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Pandemic-related food supply chain disruptions gave smaller meat processing plants more business

Pandemic-related food supply chain disruptions gave smaller meat processing plants more business
Posted at 11:28 AM, Apr 05, 2021

You may not pay attention to where your burgers come from, but for the meat processing industry, COVID-19 has shed light on some of the issues the supply chain faces for both big and small companies.

“I founded the company in 1990,” Geoff Latham, president and CEO of Nicky USA, said.

Nicky USA is a small meat processor and distributor in Oregon. When we visited, the building was busy cutting, packing, and sending off meats. The demand for processing hasn’t gone away since the start of the pandemic; it’s actually increased.

“Our processing plant has been the heart and soul of me and my company and really excelled at that time. Our distribution was suffering but our processing plant, the demand skyrocketed for the plant,” Latham said.

Last year, the pandemic shook America’s food supply chain as restaurants closed and groceries saw a spike in demand. Meat processors were included.

“We had to turn away a lot of business in the processing side just because we only had so many hours per day we could get done,” Latham said.

Where those meats ended up changed.

“When COVID-19 hit, we were 85 percent restaurants, zero direct to consumer, and about 15 percent was...butcher shops and retailers,” he explained.

Now, Latham said restaurants are only 45 percent of his businesses, and 10 percent comes from a new direct-to-consumer model.

“It doesn’t seem like much, but it’s a very important 10 percent of what we do,” he explained. ”A really big part of our survival has been the support of direct to consumer.”

COVID-19 shook up a lot of industries, and small processing facilities happened to benefit in some ways.

“Over the last year, there’s really been a surge of demand for those,” David Anderson, livestock economist and professor at Texas A&M University, said.

Anderson is referring to these smaller plants.

“They may not have an open date until next year, 2022, so there has been a surge in demand for those services and those are very small plants,” he said.

Meanwhile, large plants were dealing with their own problems, including COVID-19 outbreaks that received attention from the federal government and national news.

“When COVID hit and the big packing plants were getting written up in the paper, hundreds and hundreds of people getting sick. It really temporarily stopped the supply chain, which most people don't realize is just so massive,” Latham said.

The CDC reported almost 5,000 people tested positive for COVID-19 in 225 facilities across the U.S. Outbreaks at larger plants caused a ripple effect.

“Just as an example, we saw prices skyrocket when we had a COVID outbreak in the Midwest, and all of a sudden, beef is $3 to $4 more expensive here in Oregon,” Latham said. “It really emphasized how important it is to maybe decentralize some of our production in this country.”

Latham said more local production is the solution.

“The more you can buy regionally, the better it mitigates prices going up and down that dramatically,” he said.

However, Anderson said, while he’s seeing more of these small facilities doing well, the larger plants still have a purpose.

“The reason food is so cheap is because those places are so big,” he said. “Big plants have much lower costs than little plants, so if we took that a step further and went to a system with a lot of little plants, our food is going to cost a lot more.”

“I just believe that COVID made people realize how important it is to support your local people,” Latham said.