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As Meat Plants Stayed Open to Feed Americans, Exports to China Surged - The New York Times

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Smithfield Foods was the first company to warn in April that the coronavirus pandemic was pushing the United States “perilously close to the edge in terms of our meat supply.” Tyson Foods also sounded the alarm, saying that “millions of pounds of meat will disappear” from the nation’s supply chain as plants were being forced to close because of outbreaks.

That same month, Smithfield sent China 9,170 tons of pork, one of its highest monthly export totals to that market in the past three years. Tyson exported 1,289 tons of pork to China, the most since January 2017.

In all, a record amount of the pork produced in the United States — 129,000 tons — was exported to China in April.

The data compiled by Panjiva, the supply chain research unit of S&P Global Market Intelligence, and the Department of Agriculture is potentially embarrassing for an industry that trumpeted its role in feeding the American public to argue to keep plants operating during the pandemic. Although some meat companies say much of their exported pork was produced before the outbreak, even previously processed meat could have stocked shelves in April and May.

After slaughterhouses in several states were closed when thousands of workers tested positive and dozens died, the industry publicly lobbied the Trump administration to intervene with state and local officials or risk major meat shortages across American grocery stores. Indeed, some retailers put limits on the amount of meat customers could buy, and the fast-food chain Wendy’s, at one point, ran low on hamburger.

But the meatpackers, including Smithfield, which China’s largest pork producer bought in 2013, did not emphasize, at least not publicly, that keeping the plants open would also protect their long-term investments in exporting to a country that is vital to their growth.

Analysts say the meat shortages have subsided, with most plants having reopened, though many are still operating at slower speeds. As some meat companies continue to test their workers, they are still discovering positive cases. So far, 25,523 meatpacking workers have tested positive and 89 have died, according to the Food & Environment Reporting Network, which has been tracking the outbreak.

After decades of relatively stagnant pork consumption in the United States and a recent thaw in the trade war with China, this was the year that the pork exports were set to take off.

“The meat companies were saying the sky was falling, and it really wasn’t,” said Tony Corbo, a senior lobbyist at Food & Water Watch, a consumer and environmental watchdog group. “It wasn’t that there was not enough supply. It was that the supply was being sent abroad.”

The industry stands by its warnings about shortages and the need to keep the plants operating.

“As long as our nation’s harvest facilities continue to operate, not only do we have enough meat to feed Americans, but also to feed the world,” Smithfield said in a statement.

Smithfield said the meat it exported in April “was actually ordered and processed in the months prior to Covid-19.”

The company added that “much of what is exported are items that attract little or no interest from domestic consumers,” such as the pigs’ feet, snouts and tails, and that exports had declined as production slowed amid the pandemic.

Tyson said pork exports to China had amounted to about 3 percent of its total production since October. “In recent months, we’ve prioritized supplying meat to the U.S. domestic market and have voluntarily curtailed shipping those pork export items that are also used by domestic consumers to try to meet U.S. demand,” the company added.

Credit...Daniel Acker for The New York Times

Before the pandemic took hold, the U.S. pork industry had been undergoing a major expansion. Large new slaughterhouses across the Midwest contributed to a 12 percent increase in pork processing between 2017 and 2019, federal government figures show. Farmers also enlarged their herds and even invested in building giant packing plants to process their pigs.

In 2017, a venture involving five large Midwestern pig farmers built a nearly one-million-square-foot, $335 million pork plant in Sioux City, Iowa, which started processing three million pigs a year. A year later, the company, Seaboard Triumph, added a second shift, doubling its annual output to six million pigs. To fully staff the plant, Seaboard Triumph recruited workers from as far as Micronesia.

All of this expansion was taking place even though pork consumption in the United States has stayed relatively flat since the early 1980s. China, which consumes half the world’s pork, has long loomed as a big opportunity for American meat companies.

“We are talking record pork production last year and the year before that,” said Dennis Smith, a livestock analyst at Archer Financial Services. “The producers need exports.”

When China’s largest pork producer, W.H. Group, bought Smithfield, critics worried that the deal gave a Chinese company too much control over the American pork supply.

Some U.S. officials wanted to block the deal with W.H. But the $4.7 billion deal eventually went through.

Credit...Qilai Shen/Bloomberg

Until recently, China had been largely self-sufficient in pork. That changed after African swine fever started decimating its pig population in 2018.

The trade war between the United States and China slowed pork exports. But by this winter, many of the tariffs had been reduced, and the American industry’s big bet on exports “started looking really smart,” Mr. Smith said.

The pork that is sent to China is often more profitable. In some cases, Chinese buyers import large portions of the pig carcasses, which require less labor to process and result in a higher margin for the meatpackers.

China had also started to shape how American pigs are raised. Recently, large producers like Tyson said they would no longer process pigs that were fed ractopamine, a feed additive that allows them to gain muscle while eating less grain. Most pigs in the United States had been raised on the drug, but China bans it.

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Pork producers typically send 25 to 27 percent of their meat overseas, according to the U.S. Meat Export Federation. But that number jumped to 32 percent in the first four months of this year, driven by demand from China.

Last week, the Department of Agriculture reported that total pork exports to mainland China in April reached their highest monthly total since the agency began keeping track 20 years ago. Overall pork exports increased 22 percent from the previous April, to 291,000 tons, though that was down from March.

While the companies emphasize that exports to China include feet, tails and other parts most American don’t eat, about 40 percent of the April exports were whole carcasses. Some analysts believe those totals could be even larger. Meatpackers are notoriously secretive, and it’s unclear how many of the nation’s plants are designed to ship carcasses to China.

“Some of the plants would be companies that maybe own five or six pork plants, and they said in one of our small plants, we’re just going to do carcasses for China,” said Brett Stuart, the president of the consulting firm Global AgriTrends. “I don’t think any of them have really reported what they’ve done.”

Credit...KC McGinnis for The New York Times

Government data on exports is also incomplete. After the meat executives warned of shortages, Mr. Corbo of Food & Water Watch filed public-records requests asking the Department of Agriculture for a list of all “exports certificates” detailing meat exports from each company. The federal agency declined to release the amount or type of meat included in each shipment without the companies’ permission, he said.

Smithfield has been sensitive about its connections to China for years. On its website, the company points out that it is owned by an entity with shares that trade on the Hong Kong stock exchange and that all of its top executives are American.

In late November, Reuters reported that the pork plant in Smithfield, Va., the company’s hometown, was shifting production to meet Chinese demand. Workers described how they had shifted their focus away from American products and were now focused on slaughtering and slicing pig carcasses into thirds for shipments to China.

In late April, President Trump announced an executive order keeping meat plants open, and a few days later Smithfield issued a news release saying it would “immediately begin the process of retooling” its hometown plant. The company said the plant would process pork exclusively for American consumers.

In its statement, Smithfield said it was making the changes to the plant “to meet demand for fresh pork, bacon and the company’s iconic Genuine Smithfield Ham” from U.S. consumers.

But there may be other considerations for the move. “I think it’s on their radar that exports could fester into a P.R. problem,” said Mr. Smith, the livestock analyst.

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