Food Shortages & Price Increases Ahead?

[Evo]

Even though they are destroying millions of chickens, cows and pigs, this is also going to cause shortages and price increases of all other foods as people have to find alternatives and start hoarding.

https://www.yahoo.com/news/food-supply-chain-breaking-tyson-213539680.html

In a related article, another supplier had euthanized 2 million chickens.

https://www.businessinsider.com/mil...-food-supply-chain-brink-meat-shortage-2020-4

What a waste, what a shame.

 

[Klystron]

What a waste, what a shame.

Sad but true.
Government for the people by the people would help mitigate, prepare and plan food production and distribution. There are many ways to preserve proteins and othern nutrion content originally intended for other venues -- restaurants, international commerce, hotels, etc. -- until demand and supply normalize.

What a tragic unnecessary waste of limited resources; a shadow on the land.

 

[phinds]

I've also read that all total there are millions of TONS of fresh produce being left to rot because restaurants and other outlets are closed.

And this at a time when, reportedly, food banks are begging for donations.

 

[TeethWhitener]

Surely Tyson doesn’t have a vested interest in whipping up a demand frenzy...

Also, from the Time article:

The Arkansas-based company says food waste is also a threat, as “farmers across the nation simply will not have anywhere to sell their livestock to be processed, when they could have fed the nation.”

“Millions of animals —chickens, pigs and cattle— will be depopulated because of the closure of our processing facilities,” Tyson writes.

Maybe someone more familiar with meat processing can explain the logic here. Aren’t Tyson’s facilities the places where this “depopulation” takes place? If these facilities are shuttered, why does that eliminate the animals? Don’t animals continue to, you know, live when they’re not being sent to the slaughterhouse?

 

[Bystander]

I'll swear that I've seen remarks to the effect that "at any given moment there is food (globally) for two weeks;" i.e., that there is only a two week interruption in production necessary to screw things up thoroughly. Googling "global food supply" + "amount on hand" in a variety of permutations has failed to yield a result.

When producers can't get products to market... Shades of the "Irish Potato Famine," very local, gone global.

 

[phinds]

Don’t animals continue to, you know, live when they’re not being sent to the slaughterhouse?

Yep, they sure do and they are HUNGRY critters. You want to pay to feed them out of the goodness of your heart? Thousands of them? And pay the workers that handle the feed and the feeding machines? And keep them clean and free from disease? Large processors are in business to make money, not because they love animals or because the love losing money.

 

[russ_watters]

Don’t animals continue to, you know, live when they’re not being sent to the slaughterhouse?

Yep, they sure do and they are HUNGRY critters.

They also procreate and go through their planned life-cycles. For cows it takes something like two years, and you can't just press pause on that process. I'm sure they have absorbed as much extra holding capacity as they can.

And we eat (and therefore breed) 25 million chickens per day in the US.

At least with our oil glut we can literally turn off the tap.

 

[TeethWhitener]

Yep, they sure do and they are HUNGRY critters. You want to pay to feed them out of the goodness of your heart? Thousands of them? And pay the workers that handle the feed and the feeding machines? And keep them clean and free from disease? Large processors are in business to make money, not because they love animals or because the love losing money.

So is it cheaper just to kill/let the animals die and start from scratch after the pandemic than to keep the animals alive and resume slaughtering once the pandemic ebbs enough to restaff the slaughterhouses?

 

[phinds]

So is it cheaper just to kill/let the animals die and start from scratch after the pandemic than to keep the animals alive and resume slaughtering once the pandemic ebbs enough to restaff the slaughterhouses?

Don't you think processors would do that it if it was profitable? If it is in some cases, they will, otherwise ... FOLLOW THE MONEY.

 

[TeethWhitener]

Don't you think processors would do that it if it was profitable?

Which?

 

[TeethWhitener]

I agree that businesses will seek to maximize their profit. I just find it surprising in this case that maximizing their profit consists essentially of taking a blowtorch to their inventory.

 

[phinds]

I agree that businesses will seek to maximize their profit. I just find it surprising in this case that maximizing their profit consists essentially of taking a blowtorch to their inventory.

