A TENTATIVE agreement last Thursday between shipping companies and striking dockworkers brings huge sighs of relief from U.S. meat exporters and importers and the agricultural feed/food industry. All had warned that a prolonged strike would wreak havoc on their sectors. The last time the International Longshoremen’s Assn (ILA) struck in 1977, the port closure lasted six weeks, creating trade chaos. Last week’s strike began last Tuesday and involved 45,000 people in 14 major ports from Maine to Texas. But on Thursday, the ILA and the U.S. Maritime Alliance (USMX) announced they had reached a tentative agreement, effective immediately, putting an end to the labor strike plugging up the East and Gulf Coast ports. ILA and USMX agreed on wages and an extension to the Master Contract until January 15, 2025, ensuring that all affected ports can reopen while they continue to negotiate outstanding issues.
The breakthrough Thursday came after port employers offered a 62% increase in wages over six years, according to people familiar with the matter (as reported by The Wall Street Journal). The new offer, up from an earlier proposed raise of 50%, came after the White House privately and publicly pressed the large shipping lines and cargo terminal operators who employ the longshore workers to make a new offer to the union. President Biden applauded the agreement, saying in a statement, “collective bargaining works and it is critical to building a stronger economy from the middle out and the bottom up.”
Meat Industry Relies on The Ports
The U.S. Meat Export Federation (USMEF) immediately praised ILA and USMX for their decision, as the meat industry relies heavily on access to those ports. This is a tremendous relief to everyone in the U.S. meat and livestock industries, as about $100M worth of beef and pork products are exported every week through East and Gulf Coast ports, said Dan Halstrom, president and CEO of USMEF. Exports are a critical revenue stream at all levels of the U.S. red meat supply chain, and the industry needs all U.S. ports operating to meet the needs of its international customers and to maintain the U.S.’s reputation as a reliable red meat supplier, he said.
Without a renewed labor contract, the U.S. agriculture sector would have taken a big hit, especially as the shutdown would have occurred at a time of year when U.S. meat exports increase. The strike could impose a significant economic impact on the U.S. meat industry, Erin Borror, vp for economic analysis for the U.S. Meat Export Federation (USMEF) warned last Tuesday. In the first seven months of 2024, the East and Gulf Coast ports directly accounted for nearly $3 billion worth of U.S. red meat exports, the equivalent of approximately $100M worth of product weekly. As the industry learned from the COVID shipping issues, when there is one disruption in the shipping or supply chain, there are ripple or domino effects, says Borror. The industry needs to think about the impacts indirectly on all U.S. red meat exports, which were valued at over $11 billion in the first seven months of the year, she says.
The shutdown occurred at a time of year when exports typically increase, says Borror. U.S. production and exports typically accelerate in the fourth quarter. Especially with the seasonal increase in pork production and exports, the industry looks at the need to be able to handle and accommodate more pork, including ahead of year-end holidays. The U.S. is exporting a record large share of its pork production. More than 30% of all production goes to export when one includes variety meats. For beef, about 14% of all production, including variety meats, is exported.
STRIKE WILL IMPACT SMALLER FIRMS
THE shutdown at East Coast and Gulf Coast ports will impact many smaller businesses that serve specific markets such as the Caribbean or Central and South America, says the U.S. Meat Export Federation (USMEF). It will impact exports of variety meats like beef livers to Egypt. The latter relies heavily on routes out of Houston. These routes do not have economically viable shipping alternatives, says USMEF. These remarks came before the strike ended last Thursday, as did remarks below by the American Feed Industry Assn (AFIA), Vice President Kamala Harris and former President Donald Trump. CBW reports these remarks to give its readers a view of how a prolonged strike would have impacted U.S. agriculture.
The AFIA last Tuesday warned of long-term economic repercussions, potential animal food supply issues and escalating costs for farmers and pet owners. In response to the labor strike, AFIA President and CEO Constance Cullman said the strike means that U.S. animal food manufacturers face a dire trading situation that mirrors or could be worse than the days of the COVID-19 pandemic. The lack of compromise not only puts 45,000 dockworkers out of work, it also threatens the livelihoods of thousands of dedicated individuals throughout the animal food industry, said Cullman.
The animal feed industry does not have a choice to provide vital nutrition to farm animals and pets, it has a responsibility, said Cullman. Yet, with reduced access to imports of essential ingredients, packaging materials, equipment or other goods, production of animal food may be limited at best. The animal food industry relies heavily on the interdependence of smooth shipping routes and has spent years building relationships with foreign buyers and sellers. Yet overnight it could lose the ability to access or do business with international markets, said Cullman.
