Coronavirus crisis: Could the US abattoir shutdowns benefit Aussie farmers?

The US’ coronavirus-induced abattoir shutdowns, which American meat processors say will jeopardise the country’s food security, could provide a short-term boost to Australia’s beef market. Despite US President Donald Trump last week issuing an executive order to keep American slaughterhouses in operation, many processors opted to close as the COVID-19 pandemic took its toll on labour availability. American processing giants Tyson Foods, JBS International and Cargill have all shut down or reduced production at multiple processing facilities. With the three companies accounting for about two-thirds of America’s beef output, the disruptions have caused serious bottlenecks in the US cattle supply chain. Some American cattle producers have been forced to cull livestock because of the processing plant shutdowns, with added fears the US is likely to experience red meat shortages and rising protein prices. The US meat processing issue comes as it was revealed this week that Cedar Meats Australia’s Victorian processing facility, about 10km west of Melbourne, was at the centre of a significant coronavirus cluster. Cedar Meats has been linked to more than 30 cases. Although the outbreak has hit Australia’s processing industry, Mecardo analyst Angus Brown said the COVID-19 pandemic was responsible for more severe issues across the US cattle market and beef production. “When the coronavirus crisis emerged, there was plenty of concern surrounding the virus infecting abattoir workers and closing processors,” he said. “Fortunately, Australia has thus far avoided impacts on processing capacity, but in the US we are seeing falling cattle prices and rising beef prices as bottlenecks emerge. “Nearly one million Americans have been infected with coronavirus, and plenty of them work in abattoirs. “The issues have caused full closure of some facilities, while plenty of others have dropped shifts due to absenteeism and cleaning requirements.” The US Department of Agriculture estimated total cattle slaughter was at 469,000 head a fortnight ago. It marked a 6.5 per cent decline on the previous week and a 27 per cent drop year-on-year. Mr Brown signalled the US’ declining red meat output to provide a short-term boost to Australian cattle producers. “When slaughter capacity is limited, there is an oversupply of cattle, and an undersupply of beef,” he said. “In the US, most of the beef produced is consumed domestically, so falling cattle slaughter has an immediate impact on the beef supplies, and therefore prices. “There could be positive short-term impacts on our beef exports, but over the medium term, more cheap beef from the US will pressure export prices.” Meat and Livestock Australia market intelligence manager Scott Tolmie acknowledged the coronavirus crisis had cast a shadow of doubt across Australia’s meat production industries. But he said Australian processors had not been affected on the same scale as US counterparts. “Australia has also been somewhat fortunate in that because virus numbers have stayed low, we haven’t had closures to processing plants that some of our competitors, including the US, have had,” he said. “This means we’ve been able to maintain consistent supply through our plants.”