fallout from a backlog of animals due to shutdowns or slowdowns at the processing plants for some time.
The Canadian Pork Council said this month the backlog in eastern Canada is at 140,000 pigs, and the loss to the industry this year could hit $675 million.
“It’s a sad deal right now,” said chairman Rick Bergmann.
The Canadian Cattlemen’s Association estimates the industry could lose about $500 million by the end of June because of the accumulation of cattle. The CCA said Tuesday that as of this week, there would be a backlog of over 100,000 cattle in Alberta alone.