There is no shortage of demand for beef.
Prices have gone up. Wholesale stores limit how much each customer can buy. Last week, more than 1,000 Wendy restaurants ran out of hamburgers.
There is also no shortage of livestock intended for conversion to beef.
But prices for those animals have dropped. Sales decline. At the recent cattle auction in San Joaquin Valley, only a handful of buyers bothered to appear.
The problem is in the middle of this pipe: the crisis at the meat processing plant.
Employees in these factories work closely together, and thousands of people across the country have been infected with the new corona virus. At least 20 have died. When workers fall ill, factories reduce capacity or are temporarily shut down.
The reduced capacity of the plant means some beef cannot be processed, and that has made cold water on the market for livestock: Why pay dearly for animals if you might not be able to sell it later?
That’s a problem for California, the country’s fifth largest cattle producer. In a good year, commercial breeders can aim to earn more than $ 1 per pound for premium calves. Now, the expected price has dived 15% to 25%, said Mark Lacey, president of the California trading group Cattlemen’s Assn.
“We have experienced some major droughts, we have had bad market years, but this is not like anything I’ve ever seen,” said Megan Brown, a sixth generation cattle rancher and Brown Ranch manager in Plumas and Butte districts. “Even in family history, nothing compares to this.”
A hamburger journey from the farm to a long and winding plate.
Farmers who produce calves, such as Brown and his family, are at the beginning of the chain. Calves are usually raised with the mother to weigh 500 to 600 pounds. Then they are sold to a spreader – a breeder who will continue to grow cows by feeding them grass until they reach about 900 pounds.
Then the cattle go to the feedlot to be fattened before being sold for slaughter, slaughtered in meat processing plants and sold to wholesalers, supermarkets and restaurant chains.
The whole process – from agriculture to the fork – can be likened to an hourglass shape, said Dave Daley, administrator for Paul L. Byrne Memorial University of Agriculture at Cal State Chico. The processing plant is always the narrowest point; if one is turned off – especially a large one – it can back up the entire system.
Factory traffic is always tight, “but now it’s really tight because of COVID-19,” he said. “We have livestock stock at the top end. We must solve it through narrow constriction. “
Feedlots have been severely blown away by bottlenecks. With a slowdown in the processing plant, feed yard operators are forced to keep cattle longer. That means more feed and maintenance costs.
A few months ago, the price of livestock was $ 1.19 per pound for cattle scheduled for delivery in May and June to a meat processing factory. Prices have since dropped to 92 cents per pound, said Jesse Larios, who operates two feed yards in Imperial County.
Larios said his cows are now worth less than what he paid for them. Not counting on what he had spent on food and other expenses, he said that he saw a loss of $ 365 per cow – and he had thousands of them.
Larios said he did not plan to buy any cattle next month. There is too much uncertainty in the market, especially because feeders usually buy cattle with the aim of selling them for slaughter six months to a year later.
“We are trying to learn and understand where this virus will be in that time frame,” said Larios, who – following in the footsteps of his father and three uncles – has worked in feedlots for 22 years. “Will the restaurant reopen in six to 12 months? Will they serve the same number of customers, or will they have social distance? We cannot buy animals with the same capacity if we are not sure what the production rate will be. “
When the feedlot operators stop buying, commercial farmers see cattle prices drop. Hard forced choices: Raising livestock for longer in the hope of a better market, spending additional costs on feeding animals while waiting? Or immediately sell at a loss?
Lacey, president of the trade group, did not have much choice. Dry weather earlier this year in the Lacey Livestock of his family in Mono and Inyo districts meant that less vegetation grew on the grassland where his cattle graze.
During the 2014 drought, Lacey recalled, livestock prices were much higher, so farmers could rent pasture land in other states and move their livestock there.
“This time, that’s not the case,” said Lacey, who is the family business manager. “Price isn’t there.” He managed to move some of his cattle to the Midwest and sell others, taking more than he expected.
Cows are usually sold in several ways: in a private agreement between the seller and the buyer or at auction.
