Published in Food/Agribusiness
Turkey farms in West Michigan are struggling because most of their products typically end up in foodservice distribution channels, which have been disrupted because of the state-mandated closure of restaurants to curb the spread of the coronavirus. Turkey farms in West Michigan are struggling because most of their products typically end up in foodservice distribution channels, which have been disrupted because of the state-mandated closure of restaurants to curb the spread of the coronavirus. COURTESY PHOTO

Foodservice disruptions create crisis for farmers

BY Sunday, April 26, 2020 05:22pm

As the new coronavirus spreads throughout the Midwest and people’s behaviors change as a result, Michigan’s turkey farms are struggling to stay afloat. 

That’s according to Curtis Walcott, a second-generation operator of Walcott Farms in Allendale. 

Turkeys raised in Michigan are not the typical Thanksgiving fare most Americans associate with the bird because farms in the state raise toms instead of hens. Toms grow to about 40 pounds and are sold as ground turkey, deli turkey and whole turkey breast. About 60 percent of those products are consumed in sandwiches prepared at fast-casual restaurants or found on dine-in menus, Walcott told MiBiz

Along with vast numbers of people throughout the country, West Michigan residents are now spending the majority of their time at home as part of mitigation efforts to fight the spread of COVID-19. That’s largely changed the way people eat, Walcott said. 

Now, consumers are buying nearly all of their food from local grocery stores, markets or online retailers, often stocking up on supplies that will last weeks at a time. Aisles of meat and produce at stores have been wiped out. At the same time, vast storage of local meat and dairy products that were destined for foodservice is piling up because the two supply chains operate in disparate and intricate channels, according to Walcott.

Walcott Farms is the largest turkey producer in the state and is part of a group of 18 family-owned and operated turkey farms that collectively work together and own the Michigan Turkey Producers Co-op processing operations in Grand Rapids and Wyoming. The co-op also is struggling, Walcott said.

Prior to the coronavirus pandemic, people purchased 50 percent of their food at restaurants, schools and other locations outside of their homes, according to data from the U.S. Department of Agriculture. 

The overall demand for turkey from Michigan has decreased by 70 percent since the beginning of the coronavirus outbreak, according to the co-op. If restaurants and grocery store deli counters remain disrupted, turkey farmers who have nowhere for their product to go may have to shut down, according to Walcott. 

“The distribution centers that you may be shipping product to may already be sitting on product that was supposed to go to a school or college or a restaurant that no longer wants that product,” Walcott said. “So, in addition to our product needing to go out, somebody might be sitting on product that they anticipated to go out, too. It’s created some very complex problems for people to deal with and it’s a real struggle for people on every end of it.” 

Any food supply shortages that happen during or immediately following the COVID-19 crisis are “not for lack of production at the farm level,” according to Ernie Birchmeier, manager of commodity, farm and industry relations at the Michigan Farm Bureau

“I don’t ever remember a time when the potential for crisis was this big across the industry,” Birchmeier told MiBiz.

The state’s dairy and livestock industries have been the hardest hit by the shift in consumer behavior, according to Birchmeier. While dairy processors are ramping up bottling operations to somewhat meet demand, milk prices have dropped 30 percent, he said. Unlike operations in some neighboring states, dairy farmers in Michigan have not yet been forced to dump their milk, according to Birchmeier. 

Meanwhile, closures and reductions of capacity at processing plants are inflating meat prices in grocery stores while animals remain stuck on feedlots. Livestock farmers who are already facing increased food and shelter costs will likely see a decrease in the financial value of each animal they produce now that the supply is increasing.

“Processing plants are in business to make money,” Birchmeier said. 

Some farmers and ranchers hit by the disruptions and shutdowns caused by COVID-19 will receive financial assistance from the federal government. Earlier this month, U.S. Secretary of Agriculture Sonny Perdue announced $19 billion in funding for the Coronavirus Food Assistance Program (CFAP). The program will “take several actions to assist farmers, ranchers, and consumers in response to the COVID-19 national emergency” including immediate relief funds, according to the announcement. 

CFAP will use funding provided in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Families First Coronavirus Response Act and other existing USDA authorities.

About $16 billion from the program will be directly distributed to farmers and ranchers and the remaining funding will be used to buy excess food that is overloading the supply chain. 

Historically, turkey farmers have not been able to access emergency financial assistance from the federal government, according to Allison Brink, executive director of Michigan Allied Poultry Industries. However, the group is working to clarify if turkey farmers can access funds this time around. 

In the meantime, the state’s turkey industry is reaching “critical levels,” Brink told MiBiz. “Turkey farms cannot exist on grocery sales alone,” she said. “We’ve got diminished demand, we’ve got falling prices and all of this is contributing to economic pain at the farm level.” 

Even if selling all of the turkeys that are raised in the state through grocery stores was a viable option, shifting excess products to retail channels is not a simple task, according to Brink.

“The meat market is a very competitive market and the retail market is very competitive,” she said. “It’s important to develop good relationships with your customers and when you see that swing (away) from the foodservice industry, it’s clearly impacting the Michigan turkey industry. It’s a very fluid situation right now and retailers aren’t really looking at taking on new product.” 

Turkey farmers in the region are scrambling to adapt to the lingering decrease in demand by making “difficult decisions” to reduce capacity through the end of the year, which will have lasting effects on the industry beyond 2020, according to Walcott. 

“I don’t think anybody really knows what’s going to happen in the future,” Walcott said. “We can safely say that people are doing things differently in their personal life and one thing we can’t be certain of is how people are going to behave or what life is going to be like for people moving forward. The bottom line right now is the meat that we have coming in and the products that we have coming into our facilities don’t have a home once they’re ready to go.”

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