NYC Meat Suppliers Explain The "Meat Shortage"

Dan Honig, owner of Happy Valley Meat Company, started hearing of troubles at large-scale slaughterhouses in late March, when a beef processing plant, JBS Beef in Souderton, PA, closed due to COVID-19 related issues.

Over the past few weeks, stories of slaughterhouse workers coming down with coronavirus have become common. Just last week, nearly 1,000 employees tested positive for coronavirus at a plant in North Carolina. With plant closures, fears of impending meat shortages grew because a handful of large conglomerates — like JBS (a Brazilian based company), Tyson Fresh Meats, WH Group (the Hong-Kong based company that owns Smithfield) and Cargill — supply America with 80% of its meat.

Adding to supply-chain anxieties, late last month Tyson’s board chairman, John Tyson, placed full-page advertisements in The New York Times and The Washington Post that set off alarm bells. “The food supply chain is breaking," he wrote.

Two days later, on April 28th, President Donald Trump signed an executive order mandating that meat processing plants remain open. But by then, the Souderton plant had already reopened. And, Honig said, throughout this pandemic, he’s had little trouble getting meat—noting that the plants he works with are smaller than the JBS Souderton plant.

While a number of meat processing plants have closed across the country, those familiar with New York City’s meat supply chain responded to John Tyson’s warnings with skepticism.

“Was it an advertisement or a letter?” Russ Whitman, senior vice president of Urner Barry, a commodity market reporting firm, asked. Tyson’s statements, he said, were irresponsible and “created undue panic that compounded an already challenging situation.”

Three large meat distributors who service New York, who together have shipped out, on average, more than 800,000 pounds of meat weekly amid this pandemic, also felt that Tyson’s comments caused unnecessary anxiety.

“Of the 3,000 items we carry, we’ve had a hard time getting one—boneless center cut pork loins," said Pat LaFrieda, CEO of Pat LaFrieda Meat Purveyors. "And that was for two days. That’s since corrected itself and now I’m having a hard time getting skirt steaks. This will likely go on for several days.”

LaFrieda, who gets meat from both small and larger slaughterhouses thinks the issues he’s encountered, none of which he says are serious, are likely due to the employment issues at the larger plants, which supply him with much of his meat. “These are the ripple effects,” he said.

Heading into the pandemic, meat production was at, or near, an all-time high, with freezer inventory at an all-time high as well, Whitman explained. And while some say that freezer supply may only tide Americans over for a month and a half, diminishing those supplies “is not going to happen unless our meat production goes to zero,” Whitman said. “And getting to zero is unlikely.”

LaFrieda agrees wholeheartedly. “If you actually care about your neighbors,” he said, “now is the time to use the meat in your freezer. Because by mid-May, you’ll be able to fill it up again with ice cream.” His predictions have borne out.

Over a week ago, an alarming headline announced that almost a fifth of Wendy’s locations ran out of beef for hamburgers. By Sunday, Wendy’s updated customers, characterizing the shortage as affecting only “a few” locations, emphasizing that most had enough beef.

And while large slaughterhouses have had difficulty, operations have run better at the smaller plants that supply America with about 20% of its meat. Honig’s Happy Valley Meat Company sources all its meat from small farms in Pennsylvania and upstate New York; and he works with small slaughterhouses near those farms, too. Last week, he said, he was operating at 100% at where he was pre-pandemic. Among other restauranteurs, he works with Brooklyn chef Sohui Kim, owner of The Good Fork, Gage & Tollner and Insa. Kim, who has been cooking takeout at Insa, said she is not at all worried about meat shortages.

Honig believes that small plants haven’t been as hard hit by the pandemic because they have fewer employees and the relationships between the plants’ management and line workers are closer. “They’ve slowed down for safety,” he explained, “but their lines aren’t stopping.”

In fact, the greatest disruption for both he and LaFrieda happened when restaurants closed in New York, which accounted for the majority of their business. And Ariane Daguin, the CEO of D’Artagnan, a meat purveyor and distributor based in northern New Jersey, said that was her story, too. Initially D’Artagnan saw a 75% drop in sales after restaurants closed, she explained.

Nationally, Whitman said, restaurants account for about 60% of America’s total meat consumption so their experiences tell a bigger picture. “You have the Applebee's and the Chick-Fil-As,” he said. And, in “New York it's a different animal because of the diversity of the restaurants.” According to LaFrieda, NYC’s restaurants and hospitality were responsible for approximately 60% of all meals served in New York City.

For meat distributors in Hunts Points, Whitman said, that critical restaurant business “has simply gone away.”

Adding to the COVID-19 related stress on the supply chain is increased demand from consumers sheltering in place. Jeff Lyons, Costco’s senior vice president for fresh food, told the Wall Street Journal, “I have not seen beef sales behave this way since the Atkins Diet days.”

