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Mexican beef fills the US supply gap amid slaughterhouse bottleneck

14 May 2020

More Mexican steaks and beef cuts are headed to the US as the coronavirus outbreaks shutters US meat processing plants.

Reuters reports that the move could potentially offset fears of meat shortages in the US retail and restaurant sector. The shift to foreign supplies has angered American ranchers.

The Mexican industry attributes the export growth to new safety measures enacted by Mexican plants. The country also runs comparatively smaller-scale operations that have so far kept businesses open and coronavirus infections at bay.

The United States has seen a surge of deadly COVID-19 cases at slaughterhouses and meat processing plants. In response to the outbreak, major beef companies have had to temporarily idle operations, restricting domestic beef supplies. This has led to significant unease among American consumers and businesses, who fear widespread shortages.

In a recipe for popular discontent, those shortages could cause meat supplies to fall by nearly a third by the end of this month, while prices jump by around 20 percent.

Before the pandemic, the US was already increasing its purchases of Mexican beef. The sector was set for strong double-digit growth in 2020, said Juan Ley, president of Mexico’s main cattle growers association.

Leading an industry that spans 20 government-accredited beef-exporting companies including Mexican heavyweights like SuKarne, Ley predicts up to 12 percent growth in US exports this year, compared with last year's volume.

Sales to US buyers have already jumped 10 percent in May, he said, and he expects the same in June.

In 2019, Mexico was the third-biggest foreign beef supplier to the United States, behind Australia and Canada, with exports reaching 232,000 tonnes. The United States accounted for about 86 percent of total Mexican beef exports, worth $1.3 billion.

"I think we're going to leap past Canada this year," added Ley.

Mexico has nearly 30 federally regulated processing plants of different sizes. They can process anywhere from 600 to 1,800 cows in an eight-hour shift, according to industry data. Almost all of them operate only one shift per day and have workforces that vary from 20 employees to several hundred.

To compare, the US has four major beef packing companies that control more than 80 percent of the business.

While much of the beef imported into the United States is used to make hamburgers, most of the beef imported from Mexico is higher-end cuts that end up in grocery stores, said Derrell Peel, a livestock marketing specialist at Oklahoma State University.

The drawbacks of a leaner industry

The shift towards foreign suppliers has angered many US ranchers. They argue that the consolidation of the meatpacking sector and idling of processing plants is limiting their access to the domestic marketplace.

"There are about a half-million cattle here that cannot get to slaughter," said Bill Bullard, chief executive officer of the Ranchers Cattlemen Action Legal Fund United Stockgrowers of America.

"I know guys who have had cattle to sell for five weeks, and they can't even get a bid," he said.

Ley, head of Mexico's beef exporters association, is sensitive to the complaints. However, he noted Mexico also imports US cuts in what he describes as a "very complementary" trade that he said was up 6 percent this year.

Mexican producers' near-term gains are made possible by meatpacking plants that have not experienced the level of coronavirus outbreaks as their American counterparts.

To date, no more than 20 processing plant workers across the country have tested positive for the coronavirus, according to the cattle growers association, and no plants have been closed.

Read more about this story here.



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