Oh, it's worse than that. They have to lay off people who were taking care of the animals and machines and then eventually hire new ones (maybe some of the same, so good, but maybe some new so bad because of training issues and lack of experience). They may also lose supply chain contracts both for what they sell and for what they need to buy.

Also, it's NOT "taking a blowtorch to their inventory". If the inventory were in a warehouse they owned they could just turn off the lights. In this case they have the expenses I mentioned, so not the same thing at all.

 

[TeethWhitener]

Also, it's NOT "taking a blowtorch to their inventory". If the inventory were in a warehouse they owned they could just turn off the lights. In this case they have the expenses I mentioned, so not the same thing at all.

Now I’m very confused. I guess I’m just too dense for subtlety, so you’re going to have to be as straight as possible with me. By “inventory,” I meant the animals. Are you saying that the animals will be kept alive?

 

[Bystander]

will be kept alive?

I'll answer for Paul, since he's stepped out for a moment; "No. Whatever costs money and yields no return on the investment goes."

 

[phinds]

Now I’m very confused. I guess I’m just too dense for subtlety, so you’re going to have to be as straight as possible with me. By “inventory,” I meant the animals. Are you saying that the animals will be kept alive?

No, I'm saying that if the "inventory" were boxes of cereal and it were stored in a warehouse that they owned, they would not take a blowtorch to it, they would just leave it there, turn off the lights and lock the door. They wouldn't destroy it because there's no cost to keeping it. You seem to be finding it difficult to accept that keeping live animals is expensive.

 

[TeethWhitener]

You seem to be finding it difficult to accept that keeping live animals is expensive.

No I find it surprising that it costs more than kiboshing the whole operation and starting over from scratch.

 

[phinds]

No I find it surprising that it costs more than kiboshing the whole operation and starting over from scratch.

I agree

 

[Bystander]

kiboshing the whole operation and starting over from scratch.

Depends; you're a rancher fattenning cattle for slaughter, you're a rancher breeding cattle for slaughter, you're a "rancher" renting pasture to run cattle on; three different business models.

 

[gmax137]

I agree that businesses will seek to maximize their profit. I just find it surprising in this case that maximizing their profit consists essentially of taking a blowtorch to their inventory.

"cash flow"

 

[256bits]

No I find it surprising that it costs more than kiboshing the whole operation and starting over from scratch.

It is not a kibishing of the whole operation.
It is a re-adjustment, due to supply and demand, with some extreme bottlenecks thrown into compound the situation facing producers and processors.
Right now there is oversupply in the restaurant and culinary side of the food supply - exactly pretty much a complete drop in demand in that side of the food chain due to the closures of the restaurants.

Some producers and processors exist exclusively with contracts to that part of the chain. Since that demand has dried up, they have two choices - try to sell to the grocery side of the market at reduced price, or reduce their production through either "natural means" ( reduced births of animals or delayed planting or harvesting of crops - the continuation of a herd or the planting and harvesting, as mentioned, requires manpower which is not available for many reasons, so the farmer may be limited in choice ), or euthanization. After all, farmers themselves do not have unlimited resources to house, feed and take care of animals and produce.

The closures for the food processing plants has added another dimensional effect to the food supply.
If they do have a product, they may now not have any where to sell, or at the very least, limited options to sell.

This explains it much better, and one can see where the depopulation come about.
https://www.reuters.com/article/us-...d-as-pandemic-slams-meat-sector-idUSKCN2292YS

Yes. it is a shame.
But the food supply is tweaked to run at a certain throttle.
An unexpected reduction of the throttle has thrown the system into turmoil, but at the present moment not into complete chaos, The producers and processing plants still exist.
When we start seeing bankruptcies and complete elimination of these businesses, then do start to completely worry.

Thank Tyson for bringing the problem to the for front.

 

[Bobsweslay]

It seems to me, that adequate food production would be a priority, in order to insure that everyone has enough to eat, and the govornment would subsidise food producers to a certain degree as to maintain a level of stability. Because, obviously, a food shortage will result in so many unpleasant and uncontrollable scenarios, that I have no doubt would be much more difficult and expensive to manage than the"books"and the inventory.

 

[Vanadium 50]

It seems we are learning what a planned economy looks like - without all that planning.

