The coronavirus outbreak has hit the meat industry hard. In the short term, this will cause meat prices to rise. But it could have a long-lasting impact too.
Nearly half of the coronavirus hotspots in the U.S. have been linked to meatpacking plants. More than 10,000 workers have either been exposed or infected, and 30 have died. As a result, many plants are now operating at a significantly reduced capacity and they are producing fewer meat products.
According to Sanchoy Das, a professor at the New Jersey Institute of Technology, reducing plants to a third of their capacity will have a knock-on effect. Chicken prices could rise by 25 to 30 percent. They told Bloomberg: “the 99-cents per pound chicken could be in short supply very quickly.”
And it could stay that way. Many major meat companies are now looking at remodeling operations to reduce the risk of virus outbreaks. Many are already actively exploring introducing more automated lines and robotics.
According to Steve Meyer, an economist at consultancy firm Kerns & Associates, more expensive operations inside meat plants could mean higher meat prices for the consumer.
He said: “the whole system was designed to produce quality products at the most reasonable cost possible, so you don’t go and add a lot of extra costs to go handle a once-in-a-100-year situation.”
He added: “but you also don’t turn a blind eye to the fact that people are sick and some people have died. So I think there will be some changes made.”
Vegan Meat Drops in Price
While meat costs rise, some vegan meat companies—like California-based Beyond Meat—are cutting their prices.
Jim Cramer—host of CNBC’s “Mad Money” and a former hedge fund manager—recently spoke of Beyond Meat’s potential on CNBC’s “Squawk on the Street.”
He said: “it’s all going Beyond Meat’s way. And what is Beyond Meat doing? They’re cutting prices.”
He continued: “so the price of meat is going to go up for the regular meat, and the protein that skips the whole meat chapter is going to do well. Beyond Meat is one of the most dangerous shorts in this market.”
Sales of plant-based meat are soaring. In the last week of March, fresh meat alternative sales outpaced the growth of meat sales. The former rose by 255 percent compared with 2019, and the latter increased 53 percent.