NET News – COVID-19 Is Roiling The Beef Industry, But Some Small Producers Are Spared
COVID-19 Is Roiling The Beef Industry, But Some Small Producers Are Spared
by Christina Stella, NET News
4.9.20
(Stock Photo: Jahd Khalil, Harvest Public Media)
April 8, 2020 – 5:50pm
COVID-19 has wreaked havoc on the beef industry; cattle prices and futures have plunged while consumer demand has emptied grocery shelves. But some who sell beef directly to consumers have been spared, and in some cases, business is booming.
Ben Gotschall runs a few businesses just outside Lincoln’s city limits — cattle, grass fed beef, and wholesale distribution.
He typically makes appointments with his butcher in late spring to process product. But this year, the phone’s been ringing off the hook with customers wanting beef and even their own dairy cows.
“We sold quite a bit of the beef that we had on reserve," he said. "So I decided to get some more cattle butchered.”
The business has lost some revenue from local restaurants, but it will all balance out given the uptick in customers looking for cuts.
Gotschall doesn’t sell to meatpackers, and sets his own prices. He thinks that’s protected him from some of the losses his conventional counterparts are bracing for.
"I won’t have anything to do with the packers," he said. "I’d have gone out of business years ago if I’d stuck with them."
Accusations of market manipulation are mounting from ranchers and trade organizations against meatpackers, which recently saw soaring profits as cattle prices tumbled. Cash cattle prices are down 11% since mid-March, while declines in anticipated future prices hover around 30%.
Senator Deb Fischer expressed similar concerns in a letter to Chairman Mike Lee and Ranking Member Amy Klobuchar of the Senate Judiciary Subcommittee on Antitrust, Competition Policy, and Consumer Rights.
"We’ve seen dramatic price swings in the cattle market that have negatively impacted producers’ bottom lines while prices that packers receive for boxed beef have increased," Sen. Fischer wrote. "It has become clear we as lawmakers must do our duty to investigate allegations of wrongdoing under the authorities and congressional intent set forth by the Packers and Stockyards Act to ensure cattle producers have a fair chance in the marketplace."
Meghan Filbert, a livestock manager with Practical Farmers of Iowa, has also noticed evidence of price gouging. But she thinks the lessons of COVID-19 stretch farther, and point to long-running vulnerabilities in global supply chains.
"It’s kind of like the mask is coming off," Filbert said. "Because before, if there were breakdowns in that supply chain, there’s another market from another country that can fill it. But that’s what has been broken right now."
She’s taken calls from commodity farmers who are reeling under the stress of such an uncertain market.
"They’re told to wait out, and I’m not sure that’s a good answer," Filbert said. "So I think that more and more farmers might figure out really quick how to sell halves and wholes of beef to their neighbors."
Filbert also thinks direct-to-consumer operations have more flexibility to practice social distancing without losing business.
“This is where we’re really seeing local and regional food systems shine," she said. "We’re seeing that they are smaller, they can pivot faster, they can adapt. They’re flexible, and that’s what resiliency is all about."
Gotschall has upended the way he typically does business.
"When the first people were calling, I said, ‘Given what’s going on right now, I’m going to tell you now, the process is going to be different,’" he said.
Instead of taking customers at his farm store, he’s set up contact-free pickup out of his truck. He now wears gloves and a mask to prepare orders, and sanitizes the cooler customers collect from between uses.
That’s welcome policy to customers who are concerned about visiting high-traffic shops right now.
"I’ve had a couple of the customers say, ‘I’d rather come out to your farm and know that you are the only person that’s handled these packages. If I go to a grocery store, I don’t know who’s been handling them.’"
It’s unclear when global meat markets will stabilize. But Filbert hopes the pandemic isn’t merely a short-term boost for smaller ranchers; she sees an opportunity for ranchers to diversify their business models and embrace a hybrid of local and commodity business. That could soften future financial risk.
"It doesn’t all have to be local and regional," she said. "For the things that we can’t grow regionally, then we rely on more of a global system. But we should not rely on a global system first, and a local system last."