On a recent Thursday at the Overland Stock Yard in the city of Kings County, Hanford, the electric doors of a pen opened, and four calves flew to a large floor scale, stripped off from another part of the room. They were ushered around by a man with a long pole that ended in a red paddle, clicking.
When the cattle move in formation around the stable, Dustin Burkhart, auctioneer and co-manager of Overland Stock Yard, starts bidding. About 30 people sit on the indoor amphitheater – which has social distance – ready to bid. Many others watch online.
Finally, 21,000 head of cattle are sold on the online auction platform.
“That’s an incredible number,” said Jason Glenn, co-manager of the auction house, but there is a warning: The cows will not be ready for slaughter until 2021.
For cattle that are closer to slaughter, that is a different story. The auction house was vacated, with only seven buyers left. Only 85 cows ready for slaughter are displayed, compared to 300 to 400.
Prices fluctuate between 46 cents and 55 cents per pound.
“We have never seen anything like it,” Glenn said. “Not after 9/11. Not after the last financial crisis. Never.”
During the same week last year, the auction house processed around 670,000 cattle, he said. This year, the weekly number has dropped to 425,000.
Even before the coronavirus outbreak hit, prices were depressed because there were many cattle on the market. The pandemic created more turmoil, said Kate Miller, owner of IMB Cattle Co. in Arkansas, which has been marketing beef for 10 years.
Other meat producers also experienced difficulties.
When closing Corona-related restaurants cut demand for pork products, and when slaughterhouses were temporarily closed to slow the spread of COVID-19 among workers, some US pig farmers – faced with a declining market and no room to accommodate additional pigs – forced to choose to kill piglets.
It is possible to slow the growth of livestock by pulling them from grain food and putting them on a breeding plan, Miller said, but that doesn’t work with pigs. And once a pig reaches about 325 pounds, it is too big to be processed in a factory.
Pigs also tend to be slaughtered at a much younger age than cows, which means pig farmers have less time to manage the ongoing crisis. Pigs can be ready for slaughter at the age of six months, when they weigh about 280 kilograms, according to the National Pork Board marketing program. In contrast, most cattle are between 18 and 24 months old, said Wade Lacque, co-owner and manager of the Orland Livestock Commission Yard in the Sacramento Valley.
Breeders and feeders strongly reject the idea of killing cows, noting that it will be a huge financial loss because animals are very expensive to raise.
As an alternative to selling at auctions, Brown, the sixth generation farmer, decided to try to slaughter his animals and sell beef directly to those who wanted to eat it.
Recently, he advertised “sharing hamburgers” on social media for friends, family, and residents nearby. The customer pays directly through PayPal, and he sends a pound of ground meat to their homepage.
He got the beef slaughtered and processed it in the U.S. Department of Agriculture facility. small ones that don’t handle the volume of meat done by larger plants.
The profit margin is “a drop in the bucket” compared to what his family usually makes at auction, and it takes a lot of time and work to send a cow to be processed, he said. But it’s better than nothing, and he said he hopes it will lead to the continuation of sales in the future. After all, the agriculture-to-table movement has grown strong lately.
In the past, he had done a few cuts of beef but had only butchered a handful of older calves that were not suitable for auction, such as the smallest or the ones with bad eyes. This is the first year he has access to cream plants.
“I don’t always make a lot of money, but that is good intentions for the community,” Brown said.
Like many California cattle ranchers, the Brown family has been in the business for a long time, around 100 years. Two of their farms cover 4,000 hectares.
“It’s a lifestyle,” said Lacque of the Orland Livestock Commission Yard. “People enjoy ranching … being out in the open, in the hills. Riding their horses and with cattle. “
The manager of the third generation auction page said he could not count the number of phone calls he had received last month from the farmer asking for advice on what to do. He said he did not have solid guidelines because no one had ever been in this situation before, and it was not clear what would happen in the future.
Business is also difficult for him. The auction page makes money from sales commissions, and for the last month only sold around 30% to 40% of the normal volume of cattle.
“This will be a difficult year,” he said. As for its customers, “hopefully most of them will succeed and will still farm next year. I am sure some of them will not like that. “
Rust reports from Hanford, Calif., Dan Masunaga and Parvini from Los Angeles.