Where alternative ingredients or shipping routes can be found, animal food manufacturers will do their best to produce feed, pet food and treats, said Cullman. But that will likely incur increased prices that unfortunately must be passed on to farmers and pet owners. Where alternatives do not exist, due to logjams at other ports or unavailable ingredient options, feed and pet food aisles may go bare should the strike be prolonged. The Biden administration needs to tell the two parties that walking off a short dock is not a solution to their labor squabbles. The U.S. economy and the human and animal food supply depends on them getting back to work, said Cullman.
The overall export value in 2023 for feed, feed ingredients and pet food was $13.4 billion, while imports were an estimated $5.4 billion. According to the American Farm Bureau Federation, in 2023 grains, animal feed and hay accounted for 2.18M metric tons (mt) or more than 70% of waterborne exports that ship from East and Gulf coast ports. Many AFIA members use these ports for importing vital feed inputs such as vitamins and amino acids, as well as equipment and other critical components, said Cullman.
In a statement released by the White House last Tuesday, President Joe Biden urged the U.S. Maritime Alliance (USMX) to come to the table and present a fair offer for workers at the International Longshoremen’s Assn. It is time for USMX to negotiate a fair contract with the longshoremen that reflects the substantial contribution they’ve been making to the U.S.’s economic comeback, said Biden.
Australian Exports Also Feared Disruptions
Beef exporters in Australia (and no doubt in New Zealand, Brazil and other countries) had feared that a prolonged strike could cause severe disruptions to their efforts to export beef and other meat to the U.S. The U.S. is easily Australia’s largest beef and lamb export market this year, accounting for 272,000 mt of chilled and frozen beef by the end of September, plus 57,000 mt of lamb and mutton by the end of August. The biggest proportion of Australian chilled higher quality beef exports arrive in the U.S. via West Coast ports, which are likely to be unaffected by the current dispute, says Beef Central. But the majority of frozen trimmings used for hamburgers arrives via the big East Coast ports like Philadelphia, New York and New Jersey.
Harris And Trump Take Same Stance
Vice President Kamala Harris and former President Donald Trump are so far taking the same side in the strike by East and Gulf Coast longshoremen, speaking up for the American workers against the foreign-owned shipping companies that control ports in the U.S. The fact that major political leaders from both parties are taking aim at the European- and Asian-based shipping companies represents an early political victory for the dockworkers, says Politico. Their union has portrayed the strike as a necessary step to get better wages from exploitative conglomerates that bring goods in and out of the country, it says.
The messaging is also the latest sign that both parties see the support of blue collar workers as crucial to the outcome of November’s elections, says Politico. American workers should be able to negotiate for better wages, especially since the shipping companies are mostly foreign flag vessels, including the largest consortium ONE, Trump said in a statement last Tuesday evening. The Singapore-based ONE is the sixth largest shipping company in the world.
Striking dockworkers are enjoying the confluence of a labor-friendly Democratic White House and a GOP nominee trying to court union voters weeks before the election, says Politico. Trump’s support for this strike contrasts with his suggestion in August during an interview on X with Elon Musk that striking employees should be fired. Harris also sounded a message sympathetic to the port workers last Wednesday, despite the risk that an extended strike could trigger price spikes and commodity shortages that would imperil her chances of defeating Trump. The strike is about fairness, said Harris, who also emphasized the shippers’ outside-the-U.S. locale. Foreign-owned shipping companies have made record profits and executive compensation has grown.
CONSUMERS BUY MORE FOOD ONLINE
AMERICAN consumers source the majority of their daily calorie intake from home-prepared meals but there is a rising trend in online grocery shopping among them. So says USDA’s Economic Research Service (ERS) in a new report about consumers’ food purchasing patterns. The surge in online shopping gained momentum in 2020 because of social distancing guidelines and stay-at-home orders issued in response to the COVID-19 pandemic, and projections indicate continued growth, says ERS.
The expansion of online grocery shopping can impact the food retail landscape, food access and purchase decisions, says ERS. Previous research has indicated that preparing food at home tends to be healthier. USDA plays an important role in developing and promoting dietary guidelines and has a goal to expand access to healthy foods that are essential to optimal health and well-being. ERS’s report presents the prevalence and frequency of online grocery shopping, methods of receiving groceries purchased online, primary motivators for U.S. consumers to purchase groceries online and the consumer characteristics that change the participation and frequency of online grocery shopping, says ERS.
