The global meat processing industry is taking a massive hit as coronavirus tears through its factories, reducing its workforce and temporarily shuttering plants in an industry still heavily reliant on human labor.

In April, the chairman of meat giant Tyson, John Tyson, bought full page advertisements in several US newspapers warning that "millions of pounds of meat will disappear from the supply chain."

Tyson, which employees about 100,000 workers, was one of several major processors forced to close plants after workers fell ill with the coronavirus.

The result has been reduced supplies and a spike in meat prices, potentially offering opportunity to the more automated seafood processing sector.

Whether seafood can do what it takes to gain an advantage, though, remains to be seen.

Beef hit, pork hit harder

To some extent, Tyson's predictions are coming true.

Beef production in the United States was down around 14 percent in April due to Covid-19-related packing plant shutdowns and reduced slaughter capacity, Eva Gocsik, associate analyst animal protein at RaboResearch Food&Agribusiness, told IntraFish.

Other big beef producing nations are also looking at reductions, although not all of these reductions are pandemic-related.

In Australia, beef production in 2020 is expected to decline by 13 percent, largely due to historically low cattle supplies, and in both Brazil and Argentina the supply of animals is limited because of the high slaughter of females in recent years, said Gocsik.

Pork is suffering an even bigger shock, with production in China already hit hard by the devastating African swine fever.

The EU, meanwhile, is seeing similar, but less severe, supply chain issues, while aforementioned ongoing African swine fever issues in China and Southeast Asia are limiting production.

Pork production growth is expected to slow this year, and contraction is expected in the United States and China -- by 15-20 percent, according to Gocsik -- and Southeast Asia.

"The pork industry has suffered the most," Ag economist and Senior Vice President at Wells Fargo Bank Michael Swanson, told IntraFish.

"They are highly programmed for delivery of hogs. The piglets go into the barns with scheduling precision that exceeds an airline’s planning. The poultry sector can reduce and ramp up faster than swine, and the cattle can wait few weeks or a months for their turn."

Is it really a shortage?

What is classed as a "shortage" in markets where a taste for cheap protein has driven major growth is down to interpretation, however.

"It is only compared to the record levels of meat consumption that we can call this a reduction," said Swanson, noting that supplies have dropped to 2014 levels.

"In Minnesota, we feel that 10 below zero is pleasant if it was 30 below zero the night before."

Duane Lenz, general manager at beef industry information and analysis service Cattlefax, is of the same mind.

"There is no shortage, and supplies will only grow from here," he told IntraFish.

The beef and pork processing industries in the United States are running at near 80 percent capacity, with poultry at around 85 percent and growing, Lenz said.

"They may not be back to 100 percent for some time as employees are spaced out more now, but we believe 95 percent of capacity will become the new norm, which is more than enough to supply domestic and export needs," he added.

Terrestial proteins post 'record' prices

So while a shortage is apparently a matter of opinion, what is not debatable is the impact the reduction in supplies is having on prices in the short-term.

Beef prices rose to "by far record levels" as processing facilities slowed production or temporarily shut down for sanitization, Lenz told IntraFish, an impact that Swanson describes as "a big burden on lower income families."

Similar scenarios are seen in pork and poultry, with a hike in logistical costs also coming into play. According to Gocsik, ship movements are down 20 percent between the EU and Asia and 10 percent between North America and Asia, limiting container availability and increasing freight costs.

"This will drive up inventory and transportation costs for animal protein," said Gocsik, a cost that will presumably need to be recouped via higher prices lower down the supply chain.

An opportunity for lower-priced proteins

On the other side of the coin are the more generalized economic impacts of the coronavirus in the consumer environment and the fall in demand from the foodservice sector.

Nowhere is this more dramatically seen than in the world's largest protein market. Covid-19 measures had a "dramatic impact" on China’s beef consumption in the first three months of the year, according to Gocsik, with an estimated 80 percent drop in out-of-home beef consumption.

This fall in demand will probably spur discounting, but it also presents opportunity for lower-priced proteins as consumers seek out meal options a little gentler on the pocket.

This is not necessarily a situation that bodes well for seafood, which takes the brunt of both a drop in foodservice, where seafood is most commonly eaten, and the generally high price point at which it is sold.

"Seafood is a premium product when viewed as a price per pound," said Swanson. "Between restaurants that drive its availability and wage disruptions, it will have to discover what the consumer really thinks about it.

"Just like meat, it has its scale of affordability ranging from tilapia to halibut. No doubt, there will be consumer substitution up and down that value chain. In this environment, it’s likely to be a trade down for a while."

Is seafood even ready to take a bigger slice?

It is this "trading down" that has brought products such as canned tuna, and even salmon fillets, into sharp focus in recent months.

And among the buyers are many new seafood consumers, especially in the United States, Beyhan Bektasoglu de Jong, senior specialist seafood and alternative proteins analyst at Rabobank, told IntraFish.

"Particularly in the US, consumers are now more comfortable with cooking seafood at home," said Bektasoglu de Jong, who said home cooks are harnessing Instagram live streams and online chef tutorials to experiment with new recipes in lockdown.

Further supply gaps in terrestrial animal protein in this sense present opportunity for seafood, she said, but "of importance here is to keep the trend going."

To do this, seafood needs to be able to provide enough supply.

"Seafood supply is fundamentally more inelastic over time than meat," said Swanson. "Without a significant expansion of farmed fished supply, it rations its supply and demand with price more than expansion.

"In contrast, the poultry [industry] is always ready to build more barns," he said, adding that he hopes the US in particular will expand its aquaculture industry, as indicated in Trump's recent order.

"I don’t think seafood has the ability to increase supply in the short-term, but they will benefit from reduced competition through this shock to the other proteins," he said.

Markets

Is there really a meat shortage? And what does that mean for seafood?