Commodity Conversations Weekly Press Summary

The US President ordered meat plants to remain open this week, using an executive order under the war era Defense Production Act. This came after the head of Tyson warned of an upcoming domestic meat shortage because of plant closures. According to USA Today, about a third of the country’s biggest meatpacking plants are in areas with high infection rates and over half of them have already reported infections. To make things worse, some 100 USDA health inspectors who have been touring the country inspecting plants have been diagnosed with the virus, causing concern that they may have contributed to the spread. The President also suggested that, under the act, companies would not be liable if workers get infected, although some say that only judges can make that call. 

About a quarter of the beet and pork production capacity is currently closed, creating a bottleneck in the country’s meat supply chain. The price of meat in supermarkets was up 5-7% on year at the start of the month despite ample supply of livestock. The timing is particularly bad as the US hog population is at record high because producers had planned to cash in on a surge in demand from China. In a bid to cope, factories have been given waivers to accelerate their slaughter pace. The Food Safety Inspection Service and producers said the faster pace is still safe, but the Food & Water Watch warned that the measure would compromise food safety and workers are worried this will facilitate a spread in the virus. There is also a concern that the outbreak of diseases like salmonella could soar as a result. 

Plants that produce eggs for the industrial sector have been euthanising chicken en masse due to the collapse of the demand from the restaurant sector. On the other hand, the wholesale price of eggs reached USD 3/dozen as of the start of April, a threefold increase within one month, as suppliers are struggling to meet the surge in demand. The Chicken & Egg Association noted that it was expensive for industrial egg producers to switch to selling to the retail market because of the equipment required. Further up the chain, this is affecting feed suppliers, and therefore corn and soybean farmers. 

The whole coronavirus situation pushed a group of US lawmakers to call on a global ban on “wet markets,” something which many animal welfare organisations have been advocating for a while. However, an analysis in The Guardian warns against the West’s negative bias against these markets, which are basically open air markets (the term “wet” comes from the water splashed on vegetables to keep them fresh). Many wet markets in Asia do not sell any meat, and small farmers depend on them to sell their produce. The sale of wildlife meat mainly happens in the unregulated markets, and is therefore unlikely to disappear under a blanket ban. And in any case, an expert noted that consumers are increasingly keen on buying from supermarkets, adding that wet markets could slowly disappear by themselves. 

The news of a potential shortage of meat in the US pushed the shares of plant-based meat company Beyond Meat, which has been struggling from the closure of restaurants and food chains. The company announced it was launching its products in China in a deal with Starbucks. The coffee chain has reopened almost all of its stores in the country. 

Nestle reported an organic growth of 4.3% in the first quarter, the highest in almost 5 years. Sales were driven in large part by pet food, as people panic-bought feed and are now spending more time with their pets – and therefore spoiling them. Nestle’s retail coffee products with Starbucks, Nespresso and Nescafe also performed well. The company is keeping an eye out for acquisition opportunities, the president said. 

The CEO of Danone noted that consumers are switching away from trendy niche products and returning to older, more established, and even sometimes old fashioned, brands. Campbell Soup and Kraft Heinz Oscar Mayer hot dogs are seeing a revival, while the UK is witnessing a growing demand for Smash instant powdered mashed potatoes. This is in part because it has been easier for these bigger groups to ensure supply amid the current restrictions but it could also be that consumers may be looking for reassurance in known products, which also happen to often be cheaper than the new, trendy ones. 

Many brands are even relaunching products popular in the 90s which were discontinued. A journalist noted that these brands have a strong nostalgic appeal. For example, Kraft is launching new flavour of Planters Cheez Balls, originally discontinued in 2006, General Mills is bringing back Dunkaroos and Coca-Cola is relaunching Surge. Most of these products were discontinued when consumers moved away from unhealthy ultra-processed products but an author noted that “there’s always going to be a few million people who are just in it for the craving and the fix”. 

This summary was produced by ECRUU

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