By William Watts, MarketWatch
While consumers face the prospect of meat shortages as coronavirus infections shut down processing plants across the country, farmers are making tough choices about what to do with livestock they can’t move to market.
Producers are already changing ingredients in an effort to slow the growth of hogs and cattle. David Mensink, who raises around 80,000 hogs a year near Preston, Minn., said that around two weeks ago he began removing distillers corn oil, a byproduct of ethanol production, from rations.
“It’s probably the first time in my life I’ve ever changed a ration to make a pig grow slower,” he told MarketWatch, in a phone interview as he took a break from planting corn on Thursday. “We usually do all we can to provide the right nutrition to make that pig grow as efficiently as we can.”
‘It’s probably the first time in my life I’ve ever changed a ration to make a pig grow slower’
Despite those efforts, Mensink and other farmers have warned that shutdowns will create a backup that will likely force producers to begin euthanizing hogs.
Animals, of course, don’t stop growing once they reach slaughter weight. Oversize animals face steep discounts from meatpapackers—consumers don’t want oversize hams or other cuts of meat -- and producers also face the prospect of overcrowding.
COVID-19 outbreaks have closed around a dozen meat plants around the country in the past week, according to The Wall Street Journal , including three Tyson Foods Inc. (NYS:TSN) plants, while other facilities have curtailed operations to deal with or avert outbreaks of the deadly pathogen. Grocery executives have warned that supplies of some products could run short within two weeks, the report said.
Altogether, closures and partial shutdowns have taken out around 30% of the country’s hog-slaughter capacity, said Mensink, who is president of the Minnesota Pork Producers Association. That equates to around 150,000 hogs a day, or 750,000 a week. Bloomberg reported that hog producers in eastern Canada have began euthanizing hogs due to bottlenecks there.
Feedlot operators are also taking steps to slow the growth of cattle, but may be able to avoid euthanization for now. That’s because the growth rate of cattle can be more finely tuned than hogs.
“The cattle that are ready for market, they just have to keep in the feedlot longer…and hopefully they will be able to get them to market — but everything is just slowed down,” said Ken Herz, who runs a cow-calf and feedlot operation in south-central Nebraska and is president of the Nebraska Cattlemen Association.
Calves are weaned at around six to 10 months of age and placed on pasture before eventually being moved into feedyards or sold to feedlot operators. As cattle enter what’s known as finishing stage, the content of their feed rations is adjusted in stages to allow faster growth until they are ready for slaughter.
If needed, producers can slow down growth by sticking with or reverting to lower-energy rations, said Daniel Loy, professor of animal science and director of the Iowa Beef Center at Iowa State University in Ames.
Producers typically feed a series of four to five rations, Loy said, in a phone interview. By reverting to or maintaining rations that contain more hay and forage, as opposed to grains and other higher-energy feedstuffs, producers can cut the growth rate by around a quarter-pound a day.
Loy said in more extreme circumstances, producers could revert to rations that would slow growth to around 2 to 2 ½ pounds a day without affecting the quality of the meat. In the most extreme scenario, producers could feed a maintenance ration designed to keep cattle at a steady weight, but that would risk affecting the marbling and overall quality of meat, Loy said.
While feed is delivered each day to cattle on a feedlot, hogs typically are fed via self-feeders. While there are more options when it comes to lowering the energy in cattle rations, the best producers can do with hogs is to add some fiber-type feedstuffs, Loy noted.
Standard slaughter weight for cattle typically runs between 1,300 to 1,400 pounds, while the average hog slaughter weight runs between 280 and 290 pounds, according to the U.S. Department of Agriculture.
Herz said the Nebraska Cattlemen Association is working with packers in an effort to get them to curtail dockages for oversize animals in the wake of the plant closures and slowdowns.
The U.S. Department of Agriculture last week announced an aid program that included around $1.6 billion in direct relief for hog farmers and $5.1 billion in direct relief for cattle farmers, along with $3 billion in purchases of various agricultural commodities.
Producer groups have called the aid welcome but not enough to sustain many producers.
Meanwhile, the possibility of meat shortages — and rising consumer prices — offers a contrast to cattle and hog farmers who are operating with negative margins.
Indeed, live hog futures (CME:LH.1) jumped 16% in the past week as traders reacted to plant closures, after hitting a 3 ½ year low on April 14. Hog futures remain down more than 28% in the year to date, while live cattle futures (CME:LC.1) are off around 34% so far in 2020.
“The profit margins were gone a long time ago,” said Herz. The longer the backups persist, “the worse it gets.”