Farm-to-retail price spread widens during pandemic
It’s common knowledge that the response to COVID-19 severely disrupted the food supply chain, but new information sheds light on how the pandemic widened the gap between what consumers pay at the store and what farmers receive for their products.
According to a report by the American Farm Bureau Federation, the farm-to-retail price spread hit record levels during the pandemic—particularly for the beef and pork industries.
“If you look at the farm-to-retail price spread for beef, in June it was $5.21 per pound, and that is the highest it’s been ever since the data was collected beginning back in 1970,” said Michael Nepveux, an AFBF economist. “You see a similar story in pork. So the farm-to-retail spread for pork hit its record in June at $3.65 per pound.”
Nepveux attributes the spread to labor issues and restrictions at processing plants that created a shortage of beef and pork. Wholesale and retail prices increased, but because there was an oversupply of animals that couldn’t be processed, the prices for live animals declined.
“The record farm-to-retail price spreads for cattle and hogs in 2020 have aggravated a lot of livestock producers that produce and deliver animals to the commodity-level supply chains,” said Tony Banks, senior assistant director of agriculture, development and innovation for Virginia Farm Bureau Federation.
Emily Bryant, a Botetourt County beef cattle producer, said her family farm has been adversely affected. “It would be safe to say that our operation has seen a decline of 15-20% in prices for cattle sold from late February to mid-August,” she said. “We pray that we are past the worst of it. Prices have rebounded for now. The markets seem to be a little stronger.”
Bruce Stanger, a Montgomery County beef cattle farmer and member of the VFBF state board and Livestock Advisory Committee, said he also believes the worst has passed, but it’s “a shame that we always get the short end of the stick” when it comes to prices.
“We’ve got the animals and we have to sell them, and we’re sort of at the mercy of whoever’s buying.”
Banks added that, as processors adjust to the changes caused by the pandemic and implement protocols to protect workers, meat processing volumes are rebounding.
“The more animals that can be processed and the more meat that can be sold will help farmers see improved prices for their livestock at the markets,” he said.