Food & Beverage

Tyson Foods chairman warns 'food supply chain is breaking' as coronavirus forces plant closures

Key Points
  • Meat processors, including Tyson, Smithfield and JBS, are closing U.S. facilities after workers test positive for Covid-19.
  • "The food supply chain is breaking," Tyson Foods Chairman John Tyson wrote in a full-page newspaper ad that ran on Sunday.
  • More than a dozen packing and food processing workers have died after contracting Covid-19, according to the United Food and Commercial Workers International Union. 

In this article

A package of Tyson Foods brand grilled chicken package is arranged for a photograph in Tiskilwa, Illinois.
Daniel Acker | Bloomberg via Getty Images

Tyson Foods expects that millions of pounds of meat will disappear from the food supply as the company temporarily shutters beef, pork and chicken plants due to local coronavirus outbreaks.

Meat processors, including Tyson, Smithfield and JBS, are closing U.S. facilities after workers test positive for Covid-19. Meatpacking workers often work shoulder to shoulder for hours at a time, increasing their risk of exposure to the virus. 

Tyson placed a full-page ad in The New York Times, Washington Post and Arkansas Democrat-Gazette on Sunday addressing the plant closures. 

"The food supply chain is breaking," Tyson Chairman John Tyson wrote.

Tyson said that a limited supply of its products will be available in grocery stores until facilities can be reopened. These temporary closures will also mean millions of livestock will be slaughtered because farmers will not be able to sell their pigs, cows and chickens to buyers who can process the meat.

Just how safe is the food supply?

The U.S. Department of Agriculture is buying $3 billion in fresh produce, dairy and meat from farmers to stabilize retail prices and reduce food waste. The agency is forecasting that 2020 beef prices will climb 1% to 2%, poultry as much as 1.5% and pork between 2% and 3%, The Associated Press reported.

The United Food and Commercial Workers International Union, which represents about 80% of beef and pork production workers, said Thursday that at least 13 packing and food processing workers have died after contracting Covid-19 and thousands more have tested positive or been exposed. 

On Sunday, the Centers for Disease Control and Prevention released guidelines for meat and poultry processing workers and employers. Recommendations include adding more stations for workers to clock in and out, providing cloth face coverings for all employees, limiting carpooling and checking temperatures before workers enter the plant. 

Bernstein downgraded Tyson's stock on Friday, citing the uncertainty about the company's ability to maintain production levels in the near term. 

"Overall, we expect production disruptions to be a ~60% headwind to TSN's pork volume for 4 weeks given the impact of plant closures and reduced production levels due to absenteeism," analyst Alexia Howard wrote in a note to clients. "We also expect TSN to face a ~35% volume headwind in beef and a 20% headwind in chicken for 4 weeks." 

As concerns over a meat shortage have grown in recent days, Beyond Meat had its best week of trading since going public in May, with shares closing up 41% for the week on Friday. The maker of meat alternatives also announced deals last week to sell its products in China at Starbucks and KFC locations.

Beyond's stock, which has a market value of about $6.2 billion, closed down 8.4% at $99.63 on Monday after a downgrade from UBS on lower restaurant sales.

Shares of Tyson, valued at $21.8 billion, rose 1.2% to $59.68. Tyson's stock has dropped 34% since the start of the year. 

12 major US meat plants currently shut down