Sophie Grinnell, who sells meat for Baldor Specialty Foods said that since the pandemic began, her meat orders have jumped to record highs—at times tripling from where they were last year. But that increased demand means that certain cuts and animals, like chicken thighs and ground pork, are more popular than ever and other cuts and animals, like quail, have lost their audience all together.

Daguin said that the only processing plant issue she’s faced happened when a South Carolina plant stopped processing quail because demand dried up overnight when restaurants closed. As for La Frieda, he said, “At one point, I was selling ground beef for more than fillet mignon or T-bones.”

Since adjusting to today’s realities, Baldor, LaFrieda, Happy Valley, and D’Artagnan are all selling meat direct-to-consumers at unprecedented rates. D’Artagnan, which already had an e-commerce site, saw its online business shoot up 500%.

And while LaFrieda said he is sending out about 75% of the meat that he used to, the only reason he isn’t at 100% has to do with packaging. Honig said that’s been a problem for him too. “We've had a slow time converting wholesale packs into retail packs,” he said. “We have a lot of meat, but getting it ready for 5 pound orders is the issue.”

While the consensus among most of these meat distributors is that Tyson’s advertisement was alarmist, not all disagree with Trump’s executive order. “Farmers and ranchers,” Grinnell said, “are always the ones to get hurt.” And, she said, ensuring that plants remain open means that they will have to continue purchasing livestock from farmers and ranchers.

Processing plants often set the price and terms based on market demands while making the bulk of the profit, she explained, and historically farmers are often left holding the bag.

That’s been true amid the pandemic, too. Along with the steady drumbeat of news about processing plant closures, there were regular stories about farmers euthanizing pigs and chickens. Two million chickens from Allen Harim were euthanized in Delaware and Maryland, and though the number sounds shocking, in terms of the supply chain, Whitman offered some context. For the poultry industry overall, he said, it’s “a drop in the bucket because we’re slaughtering 170 million chickens every week.”

Americans consume more meat than any country in the world. “This year [pre-pandemic], we’re each projected to consume about 97 pounds of chicken annually,” Whitman said. So as plants closed and chicken lots filled up, some chickens, engineered to be slaughtered at a young age and specifically bred to develop oversized breasts (to meet market demand), suddenly faced the unappealing fate of literally caving in on themselves as they matured past their slaughter sell-by-date since their bodies (and small legs) couldn’t support their outsized breasts.

One upstate chicken farmer, Paul Dench-Layton, owner of Violet Hill Farms, raises such chicken varieties and heritage birds too. But, he said, surging demand at the Union Square Greenmarket in Manhattan has helped make up for the sudden drop from restaurants, so he hasn’t had to resort to these measures. In fact, he said, business is very good these days.

“Even with the [social-distancing] limits around who can come into the markets,” Dench-Layton explained, “we’re selling out.” And, when it comes to processing chickens, he’s had no trouble. But, he said, there have been curve balls. “Some workers aren’t showing up because they don’t want to drive into New York right now,” he explained.

Still, he’s heard stories. “A friend of a friend,” he said, recently got a truck and drove to the Midwest to get a load of pigs that a farmer was prepared to put down. “The pigs were free,” he said. “The farmer would rather give the pigs away than euthanize them, which is costly and also drives the price of livestock down.”

Still, Whitman, the market analyst, warned last week that some shortages or rationing may occur in localized markets. For instance, Costo recently announced that “fresh meat purchases are temporarily limited to a total of 3 items.”

On the ground, a Brooklyn grocer, who didn’t want to be named, said that his meat supplier warned that there would be shortages with red meat last week. Those shortages, he was told, were due to the processing plant closures in the news. But until recently his orders had been coming in 90% complete. So, to prepare, he started speaking with organic meat suppliers, a first for him.

Long term, Miguel Gómez, an economist at Cornell University specializing in food supply chains, explained that if problems continue to upset the meat supply chain, Americans may start paying more for meat. While supply issues have caused some prices to increase (or prompted grocers to offer fewer sales), “For now there is no need to panic,” he said.

And for the meat distributors selling direct to consumers there may even be a silver lining: growth opportunities. Honig, for example, believes he’s converting a new client base. “Our sales team is now answering emails and questions from customers full-time,” he said. “One thing we’re getting asked about a lot is the color of meat. And we’re explaining that sometimes our meat looks different because a lot of grocery store meat is flushed with carbon dioxide, which makes the red color last longer.”

His new clients are grateful he doesn’t engage in such practices, he explained, and he doesn’t anticipate losing them as result. So, he’s planning to open a second warehouse to accommodate the new client base.