U.S. Supply Chain Challenges Drive Increased Meat Prices | The Integer Group®
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U.S. Supply Chain Challenges Drive Increased Meat Prices

Friday, May 15th, 2020

After wreaking havoc on the physical health and well-being of the world and crumbling the American economy, COVID-19 has a new victim:  the U.S. agricultural supply chain. Over the past few months, the novel coronavirus has crept its way into meat and poultry processing plants. The problem is not a supply problem – there is plenty of meat and poultry available. Farmers are even destroying an oversupply of inventory. The problem is in production. Beef and pork production has plunged by 35% due to the closing of plants. Farmers and milk providers are in a similar situation when it comes to a much more perishable sector – dairy. Due to a lack of demand from on-premise food services, as well as processors not accepting milk, dairy farmers have had to dump their product.

Farmers have product that they can’t sell. Processing plants aren’t running at traditional capacity. Grocery stores and restaurants can’t get their meat supply. Ultimately, even with excess at the beginning of the supply chain, consumers will be paying significantly more in the coming months. In a time like this, where unemployment has hit record highs and food bank lines stretch miles long, there has to be a solution to get excess food products in the hands of people who need it most before it goes to waste. Grocery stores such as Kroger are buying excess inventory and redirecting it to food banks to give to those in need.

How will this all impact the everyday shopper? By the end of April, fresh meat prices were up 8.1% and could increase by 20% in the next few months. Not only will there be an increase in prices, but retailers have already begun limiting the amount of meat customers can buy while food service chains are starting to monitor the meat situation.

This all creates two opportunities for brands in the CPG space. The first, in seeking ways to help during the COVID-19 crisis, brands should be looking at their supply chain and seeing where they can help get excess products into the hands of consumers who need it. The second, more long-term opportunity, is watching consumption behaviors. With a limit on meat purchases, consumers may shift towards more plant-based meals. How can we leverage our products to continue to inspire shoppers’ at-home meal occasions?

Submitted by: Kelly Dubin, Director Insight & Strategy, Integer Dallas

Image Source: Unsplash

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