Nick Smith, left, weighs a steak while preparing cuts of beef at American Meat Co., which is keeping shorter operating hours amid supply chain issues.
SBJ photo by Jessica Rosa
Nick Smith, left, weighs a steak while preparing cuts of beef at American Meat Co., which is keeping shorter operating hours amid supply chain issues.

Meat companies navigate supply shortages

Posted online

As national supply chain issues impact the meatpacking industry, higher prices and demand have been the norm in recent weeks for local meat companies.

Across the United States, hundreds of meatpacking workers have tested positive for COVID-19 and large producers, such as Tyson Foods Inc., Smithfield Foods Inc. and Cargill Inc., have all dealt with temporary plant closures in March and April.

It’s had a negative impact for local butcher shop American Meat Co. Owner Jason Owen said meat shipments he’s received in recent weeks are about 4,000-8,000 pounds fewer than usual. The reason isn’t due to a lack of livestock, he said.

“There’s no shortage on cows; there’s no shortage on pigs,” he said. “The problem is the slaughterhouses that have been shut down because of people getting sick.”

Owen said most of the store’s beef comes from National Beef Packing Co. LLC in Kansas and all its pork is from Seaboard Foods of Iowa LLC. Both meat packers are among those impacted by COVID-19.

As product has been in short supply, American Meat Co. has reduced hours. There simply hasn’t been enough meat on hand to sell, Owen said. That led him to close the shop Thursday through Saturday the past two weeks at no small cost.

“I’m losing anywhere from $30,000-$50,000,” he said of recent closures.

Staying stocked
On the other hand, business is booming at Horrmann Meat Co. LLC.

Co-owner Seth Hoerman said sales in May could finish at a historic clip.

“May is going for a record, for sure. It’s been pretty crazy,” he said, declining to disclose revenue tallies. “When the grocery stores run out, people hear that we have things and we get hit hard.”

Sales had been climbing in March and April, too, he said. Grocery chains Price Cutter, Walmart and Hy-Vee in town have set per-customer limits on meat, to protect supply and prevent hoarding.

Hoerman said his company largely buys from Missouri processors, which has helped the store maintain a healthy supply of product amid the virus pandemic. The shop also utilizes local producers, including Wheatland-based Flying 3 Ranch LLC and Nixa-based JB Kobe Farms.

“We’ve been able to remain pretty well stocked through it,” he said, noting the company gets a lot of its beef from Zimmerman Meats in Summersville. “Definitely people are stocking up more, which is compounding the problem. It’s not a supply problem; it’s a distribution problem right now.”

Just before the COVID-19 pandemic, Horrmann Meat Co. closed its own processing plant in Fair Grove.

“There’s a lot of liability and things like that at a slaughter plant. We did it for 17 years and I think we were ready to move on as a family,” Hoerman said of the October 2019 closure.

Like Horrmann, meat wholesaler Gold Crown Food Co. also has managed to stay busy – albeit in a different way from normal operations.

Aaron Scholl, director of purchasing, said the company began selling high-demand consumer goods, such as toilet paper, paper towels and proteins, in late March at its East McDaniel Street warehouse.

“Since the pandemic broke open and Springfield went into a lockdown, we opened our doors to drive-in business,” he said, adding the service draws 15-20 vehicles a day after an initial peak of 80 daily visitors. “That’s been a huge help for our business to keep our employees employed and busy.”

Scholl said Gold Crown’s business is down 15%-20% this year, largely due to supply issues.

Declining to disclose revenue, Scholl said the company has hundreds of clients in its 150-mile distribution area – pretty evenly split between restaurants and grocery stores. Harter House and Leong’s Asian Diner are among local customers.

Its beef supplies have been cut in half, and pork is down 25% from the national processors, Scholl said, declining to disclose totals. Shortages are being supplemented with frozen product.

“People still want hamburger. People still want chicken,” he said. “But it’s the supply piece that has gone down.”

Price points
As demand for meat has increased, prices for local companies supplying them to wholesale clients and consumers has risen as well. The owners at American Meat Co. and Horrmann Meat Co. say they have raised retail prices to keep up with their costs.

Owen said American Meat’s normal markup on meat is 15%-20%, but it’s been running around 7% over the past several weeks. He recently priced ground beef at $6.69 a pound and was still only making two cents per pound.

“We haven’t seen prices like that in a long, long time,” he said.

Ground beef prices are up over $6 per pound at Horrmann Meat, too. Hoerman said the supply strains have pushed pricing about $2-$2.50 higher per pound than normal.

The higher prices at the local butcher shops mirror the jump in national retail prices. According to U.S. Bureau of Labor Statistics data, grocery pork prices in April were up 3% over March, beef roasts were up 5%, and ground beef was up 4.8%. Year over year, ground beef is up 9.7%.

Owen said he expects the supply chain issue will soon improve as more meatpacking plants are getting back to full production. However, he said it would probably take a few more weeks before supply catches up with demand.

As for his shop, Owen said the $1 million revenue mark American Meat has hit in recent years is unlikely to happen in 2020.

“It’s going to be rough unless something turns around pretty drastically,” he said.

Owen said wholesale represents about 60% of meat sales, with retail growing in the past year to 40%. As wholesale client sales have slid since March, due to many restaurants being closed or offering limited service, Owen said retail has been the company’s saving grace.

“If it wasn’t for our retail customers, we would have literally just shut it down,” he said. “Retail kept my lights on and kept my guys paid, and I’m very thankful for that.”