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President Trump Readies Bailout For Nation's Food Suppliers

Published: April 28, 2020
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Source: Zero Hedge

Update (1306ET): In another round of comments, President Trump has ordered meatpacking plants to remain open during the pandemic. While plants can remain open, workers, who don't want to contract the deadly virus, don't necessarily have to show up to work. We discussed that over the weekend in a piece titled "American Farms Cull Millions Of Chickens Amid Virus-Related Staff Shortages At Processing Plants."

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President Trump, on Tuesday, said he would be signing an executive order to address the meat supply aimed at Tyson Foods Inc.'s shuttered meatpacking plants that could disrupt the nation's food supply chain in May.

The president did not elaborate much on the executive order but noted Tyson faces a "unique circumstance" in terms of its liability. When asked about the supply of meat in the country, President Trump said: "There's plenty of supply."

On Twitter, President Trump, on Tuesday morning, retweeted The Counter, a non-profit news organization focused on the nation's food supply, that read: "First, there is no shortage of meat destined for the grocery store shelf. It might take stores longer than usual to restock certain products, due to supply chain disruptions. But we have many millions of pounds of meat in cold storage across the nation. 4/."

President Trump's comments come as the starkest warning yet that high food prices could last for a long time, Tyson Foods warned in a full-page ad in the New York Times on Sunday that the "food supply chain is breaking."

"As pork, beef and chicken plants are being forced to close, even for short periods of time, millions of pounds of meat will disappear from the supply chain," wrote Tyson Chairman John Tyson, patriarch of the company's founding family, in a Tyson Foods website post that also ran as a full-page ad in several newspapers. "The food supply chain is breaking."

On Monday, we explained how food supply chains are being stressed across the country:

News feeds in April have been inundated with food supply chain disruption stories due to coronavirus-related shutdowns. At least a third of US meatpacking facilities handling hogs have shifted offline this month, other plants that process cows and chickens have also shuttered operations, forcing farmers to cull herds and flocks. This is because each plant closure diminishes the ability for a farmer to sell animals at the market, leaves them with overcapacity issues similar to the turmoil facing the oil industry. Only unlike oil where pumped oil must be stored somewhere (as one can't just dump it in the nearest river) even if that ends up costing producers money as we saw last Monday when oil prices turned negative for the first time ever, food producers have a simpler option: just killing their livestock.

We previously explained what this imbalance has created: crashing live cattle spot prices while finished meat prices are soaring, which doesn't just affect farmers but also consumers simultaneously and could spark a shortage of meat at grocery stores as soon as the first week of May.

Bloomberg's map shows the latest closures of meatpacking plants:

It appears our reports on meat shortages developing across the country could materialize in the next several weeks as President Trump is about to sign an executive order to address the issue.

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