May 1, 2020
Ryan Bernstein Comments on the Food Supply Chain and Potential Shortages
On April 28, President Trump signed an Executive Order invoking the Defense Production Act, designating meat and poultry processing plants critical infrastructure.
McGuireWoods Consulting senior vice president, Ryan Bernstein, commented on the impact of Trump’s Executive Order and how farmers are responding to the crisis in an April 29 article from Bloomberg.
“It will ease a lot the pressure for livestock producers, but we don’t anticipate this completely solving the problem,” said Bernstein. “There will still be bottlenecks. And farmers are still going to have make difficult choices when it comes to depopulating.”
Supply chain disruptions are expected to be temporary, but could make some cuts of meat scarcer or more expensive in the coming weeks, an April 29 Farm Progress article reported.
“How long the disruptions last will depend on how many animals producers have to kill because of a lack of processing capacity and a resulting lack of income,” Bernstein said. “Right now a lot of producers are making decisions based on this year’s production and how much they can handle, especially in the hog world. Do you cull the ones that are about ready to go to market, or also the ones that are just being born? Those decisions that are being made now will really impact whether or not we’ll see short-term or long-term (shortages) if people are starting to have to cull new piglets that are being born now.”
The U.S. has a “just in time” food system, which leaves limited storage options.
“A meat shortage could create an opportunity for plant-based meat substitutes to fill gaps, although that industry is now geared largely to restaurants and is having to shift its attention more toward consumers at home,” Bernstein said.
In addition to designating meat processing plants ass critical infrastructure, President Trump’s Executive Order also shields the companies from legal liability.
“This will at least stem the cascading effect of plant closures and should help plants get back online sooner, especially if the federal government dedicates more PPE (personal protective equipment) and resources to these facilities and workers," Bernstein said.
There is little doubt that conversations will continue when the House and Senate reconvene about increasing support for rural America, Bernstein said in a May 1 article for The Fence Post.
"It’s fair to say we will see more attention to agriculture in the next COVID bill,” he said. “There is bipartisan talk at this point both in the House and the Senate about increasing the amount of capacity of the Commodity Credit Corporation. I think that has a very good chance of being expanded when people return to D.C.”
In an April 29 interview with the National Grange, Bernstein spoke at length on the food supply chain, potential shortages, relief available to producers and how this will reshape production agriculture long-term.