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Industry Snapshot: Canadian meat processing during COVID-19

Guelph, Ont. – May 16, 2020 – New analyses from food manufacturing and retail expert Kevin Grier reveal that prices, production, and profit margins in Canada’s meat processing industry have changed substantially due to the COVID-19 pandemic, with pork prices collapsing, chicken demand increasing, and beef production taking a major hit in April. Below is a brief summary of how the coronavirus has impacted the Canadian pork, chicken, and beef processing industries over the last two months.

Pork Processing

  • In the first wave of the COVID-19 crisis, pork prices collapsed as plants struggled to move product and numerous facilities were closed for health and safety reasons. 
  • However, in the two weeks heading into May 4, product movement rebounded as buyers sought to take advantage of cheap prices.
  • Looking ahead, pork prices are expected to be modestly higher.

Chicken Processing

  • The Canadian Consumer Price Index (CPI) for chicken was up 10 percent in March (latest data available), compared to the same month last year. The three-month rolling average CPI for chicken was up 8 percent year over year.
  • Chicken demand at the consumer level increased by 11 percent this March compared to last, and demand is expected to be strong going forward.
  • In April, grocer margins on chicken were higher than the 2014 to 2018 average. Margins have been boosted by much stronger retail prices and tanking wholesale costs.
  • Despite higher retail prices, increased consumer demand, and healthy grocer margins, chicken processor margins were down significantly in April compared to last year, as certain costs increased.
  • Preliminary estimates for April production indicate a 2 percent increase versus 2019. Prices for chicken breasts and legs are forecasted to rise through July 2020, while wing prices are expected to decline.

Beef Processing

  • After declining dramatically in April, beef production is starting to increase but will remain restricted due to enhanced physical distancing measures. Availability of Canadian beef products should slowly improve in the coming weeks.
  • Early May retail sales are still up versus last year due to the loss of food service (dine-in restaurants, etc.), but these increases seem to be slowing or reversing due to a lack of available product and higher price points.
  • In the food retail sector, profit margins for beef are well below the previous 2017 to 2019 three-year average, whereas grocer margins for chicken and pork are up.

Sources: Canadian Pork, Chicken, and Boxed Beef Market Reports. Kevin Grier Market Analysis and Consulting. April to May 2020. Accessed Online: https://bit.ly/2LrIR0a.

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