Tyson Foods Chairman Warns COVID-19 ‘Breaking The Food Chain’

Apr 27, 2020

The chairman of Arkansas-based Tyson Foods warns the coronavirus pandemic is disrupting the food supply chain.
Credit Tyson Foods

Tyson Foods Chairman John Tyson warns “millions of pounds of meat” will disappear from the supply chain as the COVID-19 pandemic closes packing plants and backs up the animal supply.

“The food supply chain is breaking,” Tyson, grandson of the company founder, wrote in a full-page ad published by several major U.S. newspapers on Sunday. ”There will be a limited supply of our products available in grocery stores until we are able to reopen our facilities that are currently closed.”

Tyson noted the challenges the company faces are great and create a delicate balance between protecting employees and feeding consumers. He said “in the blink of an eye, the world as we know is different. Anxiety, doubt and the fear of the unknown are now our constant companions.”

COVID-19 outbreaks have occurred in 30 facilities operated by Tyson Foods, Smithfield, Cargill, JBS and other meat companies. Government officials said at least 3,300 workers in meat processing plants have been sickened by COVID-19 and at least 17 have died.

Tyson said the company is working to protect the workforce of more than 100,000 with payment when plants are shuttered, requiring masks and protective gear when working, following the practice of social distancing in common areas, and waiving the waiting period for qualification for short-term disability, and insurance co-payments for those who become ill.

Tyson also said the company provided tours to health officials in two of its chicken processing plants in Springdale and Rogers on April 24. The company demonstrated the widespread use of hand sanitizer stations and thermal scanners as well as new social distancing measures that have been put into place.

“Tyson is taking measures to protect its team members, and anywhere people were in close proximity they have barriers between workers, and they were well spaced,” said Dr. Richard McMullen, state environmental health director, Arkansas Department of Health. “Everyone was wearing masks and it was very well done. Tyson is an industry leader and these measures are an opportunity for others to learn best practices to keep employees safe.”

ARKANSAS REACTION

Gov. Asa Hutchinson was asked Monday during his daily COVID-19 press conference about food supply worries in the state. He said no food manufacturing plants have closed in Arkansas and he is confident the actions taken by Tyson Foods and other companies will keep workers safe and the plants open.

“Arkansas is critical in not just our own food chain, but the nation and the world’s food chain. And so, the success and the health of those workers in the processing plants are very critical, and I know that Secretary Smith has worked with those in setting up the right health guidelines. But they’ve [Tyson] really gone the extra mile in it,” Gov. Hutchinson said.

According to the Arkansas Division of Workforce Services, there are 303 food manufacturing plants in Arkansas that employed a three-month average of 50,005 in the fourth quarter of 2019 – the most recent data available. Quarterly wages in the sector totaled $507.333 million.

There were 82 animal slaughter and processing plants active in Arkansas during the fourth quarter, employing 34,142. That sector had total quarterly wages of $314.896 million.

Known COVID-19 cases in Arkansas totaled 3,017 as of Monday, up from 2,941 on Sunday. The number of deaths rose from 46 to 50. The number of COVID patients hospitalized in Arkansas was 109 on Monday, up from 107 on Sunday. Of the COVID-19 patients, 25 were on ventilators, up from 24 on Sunday. The number of healthcare workers with COVID-19 was 316, up from 303 on Sunday.

TYSON FOOD ACTIONS

Tyson Foods was also one of the first companies to restrict corporate travel and it has paid about $60 million in “thank you” bonuses for its employees on the front lines and truck drivers. The company also continues to work with the U.S. Centers for Disease Control and Prevention on cleaning protocol and work station dividers to protect employees on the line.

The Springdale-based meat giant has closed several facilities temporarily in the past month for deep sanitation and to equip with more safety measures. Pork processing plants in Waterloo, Iowa, and Logansport, Ind., were recently closed so employees could be tested. The Waterloo plant remains closed. Tyson Foods’ beef processing plant in Pasco, Wash., was also temporarily closed for employee testing.

Steve Stouffer, president of Tyson Foods’ fresh meat division, said the Pasco plant employs 1,400 workers, and the plant processes enough beef each day to feed 4 million people. Stouffer said last week other Tyson Foods plants are operating but some are running at reduced operating levels due to additional worker safety protocols and higher-than-normal worker absenteeism.

Smithfield has suspended operations at its Monmouth, Ill., pork processing plant which represents about 3% of the U.S fresh pork supplies. This plant has been closed since April 24. JBS SA will shut down its beef production facility in Wisconsin, the company’s fourth plant to temporarily close. Hormel has also shuttered a plant amid COVI9-19 cases. Cargill has temporarily suspended beef operations in a Minnesota plant and one in Pennsylvania, and National Beef temporarily suspended work at a beef packing facility in Kansas.

MARKET ANALYSIS

Agriculture analysis Dave Amato, who serves on the advisory committee of the Commodity Futures Trading Commission, said last week U.S. packing plants are COVID-19 hotspots with 8% of packing capacity shut down. He said most plants are operating at 50% to 75% of normal capacity, due to employees being absent.

Livestock Marketing analyst Derrell Peel with Oklahoma State University Extension Service said this is a trying time for packers and the livestock producers who supply packing plants. He said losses are adding up for livestock producers as inventory bottlenecks in the supply chain. He said federal aid of $19 billion in CFAP (Coronavirus Food Assistance Program) funding will help to offset some of the losses being felt throughout the meat supply chain.

He said the reduced slaughter capacity is causing a backlog in live animals. Peel said cattle slaughter fell more than 6.3% last week and is down nearly 22% from the same period a year ago. He said cows held back from slaughter must remain on feed or turned out to pasture. Chickens ready for production are large and can’t go are typically incinerated. Milk oversupply is being thrown away as are eggs which have a limited shelf-life.

The USDA recently launched the National Incident Coordination Center to provide support to farmers whose animals cannot move to the market as a result of processing closures. The government agency said state agri officials will assist to help identify possible alternative markets if a farmer is unable to move animals to slaughter to eliminate the need for depopulation and disposal.