Smithfield Foods to close Sioux Falls plant indefinitely amid COVID-19

Smithfield Foods Inc. announced April 12 that its Sioux Falls, S.D., facility will remain closed until further notice. The plant is one of the largest pork processing facilities in the U.S., representing 4-5% of U.S. pork production. It supplies nearly 130 million servings of food per week, or about 18 million servings per day. More than 550 independent family farmers supply the plant.

As of Saturday, more than 230 employees had tested positive for COVID-19, out of a workforce of about 3,700 people. South Dakota Gov. Kristi Noem and Sioux Falls Mayor Paul TenHaken on Saturday asked the company to close down the plant for two weeks. The company had announced on April 9 it was closing the plant temporarily for a deep cleaning.

“The closure of this facility, combined with a growing list of other protein plants that have shuttered across our industry, is pushing our country perilously close to the edge in terms of our meat supply. It is impossible to keep our grocery stores stocked if our plants are not running. These facility closures will also have severe, perhaps disastrous, repercussions for many in the supply chain, first and foremost our nation’s livestock farmers. These farmers have nowhere to send their animals,” said Kenneth M. Sullivan, president and chief executive officer, for Smithfield.

Related:Meat sales, consumption surge amid COVID-19 disruption

“Unfortunately, COVID-19 cases are now ubiquitous across our country. The virus is afflicting communities everywhere. The agriculture and food sectors have not been immune. Numerous plants across the country have COVID-19 positive employees. We have continued to run our facilities for one reason: to sustain our nation’s food supply during this pandemic. We believe it is our obligation to help feed the country, now more than ever. We have a stark choice as a nation: we are either going to produce food or not, even in the face of COVID-19,” he concluded.

In preparation for a full shutdown, some activity will occur at the plant on Tuesday to process product in inventory, consisting of millions of servings of protein. Smithfield will resume operations in Sioux Falls once further direction is received from local, state and federal officials. The company will continue to compensate its employees for the next two weeks and hopes to keep them from joining the ranks of the tens of millions of unemployed Americans across the country.

According to the National Pork Board, the U.S. has the capacity to slaughter 506,470 pigs per day. Almost 60% of this capacity comes from just 15 plants.These plants are heavily concentrated around Iowa.

Related:How will the fear of a coronavirus-based recession affect meat sales?

Given the size relative to the industry, the closure of any of these plants has the potential to reduce hog prices and increase wholesale and retail pork prices. A recent analysis by Kansas State University's Glynn Tonsor and Iowa State University's Lee Schultz suggests every 1% reduction in pork processing capacity is associated with a 1.82% reduction in hog prices. Hog prices have already been tumbling over the past couple weeks, potentially reflecting the market’s expectation of some capacity being brought off-line.

According to the U.S. Food & Drug Administration (FDA), there is no evidence of food or food packaging being associated with the transmission of COVID-19. More information on Smithfield’s COVID-19 response can be found here.

Other meat processing plants in the United States have been struggling with coronavirus outbreaks. Tyson Foods, one of the country's largest meat processors, says it suspended operations at its pork plant in Columbus Junction, Iowa, after more than two dozen workers got sick with COVID-19. National Beef Packing stopped slaughtering cattle at another Iowa plant, and JBS USA shut down work at a beef plant in Pennsylvania. Cargill Inc. closed a plant in Hazleton, Pa., that produces meat for U.S. grocery stores.

In a statement, Tyson CEO Noel White said, “Our meat and poultry plants are experiencing varying levels of production impact, due to the planned implementation of additional worker safety precautions and worker absenteeism. For example, out of an abundance of caution, we have suspended operations at our Columbus Junction, Iowa, pork plant this week due to more than two dozen cases of COVID-19 involving team members at the facility. In an effort to minimize the impact on our overall production, we’re diverting the livestock supply originally scheduled for delivery to Columbus Junction to some of our other pork plants in the region. 

“While these are challenging times, we remain committed to protecting our people while continuing to meet the needs of our customers and consumers across America.” 

For our most up-to-date coverage, visit the coronavirus homepage.

This article originally appeared on Feedstuffs, a Supermarket News sister website.