Coronavirus hits meat industry all the way up to animal breeders
SMITHS GROVE, Ky. – Kentucky cattle farmer Joe Lowe would normally drive potential bull buyers to his pastures in his own truck, perhaps suggesting lunch afterward to talk business.
Buyers now ride separately, if they come at all. Others simply phone in their orders.
“Everybody’s just a little on edge, no matter what industry you’re in,” Lowe says.
With meat plants shutting down across the nation because of growing COVID-19 infections among workers, the ripple effect is being felt all the way up the food supply chain, with some farmers delaying the purchase of bulls for breeding – something that could affect the food supply in years to come.
Kentucky produces more cattle annually – 1,000,000 head – than any state east of the Mississippi River. And farmers here take their bull purchases very seriously.
Lowe should know. His family has been raising cattle near western Kentucky’s Barren River since 1799, when Kentucky was still the frontier.
These days, they breed Angus cattle. From a herd of about 400, they sell about 100 Angus bulls, among the most of any farm in the state. Farmers buy the Lowes’ bulls and heifers to breed with their other animals before eventually selling the resulting calves to be fattened for slaughter.
In other words, the Lowes’ animals sit at the apex of the meat supply chain. Just as there’s no meat in grocery stores without slaughterhouses, there are no calves to enter the supply chain without bulls.
No pot of chili at the bull auction this year
Before plunking down thousands of dollars on a bull – where the Lowes derive most of their revenue – farmers usually want to see it up close to evaluate its gait and other physical features.
Breeders like the Lowes typically hold a live in-person auction, usually just in time for the spring breeding season. This year, however, spring breeding season happened to coincide with the coronavirus pandemic and the imposition of social-distancing rules.
In a message posted to their website ahead of their spring auction held on March 30, the Lowes detailed the differences in their auction this year: Only buyers were invited; hand sanitizer and wipes would be available; those wishing to view bulls in private or to bid by phone could make arrangements ahead of time; and, of course, the traditional pot of chili everyone shares would be absent.
“We recognize the concern for your health and the health of your loved ones amid the COVID-19 outbreak,” the Lowes wrote on their website ahead of the auction.
“We also recognize that in agriculture we are one of the few industries that must operate business as usual as much as possible. Grass will grow, cows will need to be bred, calves will need to be sold, and people will need to be fed.”
The late March auction predated much of the meat industry’s current production woes and sales were about even with that of previous years, Lowe said. Even so, the down stock market depressed some bull prices this spring, with a number of farmers either delaying bull purchases or taking up Lowe on his offer of three-year financing for their bulls.
In the weeks since the Lowe farm’s auction, coronavirus outbreaks at slaughterhouses have wreaked havoc on much of the country’s meat production supply chain, with the more than 10,000 cases rippling all the way up to cattle farmers in Kentucky. At least 45 workers have died from the outbreak and 40 meat slaughtering and processing plants have shutdown, according to a USA TODAY analysis.
With few options to send their cattle for slaughter, farmers are now watching prices for their cattle dwindle as costs to care for them balloon. Euthanasia is on the horizon if slaughterhouses don’t ramp up production again soon, said R.W. Eldridge, a central Kentucky farmer who specializes in preparing immature calves for the feedlot.
In nearby Frankfort, breeders at Bridge View Angus, competitors of the Lowes, announced they were delaying their May auction of heifers and some young bulls by about a month. The Lowe farm’s next regularly scheduled auction isn’t until Oct. 28, and Lowe is hopeful it won't have to be delayed.
‘Moneyball for cattle’
Behind his 89-year-old grandmother’s house, Lowe cups his hands around his mouth and calls over a nearby herd with a slow siren of a wail.
“Here, girls. Come here,” Lowe says, as 25 heifers – young females – and a 3-year-old bull begin to walk lazily over.
“You got to be careful or it will be too loud and you'll bring the whole farm with them,” Lowe explains.
