Chicken processors winging it as they repair broken supply chains
Sussex County’s chicken processing plants and farms are repairing links in the food supply chain, but it’s still difficult to tell what the future holds beyond Delaware’s first steps forward.
“There’s still more unknowns than knowns at this point for the future, but we’re starting to see a light at the end of the tunnel,” said Holly Porter, executive director of trade association Delmarva Poultry Industry Inc.
Demand is there, with chicken flying off the shelves in grocery stores. But when it comes to what the marketplace will look like in the future, Porter doesn’t “have a crystal ball.”
“The marketplace shifted overnight and the big question is how long will the shift be made? It’s short term versus long term, and the support system created for supply was made with these long-term decisions in mind,” she said.
Like every business, the $3.5 billion poultry industry in Delaware and the Eastern Shore was hit by the coronavirus. Sussex County — where Gov. John Carney declared a COVID-19 hotspot in late April — produces around 263,000 chickens per week according to the National Chicken Council.
Purdue and Mountaire Farms and Allen Harim LLC are among the state’s top manufacturers and employed 12,380 people combined prior to the pandemic, according to the Delaware Business Times Book of Lists.
But when restaurants, conference centers and schools shut down, it dried up 50% of the customers for chicken across the country, Porter said in a webinar with the Delaware State Chamber of Commerce.
That was the first domino to fall. The next was workers staying home, either to take care of sick family members or out of fear. With fewer staff to process chicken, farms in Delaware and other states were forced to “depopulate” 2 million birds in April.
Workers are starting to come back, although Porter says it’s not at 100% operations. Poultry plants are stepping up screening and sanitation. The industry is testing staff through a partnership with the state and hospitals. Porter said that companies are “paying out of pocket” for PCR full diagnostic testing.
It’s estimated that 5% of people tested at poultry plants are positive for COVID-19, according to Stacey Hofmann, spokeswoman for the Delaware Department of Agriculture. That’s based on feedback from plants and reports from the hospitals.
With this in mind, the marketplace is the last link in the food supply chain that needs to be repaired. Richard Wilkins, president of the Delaware Farm Bureau, pointed out that farms have geared the infrastructure around how consumers wanted their food, and with the pandemic causing major disruptions, that pivot takes time.
“Without the structure in place to package that food and the inability for us to be nimble to redirect that to the supermarkets, it’s been a frustrating challenge when you’re a farmer that has to destroy a crop because there’s no market for it,” he said during the Delaware State Chamber of Commerce webinar.
Rerouting food already packaged for the food service industry could not be done with a simple rerouting of trucks, Wilkins said. It required the executive branch to loosen some restrictions, which came in March, but still resulted in “spot shortages” on a retail level.
Like chicken, demand for frozen or canned vegetables is exploding. While there’s nationwide examples of farmers dumping crops, Wilkens said there’s processors looking for additional acreage now.
The market should even out with employees returning to process the food and looking ahead to the summertime harvest. For many farmers, Wilkins said the workforce will be the next challenge to overcome, since Delaware farms rely on roughly 1,000 H-2A visa workers.
“We’re cautiously optimistic that the labor force will have adapted, and we’re establishing some guidelines,” Wilkins said. “The farmers that are dependent on this labor need to be ready if there’s disruptions caused by contamination.”
The silver lining for many Delaware growers is they’re continuing to see booming revenue in direct sales and farmers markets now, cutting out the transportation from the processing plants and time at the supermarkets. But what that end market will look like for poultry is yet another question left to be answered.
“These systems were not created overnight. Twenty years ago, more people were eating at home instead of at restaurants, and that’s not the case. So, these systems shifted to meet that,” she said. “It’s just a matter of moving forward and adapting where possible.”