Got Beef?

With disruptions to the supply chain, Canadians are in for a reshaping in the prices they see in the deli and meats section of their local grocery stores.

On the issue of beef prices, PM Justin Trudeau stated late last month that "We are not at this point anticipating shortages of beef, but prices might go up".

Since then, more meat processors in Canada have been forced to slow down, and some even shut down, due to physical distancing measures and even having some worker test positive for COVID-19. With food demands at highs right now due to consumers wanting to stockpile resources, beefs demand has shot up, but supply has dropped, resulting in prices increases.

Just yesterday, the Harmoney Beef meat plant was forced to shut down in connection to 34 coronavirus cases. This would be the third Alberta-based meat plant to close amidst the outbreak.

Producers are also harmed during this outbreak. With an estimated backlog of almost 100,000 cattle waiting to be processed, ranchers are losing millions in having to keep the cattle alive and lost sales. This has caused the price per cattle to actually drop in contrast to the price of beef, from an estimated $2,600 per cattle to around $1,600 - $1,800.

The scary thing about these processing plant outbreaks is that not only are workers susceptible, but all the meats that leave the plant could be contaminated. This has led to the Canadian Food Inspection Agency to place personnel in every Canadian meat plant, and only allow operations under their supervision.

With that being said, consumers are looking at alternatives to beef in the meantime. By month end of March, US alternative meat sales had increased 255% compared to a 53% increase in meat sales during the same period. Sentiment towards meat alternatives has assumed to sweeten, as companies such as Beyond Meat, a producer of plant-based meat alternatives, have seen share prices skyrocket. From March 19 until now, the stock has gained 120%, with a huge jump of 26% today.

Looking ahead to the future, consumers are starting to understand how fragile the meat supply chain can be, and outlook on meat substitutes have brightened. With that being said, will consumers still be looking to purchase meat alternatives post-outbreak? Do consumers truly believe in meat-alternatives or are they simply settling? Consumer memory is short, so it's hard to say that this pandemic event will have a lasting view on how the meat industry and its production chain is perceived. Sure, new health and safety rules might be implemented, but the demand for meat will always be there.

Meat-alternative producers can co-exist with the meat industry, but will the demand ever be the same, nevertheless, surpass the meat industry? As of right now, companies like Beyond Meat look like a buy, but we'll have to wait and see if demand for meat substitutes continues after the impact of COVID-19 is a thing of the past.

Any thoughts? Feel free to comment below

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