Trump Orders Meat Plants to Stay Open

Processors are deemed critical infrastructure as supply chain worries grow, especially among restaurants.

April 30, 2020

WASHINGTON—President Trump has signed an executive order that mandates meat processing plants stay open, CNN reports. The order falls under the Defense Production Act and declares the plants to be a part of critical U.S. infrastructure.

The president signed the order after some companies announced they were considering keeping only 20% of their facilities open. A majority of processing plants could have shut down, reducing processing capacity in the country by as much as 80%, an official familiar with the order told CNN.

The administration is also working with the Department of Labor on issuing guidance about which meat processing employees should remain home, including workers who are part of populations most vulnerable to the coronavirus. On Tuesday, the nation’s largest meatpacking union said the Trump administration should immediately compel meat packing companies to provide “the highest level of protective equipment” to slaughterhouse workers and ensure daily coronavirus testing.

Meat supply could be a problem for restaurants, along with other issues resulting from the COVID-19 pandemic, Bloomberg reports. Prices for meat are rising as supplies are squeezed, and many restaurant chains are being forced to make backup plans. 

Fazoli’s Restaurants, based in Lexington, Kentucky, plans to bring in poultry, which has seen more price stability, if ham and salami supplies get tight. “We’re expecting prices to go up” for proteins, said Carl Howard, CEO of Fazoli’s. “As it relates to deli meats, we already have a backup plan if we have to go without. We can easily put in a chicken parm instead.”

Fazoli’s relies on both Tyson Foods, the biggest U.S. meat company, and Smithfield Foods, the world’s No. 1 pork producer, for supply. Smithfield, Tyson and JBS SA, the world’s top meat company, shuttered plants across the U.S. because of COVID-19 outbreaks among employees. President Trump’s order to keep them open will affect all processing plants supplying beef, chicken, eggs and pork.

For more than a month, the dining industry has struggled with closures and decimated sales. The latest data show that same-store sales fell 83% at casual-dining chains and 34% for fast food in the last week of March, according to industry researcher MillerPulse. April results are expected to be similar.

Some in the dining industry are starting to do a little better as consumers venture further from home after extended shelter-in-place orders. Sales have been marching upward for Salsarita’s Fresh Cantina, based in Charlotte, North Carolina. Since an initial 60% sales decline in March, CEO Phil Friedman said, the chain is now down just 40%. Salsarita’s hasn’t seen higher prices or chicken shortages, but it’s ready to make meat substitutions on its menu if necessary, Friedman said.

Still, restaurant operators are concerned they won’t have the meat needed to make burgers and sandwiches, which could derail any nascent recovery. In today’s environment, lifting prices isn’t an ideal solution, said Howard of Fazoli’s, but the company may have little choice. “The last thing we want to do is raise menu prices,” he said.

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