Assessing Impact of Packing Plant Utilization on Livestock Prices

Glynn Tonsor and Lee Schulz

ISU General Staff Papers from Iowa State University, Department of Economics

Abstract: As the agricultural sector continues to adapt to the situation presented by COVID-19 (Novel Coronavirus), a multitude of questions have developed. One critical development is broader recognition of the importance of ongoing operation of packing plants. This importance reflects the need to sustain ongoing production of meat and meat products for end-user consumption. Moreover, the importance of ongoing operation to ensure business continuity of livestockmarkets is top-of -mind for producers. While the unprecedented response to the COVID-19 pandemic is evolving rapidly, the goal of this report is to provide big-picture guidance on how sensitive cattle and hog prices are to “regular” operation of packing plants. Some major potential concerns as both the beef and pork industries drift closer to maximum packing capacity are labor availability and temporary plant closures or reduction in shifts. There is a big difference between maximum physical, or rated, capacity and operational capacity with labor often being the driving factor.

Date: 2020-04-04
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Persistent link: https://EconPapers.repec.org/RePEc:isu:genstf:20200404070000

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