Tyson Foods Inc. is offering premium prices for cattle this week in light of the coronavirus pandemic.
The company said that it would give a one-time bonus for cattle harvested this week in an effort to help cattle suppliers "weather this extraordinary situation."
"It is imperative during this national state of emergency, we not only support our customers, but our cattle supply partners as well by ensuring the long-term sustainability of the beef business," Tyson spokesman Liz Croston said in an email Monday. "Without the pipeline of high-quality cattle, we would not be able to deliver on meeting the needs of our customers and consumers."
Grocery store shelves have been left bare by shoppers buying bread, milk, toilet paper and other essential items in response to the spreading virus. Meat packers such as Tyson have adjusted production to meet heightened retail demand in recent weeks.
Jason Apple, a meat science professor at Texas A&M, Kingsville, said these cattle premiums are the next step. With a limited amount of truckers hauling livestock, Apple said, companies have to come up with incentives to maintain production.
"It's a reward to get cattle there, it's keeping people in the plants employed, and it's getting products as quickly as possible to retail shelves," Apple said. "I think it's a positive."
Tyson did not disclose how big a bonus suppliers would get. However, industry publication Drovers reported Friday that it would pay an extra 5 cents per pound for live cattle and roughly 8 cents per pound for dressed and for grid cattle -- animals that are priced individually.
Elsewhere, agricultural futures on the Chicago Board of Trade have been sliding since Feb. 24, when coronavirus concerns began to weigh on U.S. stock markets. Corn futures have fallen nearly 10% and soybean futures have dropped more than 4%.
Future prices for live cattle have fallen nearly 13% in the past two weeks. April and June live cattle futures rose 3% to close Monday at $101.65 and $92.52, respectively.
Tyson Foods has six beef packing plants in the U.S., processing on average 155,000 head of cattle per week.
The nation's largest meat company may be the first to offer limited cattle premiums amid this virus outbreak, but it won't be the last. Apple said it will only be a matter of time before others across the industry do the same.
"It will be reevaluated as the week goes on," he said. "The problem is, what if everyone goes to $5? Is it a premium then?"
Business on 03/24/2020