"Crisis In Processing" - Pandemic Exposes Fragility Of Food Supply Chain  

Today's food supply chain crisis began in the meat industry has been developing for decades, and Tyson Foods has helped to create the disaster that is currently unfolding

The problem is consolidation, and with Tyson, JBS SA and Cargill Inc, three mega-corporations that control 66% of America's beef, as much of it is processed in just a few dozen meatpacking facilities across the US. Only a few companies also dominate pork and Chicken. 

There have been at least 12 closures of meatpacking plants in April because of virus-related issues among employees. This has resulted in at least 25% of pork and 10% of beef processing capacity coming offline in the last several weeks, reported Bloomberg

"This is 100% a symptom of consolidation," said Christopher Leonard, author of "The Meat Racket," which examines the protein industry. "We don't have a crisis of supply right now. We have a crisis in processing. And the virus is exposing the profound fragility that comes with this kind of consolidation."

On Sunday, Tyson Foods warned in a full-page ad in the New York Times that the "food supply chain is breaking."

"As pork, beef and chicken plants are being forced to close, even for short periods of time, millions of pounds of meat will disappear from the supply chain," wrote Tyson Chairman John Tyson, patriarch of the company's founding family, in a Tyson Foods website post that also ran as a full-page ad in several newspapers. "The food supply chain is breaking."

Then on Tuesday, President Trump signed an order for meatpacking facilities to remain open during the pandemic. With plants being forced to stay open as the fast-spreading virus infects workers, that doesn't necessarily mean workers will show up to work. We discussed that over the weekend in a piece titled "American Farms Cull Millions Of Chickens Amid Virus-Related Staff Shortages At Processing Plants." 

The number of meatpacking plants across the country has declined by 70% since 1967, thanks mostly due to companies like Tyson and their rapid consolidation efforts to control the industry.

The pandemic has exposed the fragility of America's food supply network, a victim of its own success via consolidation but now risks rapid food inflation that could anger tens of millions of Americans. 

And while the US could see food supply shortages in the coming weeks, Brazil's JBS SA is coming to the rescue and stands ready to scale up exports of meat from Australia and Brazil to aid the US.