 

[Bobsweslay]

A planned economy? By that do you mean that this"pandemic" is either planned, or being used to force a modified economic system into existence? I foresee it being used to expedite the eradication of physical currency, and hurry into practice the inevitable exclusive form of trade and commerce entirely digital and electronic, which in turn will allow the powers that be considerable more power over the masses, and the resources we all need to live. Food, being the main concern. And whoever controls the food supply and distribution, will also control the people to a large degree. Shortages would probably cause riots and panic, but rations would reward obedience and conformity as an alternative to civil unrest that could risk food availability to potential dissidents.

 

[jbriggs444]

A planned economy? By that do you mean that this"pandemic" is either planned, or being used to force a modified economic system into existence?

No. That is not what he is saying.

In #21, you yourself suggested how you thought the economy should be run. That "adequate food production should be a priority". That's a planned economy. You would have someone (government, perhaps) making decisions about how to prioritize allocation of resources so that food production is not threatened by events such as these.

@Vanadium 50 was making the somewhat ironic suggestion that the current situation with individuals making locally reasonable but globally problematic decisions is the kind of thing that could result from a planned economy with inadequate planning. An object lesson, if you will.

No, it is not being suggested that some sort of diabolical plan is in action. It is not even about individuals behaving stupidly. It is the invisible hand of the market made visible.

 

[phinds]

I foresee it being used to ... hurry into practice the inevitable exclusive form of trade and commerce entirely digital and electronic

? You think all trade and commeerce is going to become entirely digital and electronic? Now, that's just nonsense. Perhaps I am misunderstanding what you mean.

 

[TeethWhitener]

Some producers and processors exist exclusively with contracts to that part of the chain.

This is interesting. The Reuters article you posted stated that the producers aren’t “geared up” to supply grocery stores, which suggests that the process of slaughtering/butchering/etc. is different for grocery stores than it is for restaurants (or—maybe more likely—the logistics of the supply channels would require an unwieldy adjustment). But here you seem to suggest that it’s a matter of contract law, not physical ability of getting the animals slaughtered and to a point of sale. Do you mind clarifying if it’s one, the other, or both?

Edit: there’s some more info further down in the article. Things like liquid eggs or readymade eggs tend to go to restaurants (think the egg in an egg McMuffin), while eggs in cartons (which are also suffering a shortage right now) have to be graded and packed to go to grocery stores.

 

[phinds]

One thing that would likely be different is packaging since restaurants don't need things packed to individual serving sizes but grocery stores do.

 

[TeethWhitener]

One thing that would likely be different is packaging since restaurants don't need things packed to individual serving sizes but grocery stores do.

This also kind of surprises me, in a few different ways. A lot of restaurants do receive meat portioned into individual sizes (though maybe not packed that way): think burger patties that fast food restaurants sell by the billion. But now my question is: how involved are the primary producers (farmers, ranchers) in packaging their products? Clearly the animals have to be slaughtered before they’re smooshed into patties. The eggs have to be laid before they’re liquefied. The switch from restaurants to grocery stores should really only affect farmers indirectly. The real effects would be further up the supply chain. I see why shutting down a processing plant is a big deal, because it closes a channel for the farmers’ goods. But the restaurant/grocery thing is a little beyond me.

 

[phinds]

fast food restaurants sell by the billion

I was strictly thinking of places that I think of as restaurants, not junk food emporiums but the junk food places do likely sell more combined than actual restaurants do so you make a good point.

 

[Bystander]

https://www.investopedia.com/terms/f/futurescontract.asp

Googling "futures contracts" can be educational on this topic.

Edit: Trading Places is actually a fairly good tutorial re: "'The' Commodities Market."

 

[BillTre]

Ever been to a restaurant supply?
Food portion sizes are often sold in quantities that are way beyond what a normal consumer would use.

 

[Vanadium 50]

Clearly the animals have to be slaughtered before they’re smooshed into patties.

If you just smoosh 'em first you don't have to worry about the slaughtering.

I know a little about McDonald's potato supply chain. Many of the farmers grow exclusively for McDonald's - that is, Farmer A sells to a single middleman B who has a single distributor C, who in turn sells exclusively to McDonald's. If McDonald's locks down, C loses most of his business, as does B and eventually A.

