Smaller producers, retailers say they are positioned to weather coronavirus meat shortage

These days, Justin Brunson watches industry meat prices like some people watch their stocks. The Denver chef turned butcher has seen them fluctuate daily, even hourly, and by as much as 100% and more in the last week alone.

In one phone call, he was quoted $7 a pound as opposed to the expected $2.99. “I do feel like a lot of these big companies are price-gouging right now,” Brunson said.

As large beef processing plants across the United States slow production because of novel coronavirus outbreaks among their workforce, shortages are being reported and consumers are wondering when and where to buy their meat. But small butchers and grocers say this kind of breakdown in the system was inevitable.

“It’s a line, just like a car assembly line,” Brunson said of the setup of large processing plants. “Everybody works elbow to elbow, the meat comes down a conveyor belt … and just the way that they’re set up, some of the larger plants will have upwards of 1,000 people at a time working shoulder to shoulder… It’s just the nature of the beast.”

At Brunson’s 6,500-square-foot River Bear American Meats plant in Denver, he has kept eight workers turning out 7,000-8,000 pounds of meat a week during the virus shutdown. He sells everything from ground beef to whole chickens, deli cuts and cured meats at Leevers Locavore and other local stores.

For an idea of scale, Brunson’s sausages are made in 350-pound batches. His smallest producer slaughters and sends him just 10 cows a month, while the largest processes 900 a week. JBS Greeley can process around 5,000 cattle per day.

If he gets one high quote for meat, Brunson can switch to his smaller supplier, where the price hasn’t changed.

“We’re not feeling the pressure, because we don’t use the large guys,” Brunson said. “One of the big things when I work with ranchers — a lot of (them) have their own USDA kill facilities on their properties. They haven’t had the problems yet.”

Denver specialty grocer Pete Marczyk says his beef supply across two Denver stores has remained constant as well, with no sign of running out.

“It’s the high cost of cheap food, and we’re seeing it,” Marczyk said of the national shortage. “It’s amazing how durable our little supply chain is through all this. It’s inspiring and it’s really validating.”

Marczyk Fine Foods’ beef, pork and lamb products all come from Niman Ranch, a network of more than 700 family farms across the country. And Marczyk says he saw that company adjust its practices right away in March when the shutdown began.

“They were so far ahead of this thing,” Marczyk said. “When these large plants are talking about having to run at speeds that the Niman plant runs at already, they’re looking at raising prices dramatically, while our stuff is staying stable. So we’ve been paying the right price all along.”

The “right price” could be hard for consumers to swallow, though, especially during an economic downturn when more than 30 million Americans are out of work. At Marczyk’s, for example, ground beef costs $6.99 per pound, and Brunson’s River Bear equivalent sells for $7.99 a pound. King Soopers’ house brand is currently priced at $4.99.

“We do try to be competitive and fair, but it has to be fair throughout the supply chain,” Marczyk says. “Not just fair to my customer, it has to be fair to my producer.”

Brunson agrees. He pays his farmer $2.50 per pound of beef as opposed to the commodity rate of 82 cents, he said. And what he’s getting is the difference between a “BMW or a Pinto” — all Colorado grass-fed, Black Angus beef.

Marczyk says people go to the grocery store and ask for any 80% ground beef, “and (those meats) are just not all created equal. They’re just not,” Marczyk said. “The average consumer out there, they have no idea.”

Marzcyk and Brunson think that consumers will come out of this period with a better appreciation for their food, and especially their meat — where it came from, what’s in it and who got sick while processing it along the way.

“A supply chain based on monoculture is very, very dangerous,” Marczyk said. “There’s all this economy in consolidation, but there’s risk in consolidation.”

Formerly an investment banker, Marczyk puts it this way: “We talk about diversity all the time… and then we do just the opposite in our food system. Consolidate, consolidate, consolidate. Bigger, bigger, bigger.”

Meanwhile, River Bear this year will expand its Denver facility by another 3,500 square feet. And Marczyk says the outpouring of support for his small grocery stores and their workers has been humbling.

The next step now, and something that’s close to both of their hearts, could be the creation of more regional and local USDA slaughter facilities, so that the same bottleneck in the system doesn’t happen again. But each processing plant can cost somewhere between $3 million to $8 million to build.

“So it’s a huge hurdle for small family farms to do that, but if we start thinking like a community…” Brunson said.

And until then, “We think we can keep our prices stable,” according to Marczyk. “If the (farmers’) costs of production increase, of course we’re going to have to charge more, but if they don’t, we’re going to hold that line.”

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