As plants stayed open to feed Americans, exports to China surged
Smithfield Foods was the first company to warn in April that the coronavirus pandemic was pushing the United States “perilously close to the edge in terms of our meat supply.” Tyson Foods also sounded the alarm, saying that “millions of pounds of meat will disappear” from the nation’s supply chain as plants were being forced to close because of outbreaks.
That same month, Smithfield sent China 9,170 tons of pork, one of its highest monthly export totals to that market in the last three years. Tyson exported 1,289 tons of pork to China, the most since
January 2017.
In all, a record amount of the pork produced in the United States — 129,000 tons — was exported to China in April.
The data compiled by Panjiva, the supply chain research unit of S&P Global Market Intelligence, and the Department of Agriculture is potentially embarrassing for an industry that trumpeted its role in feeding the American public to argue to keep plants operating during the pandemic. Although some meat companies say much of their exported pork was produced before the outbreak, even previously processed meat could have stocked shelves in April and May.
After slaughterhouses in several states were closed when thousands of workers tested positive and dozens died, the industry publicly lobbied the Trump administration to intervene with state and local officials or risk major meat shortages across American grocery stores. Indeed, some retailers put limits on the amount of meat customers could buy, and the fast-food chain Wendy’s, at one point, ran low on hamburger.
But the meatpackers, including Smithfield, which China’s largest pork producer bought in 2013, did not emphasize, at least not publicly, that keeping the plants open would also protect their longterm investments in exporting to a country that is vital to their growth.
Analysts say the meat shortages
have subsided, with most plants having reopened, though many are still operating at slower speeds. As some meat companies continue to test their workers, they are still discovering positive cases. So far, more than 25,000 meatpacking workers have tested positive and at least 89 have died, according to the Food & Environment Reporting Network, which has been tracking the outbreak.
After decades of relatively stagnant pork consumption in the United States and a recent thaw in the trade war with China, this was the year that the pork exports were set to take off.
“The meat companies were saying the sky was falling, and it really wasn’t,” said Tony Corbo, a senior lobbyist at Food & Water Watch, a consumer and environmental watchdog group. “It wasn’t that there was not enough supply. It was that the supply was being sent abroad.”
The industry stands by its warnings about shortages and the need to keep the plants operating.
“As long as our nation’s harvest facilities continue to operate, not only do we have enough meat to feed Americans, but also to feed the world,” Smithfield said in a statement.
Before the pandemic took hold, the U.S. pork industry had been undergoing a major expansion. Large new slaughterhouses across the Midwest contributed to a 12% increase in pork processing between 2017 and 2019, federal government figures show. Farmers also enlarged their herds and even invested in building giant packing plants to process their pigs.
In 2017, a venture involving five large Midwestern pig farmers built a nearly 1-million-square-foot, $335 million pork plant in Sioux City, Iowa, which started processing 3 million pigs a year. A year later, the company, Seaboard Triumph, added a second shift, doubling its annual output to 6 million pigs. To fully staff the plant, Seaboard Triumph recruited workers from as far as Micronesia.
All of this expansion was taking place even though pork consumption in the United States has stayed relatively flat since the early 1980s. China, which consumes half the world’s pork, has long loomed as a big opportunity for American meat companies.
“We are talking record pork production last year and the year before that,” said Dennis Smith, a livestock analyst at Archer Financial Services. “The producers need exports.”
The trade war between the United States and China slowed pork exports. But by this winter, many of the tariffs had been reduced, and the American industry’s big bet on exports “started looking really smart,” Smith said.
The pork that is sent to China is often more profitable. In some cases, Chinese buyers import large portions of the pig carcasses, which require less labor to process and result in a higher margin for the meatpackers.
China had also started to shape how American pigs are raised. Recently, large producers such as Tyson said they would no longer process pigs that were fed ractopamine, a feed additive that allows them to gain muscle while eating less grain. Most pigs in the United States had been raised on the drug, but China bans it.
Pork producers typically send 25% to 27% of their meat overseas, according to the U.S. Meat Export Federation. But that number jumped to 32% in the first four months of this year, driven by demand from China.
Last week, the Department of Agriculture reported that total pork exports to mainland China in April reached their highest monthly total since the agency began keeping track 20 years ago.