It's true that A can look for a B2, who's looking for a C2, who's looking for a new customer. But this takes time, and there are inefficiencies "those potatoes are too big/small/round/oval..."

But it's also true that more people eat fries out than eat them at home. So there is an overproduction in potatoes at the moment.

 

[TeethWhitener]

Ever been to a restaurant supply?
Food portion sizes are often sold in quantities that are way beyond what a normal consumer would use.

How much trouble is it to repackage? A lot of groceries package their own meat and fish in store. Are the portion sizes themselves too big (e.g. side of beef broken down in-restaurant) or are they just packaged by the thousand?

 

[256bits]

This is interesting. The Reuters article you posted stated that the producers aren’t “geared up” to supply grocery stores, which suggests that the process of slaughtering/butchering/etc. is different for grocery stores than it is for restaurants (or—maybe more likely—the logistics of the supply channels would require an unwieldy adjustment). But here you seem to suggest that it’s a matter of contract law, not physical ability of getting the animals slaughtered and to a point of sale. Do you mind clarifying if it’s one, the other, or both?

Edit: there’s some more info further down in the article. Things like liquid eggs or readymade eggs tend to go to restaurants (think the egg in an egg McMuffin), while eggs in cartons (which are also suffering a shortage right now) have to be graded and packed to go to grocery stores.

In a very simple description.
There is the futures market ( as mentioned ), the contract market, and the auction market (spot price ). Contract s between at least one enterprise and another.
Futures is bid and ask for a future day. Auction market is buyers bidding against one another.
Any one can do one or the other, a mixture, or all three. Of course, the size of your enterprise can lead to a favouritism of selection of the choices, If you are a large restaurant chain, you might want to enter into a contract with a large supplier, or many suppliers, and vice versa.. If you are a small unit you might opt for the spot price, or opt for a distributor fulfilling that role for you and paying his price for a side of beef, or the cuts ( if it is beef you want ). Same for the groceries stores and chains, and the mom and pop stores,

Since Covid and the restaurant closures, the news items are bearing out some of the difficulties being faced within the food supply chain.

 

[Tom.G]

My response here is a little bit from being exposed to parts of the industry over the years, and a little bit 'devils advocate.' Intended mainly to highlight that 'simple solutions' are often well hidden, when they exist.

This also kind of surprises me, in a few different ways. A lot of restaurants do receive meat portioned into individual sizes (though maybe not packed that way): think burger patties that fast food restaurants sell by the billion. But now my question is: how involved are the primary producers (farmers, ranchers) in packaging their products? Clearly the animals have to be slaughtered before they’re smooshed into patties. The eggs have to be laid before they’re liquefied. The switch from restaurants to grocery stores should really only affect farmers indirectly. The real effects would be further up the supply chain. I see why shutting down a processing plant is a big deal, because it closes a channel for the farmers’ goods. But the restaurant/grocery thing is a little beyond me.

As others have pointed out, many of the 'fast food' item are eaten mainly not at home. I just checked a retaturant supply business to find out their packaging for hamburger patties.

Hamburger patties come in counts of 20, 26 30, 40, 48, 60, 96 per case. All frozen and some precooked then frozen. Pricing is around USD $2 to $5 a pound, plus shipping.

Of course the production is all automated, including stuffing the patties in a cardboard carton at the end. Even those box-stuffing machines are expensive, large, and take several months to build, and another month or so to install.

So 'repackaging' to sell in the corner store requires either

• spending 100000s of dollars and a waiting to install a new machine

or

• hiring and training a bunch of untrained people
  (then the labor costs are much higher than using the packaging machine, so they have to charge more)
• finding sources for the new packages
• finding a place for the the new employees to work
  (they could rip out the old packaging line, but what to do with it?)
• purchasing and installing all the new furniture/equipment
• finding the new retail outlets to sell to
• finding carriers (truckers) to get the product delivered

Oh, and also take into account that the slaughter houses are shutting down now because the employees are coming down with COVID-19, so the packers can't get their raw material anyhow.

And there are probably hundreds of details I haven't thought of too.

Possible? Yes. Anyone have a good solution?