The study found that in 2022, 19.3% of individuals aged 15 and older who were usually involved in at least a little of the grocery shopping in their household engaged in online grocery shopping at least once in the past month, says ERS. Among those online shoppers, similar percentages opted for grocery pickup (49.1%) and home delivery (48.7%). The remaining 2.3% reported that they evenly split obtaining groceries via pickups and deliveries. The top three reasons for shopping online named by respondents were: time constraints (40.5%), convenience (10.6%) and physical safety concerns (6.6%).
Among non-online shoppers, the top three main reasons for not buying groceries online named by respondents were, says ERS: liking being able to see and touch products in person (47.4%); not having access to the technology to place an order (5.2%); higher prices online (4.3%). The report also found several large and statistically significant differences in online grocery shopping participation and frequency. These differences include: by age group, gender, presence of other household members, race/ ethnicity, educational attainment, income eligibility for SNAP benefits and how often respondents shop for groceries for their household.
PRICE DIVERGENCE WIDENS
THE widening divergence between live cattle and boxed prices in the past two weeks continues to keep packer margins in the red. Margins the week before last were negative by $40.80 per head, according to HedgersEdge.com. They became even more negative last week, with Thursday’s margin at a negative $78.90 per head. The reason for the divergence was the same last week as the week before. Packers continue to have to pay more for live cattle while beef cutout values continue to struggle to stabilize. The 5-area steer price the week before last averaged $186.15 per cwt live or $293.53 per cwt dressed. These were up $2.24 per cwt and $3.12 per cwt, respectively, from the prior week. In contrast, the comprehensive boxed beef cutout (cuts, grinds and trim) averaged $301.18 per cwt, down $2.78 per cwt from the prior week. The Choice cutout averaged $299.69 per cwt, down $1.95 per cwt.
The cash live cattle trade by last Thursday night saw only a few sales, mostly in Iowa-Minnesota. Prices there averaged $187 per cwt live or $300 per cwt dressed. Prices down south averaged $185-186 per cwt. Cattle were expected to sell at steady to higher prices after a surge in futures prices Wednesday. The October live cattle contract gained 295 points to close at $187.42 per cwt, although it declined Thursday to close at $186.00 per cwt. The December contract Wednesday gained 255 points to close at $187.70 per cwt but declined Thursday to close at $186.40 per cwt. Friday morning saw trade develop on the Southern Plains at $186 per cwt live.
Steer carcass weights meanwhile set another new record in the latest reporting week and all three weight categories remain well above last year’s levels. Steer weights in the week ended September 21 averaged 948 lbs, 3 lbs over the previous record of 945 lbs set the week before. They were 30 lbs above a year ago. Heifer weights averaged 852 lbs, which was 20 lbs above a year ago. Overall weights averaged 862 lbs, which was 33 lbs above a year ago. This added the equivalent of 24,460 head to that week’s kill of 614,409 head, says HedgersEdge.com.
Boxed beef prices began to strengthen last week for the first time in six weeks. The Choice cutout the first four days gained $3.11 per cwt while the Select cutout gained $1.21 per cwt. One feature of the reported weekly cutout values is the wide price spread between the Prime and Choice cutouts. The spread the week before last was $44.98 per cwt, with the Prime cutout averaging $344.67 per cwt. The week also saw spot market prices average 27.9% of the total volume of 7123 loads. Formula sales accounted for 51.9%, forward sales 20.1% and export sales 17.5%. Export sales last week were expected to be impacted by the start of the strike of 45,000 dockworkers at 14 major East Coast and Gulf Coast ports.
TYSON DEPLOYS RELIEF AFTER HURRICANE
TYSON Foods moves rapidly to deploy its Meals that Matter Disaster Relief Team to provide hot meals to those impacted by Hurricane Helene and the severe damage the storm brought to western North Carolina. Volunteers from the company are at various sites to serve hot meals, ice and water and donate protein to the community to support those in need, says Tyson. Tyson first offered relief in Perry, Fla., and served 10,240 meals to residents over two days. The team then moved to Augusta, Ga., where it served 12,783 meals on October 1 and 2 before deploying to western North Carolina to offer daily aid starting last Friday. Tyson Foods volunteers have joined the deployed team on the ground from four states and partners from local food banks and other volunteers have provided help, it says. At the heart of Tyson Foods’ corporate values lies a deep commitment to supporting communities in times of crisis, it says. Through the company’s Meals that Matter Disaster Relief Program, Tyson Foods comes together as a team to rally resources, team members and volunteers from coast to coast to offer assistance where it is needed most. Tyson Foods since 2012 has deployed to more than 30 natural disaster sites and provided product to countless food banks and organizations to lend a helping hand to communities impacted by hurricanes, floods, and tornadoes, it says.