The black-hided herd, their curly brown fur still sloughing off their necks from the winter, stop a few paces short of Lowe. It’s almost as if they’re adhering to 6-foot social-distancing rules, Lowe says. After a few minutes, the more curious of the bunch venture closer.
Historically, cattle hasn’t been an easy business. In recent years, U.S. farmers were the casualty of trade disputes with both the European Union and China. Then, just as tariffs were starting to lift, the pandemic hit. The Lowes are just trying to stay the course as they’ve always done.
“There’s always something,” Lowe says.
Technology and data analysis have helped cattle farmers survive hard times. With the advent of DNA testing, ultrasounds and advanced statistics, the cattle industry has undergone a revolution in recent years. Experts liken it to the “Moneyball” phenomenon that writer Michael Lewis famously documented in baseball. New statistics are giving an edge to those unafraid to crunch the numbers.
“It is easy to get blinded by, ‘That’s him. He’s big and pretty. That’s the bull I want,’” Lowe says. “But that might not be the best bull for your situation.”
The Lowes were among the earliest adopters of the new data-driven approach to cattle.
“If they accept the data at the American Angus Association, we’re collecting it,” says the 29-year-old Lowe, who holds a master’s degree in agricultural economics from the University of Tennessee, Knoxville.
The Lowes are constantly logging weights and diet to track how efficient their cattle are at converting food into energy. The more efficient, the more profitable cattle with those genes are to a farmer. Those numbers are logged with the national association for Angus breeders.
As a child, Lowe could rattle off stats without looking at the backs of his favorite baseball cards. Today he does the equivalent for his favorite cattle.
Lowe points to one of his favorites among the cattle now standing before him. Compared to the average animal in the Angus breed, every one of this heifer’s calves will be $50 more profitable as measured by how efficient the animal’s body is, meaning it reaches maturity with fewer resources, Lowe says, before checking his Angus registry smartphone app to confirm.
Lowe is using the advanced statistic known as “Maternal Weaned Calf Value,” or $M, to make that judgment. It’s essentially the cattle equivalent of what baseball nerds would refer to as “Wins Above Replacement,” an estimate of how many more wins a given player contributes to his team compared to the average player at his position.
“It’s literally just ‘Moneyball’ for cattle,” Lowe says.
All this has helped Kentucky overall punch above its weight class when it comes to cattle and could help farmers eke out a profit during the coronavirus crisis.
As the pandemic weighs on the cattle industry, Lowe is also focusing more of his attention on growing a new line of business: direct-to-consumer sales. They still represent a tiny part of his overall business, but could help make up for any lost bull sales.
As the sun broke through what had been an overcast April sky, the young cattle farmer looked at his herd.
“So one or two of these will end up in a freezer at some point,” Lowe says. “I don’t know which one, though.”
Like most Kentuckians, Lowe doesn’t usually hold onto his cattle long enough to see them fattened for slaughter. The western states to which Kentucky typically ships its cattle specialize in that, with feedlots able to serve thousands of cattle at once.
But last fall, Lowe decided he’d start his own seven-head feedlot for the handful of heifers each year that, for whatever reason, don’t breed with the bulls they’re matched with. Once fattened, Lowe brings them to a small slaughterhouse in Hopkinsville.
After dry-aging at the slaughterhouse, the beef is ready for Lowe and his wife, Cassie, to deliver in person, responding to orders from their Instagram account. Customers so far have been mostly based in nearby Bowling Green or Louisville.
They range from health-conscious mothers to “that guy who likes craft beer and bourbon that’s hard to find,” Lowe says.
“We move a lot in Germantown,” says Lowe, referring to the near-downtown Louisville neighborhood known for its hipsters. “Very busy in Germantown.”
Lowe says he’s taking everything in stride, repeating the message he posted on his family’s website:
“The grass will grow. The cows will need bred. Calves will need sold. We will move on from this temporary moment in time by working together.”