While many regular American grocers are running out of meat, specialty food producers have plentiful supplies -- for those who can afford it.
Production of luxe varieties like heritage pork, grass-fed beef and Amish-raised chicken are expanding at a time when coronavirus outbreaks at mammoth plants operated by Tyson Foods Inc. and Cargill Inc. have wiped out about 40% of conventional U.S. beef and pork capacity in recent weeks.
So while lower-income consumers are finding meat hard to come by -- with Kroger Co. and Costco Wholesale Corp. rationing purchases -- richer Americans have their pick of fancy offerings that often cost twice as much, or more.
This is just the latest way that the coronavirus pandemic has exposed a socioeconomic divide in America, disproportionately affecting low-income and minority populations more than others. In the end, it could dictate who has access to affordable meat and who doesn’t as outbreaks at the nation’s beef, pork and poultry plants spread.
“There’s definitely an opportunity there for niche markets to emerge as a bigger component” of what consumers are buying, said McGuireWoods Consulting Senior Vice President Ryan Bernstein, who also operates a family farm in North Dakota. But for lower-income families, there will be a “two-fold problem. There are issues on price and availability. And of course, if you have a lower income, you are more sensitive to price changes.”
The U.S. meat crisis is highlighting a variety of social divides. Plant workers represent some of the populations facing a disproportionate hit from the health crisis and its economic fallout. They often come from low-income families and can’t afford to call out sick, and about 44% of them are Hispanic and a quarter are African Americans, a demographic seeing a devastating toll both physically and financially.
Meanwhile, consumers dealing with increasing unemployment and income loss are facing the tough choice of paying more for meat, or going without. Prices for conventional meat have surged since early April, but it’s still not as expensive as specialty varieties.
Organic ground beef, for example, sells at a premium of 87% at $6.99 a pound, U.S. government data as of May 4 show. Organic boneless skinless chicken breasts at $7.10 a pound are 164% more expensive than their conventional counterparts at $2.69.
Things can get even pricier for options like grass-fed beef, which can fetch $9 to $12 a pound for hamburger meat.
The virus has had limited impact on the output of specialty meats for some of the same reasons those products are more expensive. The plants aren’t run on huge economies-of-scale, where hundreds of workers are jammed into elbow-to-elbow working conditions processing thousands of animals each day.
Instead, livestock are raised on organic feed and pastures and then processed in relatively tiny plants or local butcher shops. It’s small-scale production, which means social distancing is easier and companies can more readily enforce sanitary precautions. Even if one plant goes down, it only accounts for a small fraction of supply, and the larger chain isn’t broken.
Take the case of Local Foods in Chicago. The wholesaler and distributor specializes in products grown on Midwest family farms, selling to restaurants and retailers, while operating its own storefront and butcher shop. Co-founder Dave Rand says that thanks to the company’s reliance on smaller producers, his customers aren’t seeing the same shortages that are plaguing big grocery chains.
“We don’t source any of our meat from any of those larger players, so in one sense we’ve been relatively insulated from the effects of the commodity industry having to shut their plants down or reduce processing days,” said Rand, who’s also the chief operations officer.
At least 30 American meat workers have died of coronavirus and more than 10,000 have been infected or exposed, according to the United Food and Commercial Workers International Union. At least 30 plants have closed at some point in the past two months, the union said May 8. The bulk of those closures came at large plants.
Concerns for workers are adding to a recent movement from consumers who want to buy food they consider more sustainable. Demand is now exploding for specialty farmers like Jake’s Country Meats in Cassopolis, Michigan, which produces heritage Berkshire/Duroc pigs and 100% grass-fed Scottish Highland cows.
“I’ve never seen anything like it,” said Nate Robinson, 64, a sixth-generation farmer. He and his wife Lou Ann Robinson own Jake’s Country Meats, which is named after their son. Orders have about doubled from this time last year, with retail demand more than making up for losses related to restaurant closures.
Consumers are buying more specialty meat because “people are asking, ‘What am I eating? Where did that come from? How was it handled?’” he said.
Still, Robinson isn’t immune to the disruptions facing conventional producers. One of the small slaughter plants he works with is shutting temporarily because of the pandemic. That means he’ll likely keep cows on grass for a few months longer, until they can be processed, and he may not have any grass-fed beef to sell until September.
But what makes Robinson’s situation different from the big producers is that the plant shutdown and his loss of production is unlikely to create a huge bottleneck in the larger supply chain.
In conventional meat production, processing is highly consolidated, with about 50 plants accounting for 98% of beef processing, according to Cassandra Fish, a livestock market analyst. Giant producers have such a stranglehold on output that it leaves few remedies when even a few facilities slow, leaving farmers with decreased options for selling their animals and sparking the possibility of shortages. Wholesale beef has more than doubled since early April, reaching a record high, because of a handful of plant closures.
In specialty meat, it’s a different story. Small, regional meat processors abound, said Rebecca Thistlethwaite, director of the Niche Meat Processor Assistance Network, which has around 1,500 small producer and processor members.
Members of the processing group are “incredibly busy right now, and many of them are thriving on the new demand for their products and processing,” she said.
Fewer disruptions in the supply chain also mean that even though specialty meat fetches high premiums, prices have remained relatively steady in the recent period. A pound of ground hamburger from Jake’s Country Meats goes for about $9, unchanged in the pandemic era. Meanwhile, conventional 90% lean ground beef rose 13% to $5.57 a pound as of May 8 from a week earlier. Ground chuck was up by a third over the period and was 57% higher than a year ago, USDA data show.
The narrowing spread is making the higher cost of luxury protein less intimidating, said Ariane Daguin, owner of D’Artagnan LLC, a wholesale and e-commerce food company in Union, New Jersey. The company sells meat sourced from smaller farmers and ranchers, and online sales have risen 500% since before the pandemic.
Specialty meat still makes up just a tiny fraction of total U.S. meat sales. Grass-fed beef only accounts for around 5% of volume, while pastured pork and chicken may be closer to 1%.
But producers are using the recent demand boom to expand.
Mike Callicrate, a rancher and meat processor in Kansas, said his business is up more than double for beef, pork and poultry. He’s hiring additional workers and expanding his cooler size, but hasn’t had to raise prices or limit purchases. His slaughterhouse processes about 16 cattle a day, and he’s expanding to as much as 40.
Customers looking to stock up on pricey meat have been “standing in line outside the door,” Callicrate said. “We were cranking at the plant.”