As meat demand rises, processors raise pay for farmers, workers

Chicago | Reuters –– North American meat processors said on Monday they would pay extra money to farmers and slaughterhouse workers as the companies scramble to meet surging demand from consumers unnerved by the spread of the new coronavirus.

Companies such as Tyson Foods and Cargill want to ensure their slaughterhouses remain supplied with cattle to chop into beef and employees to perform the sometimes grueling work.

Their products are in high demand as shoppers have emptied grocery stores of meat to fill their refrigerators and freezers during a time of “social distancing” to help contain the highly contagious respiratory virus.

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Tyson said it would pay farmers a one-time premium on cattle slaughtered this week, after facing objections over the company’s soaring profits.

“This is an unprecedented time and the intent of our response is to show our support in an effort to help our supply partners weather this extraordinary situation,” Tyson said.

Tyson declined to disclose the size of the payments. They are $5/cwt for live cattle and $7.94/cwt for dressed cattle, according to cattle producers.

“They help but they’re not going to make whole the losses we’re taking,” said Lee Reichmuth, a Nebraska cattle producer and board member for the U.S. Cattlemen’s Association.

Margins for U.S. beef processors like Tyson hit a record high of about $580 per head of cattle on Monday, up from about $170 a week ago, according to livestock marketing advisory service HedgersEdge.com.

Margins climbed as prices for cuts of beef that companies ship to wholesale buyers jumped about 20 per cent in the past two weeks. April live cattle futures prices fell about 7% over the same period as traders worried that the virus could shut slaughterhouses.

U.S. Agriculture Secretary Sonny Perdue said in a tweet that the agency was monitoring agricultural markets. He tagged just two commodities in his post — #cattle and #beef.

“We are paying special attention to the difference in prices from the farm gate to the grocery shelf,” Perdue wrote.

U.S. beef processors increased their slaughter last week to an estimated 653,000 cattle from 633,000 a week earlier and 636,000 a year earlier, according to the USDA.

Cargill will pay U.S. and Canadian slaughterhouse workers a premium of $2 an hour until May 3, with a bonus of $500 to those who complete weekly shifts over a period of eight consecutive weeks, according to the company.

Maple Leaf Foods, Olymel and Hormel Foods also said they would be giving employees temporary pay increases or bonuses.

— Reporting for Reuters by Tom Polansek in Chicago; additional reporting by Rod Nickel in Winnipeg.

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