With restaurants closed, a bacon backup is building in Minnesota and hog prices are plunging

Coronavirus has pulled the rug out from under demand for pork belly and ribs, driving hog prices to their lowest level in nearly two decades.

Amid simmering concerns the nation's meatpacking capacity could tighten as workers get sick and plants close, hog farmers now also face major losses on every pig they raise and sell.

About two-thirds of pork belly, from which bacon is derived, is purchased by the food-service industry, and the shutdown of restaurants, colleges and schools has hit hard.

"Demand for the belly really dropped," said Lori Stevermer, a hog farmer near Easton, Minn. "That type of pressure just continues to bring prices down."

Since March 25, the price per pound for lean hog has dropped about 20 cents. A typical hog yields about 210 pounds of lean meat, so that's a drop of $42 per animal, reflecting the lowest hog futures since 2002.

"Taking feed costs into account, it's projected we'd lose about $25 per head the next year," said Dave Preisler, director of the Minnesota Pork Producers Association.

It's not just bacon causing the decline. Closed restaurants aren't purchasing pork chops or ribs either.

Packing plants are putting more meat in storage, but they're also trying to send more bacon and other types of meat to the grocery store, where demand has been strong.

"You're trying to pivot," Stevermer said. "Instead of going to food service and restaurants, can you take that into the grocery stores? That would involve cutting the carcass a different way, and packaging it differently."

Food service companies buy bacon by the 15- or 20-pound box. Shifting the supply chain to wrap that bacon in a 12-ounce package for the grocery store takes time.

"You can't just do it overnight, and in the meantime, that product goes into freezers. That's another thing that's weighing on the market, is all that meat in storage," said Preisler.

"I just don't know that we could have invented something to make a bigger mess than this," he said of the pandemic.

Another profound concern is whether packing plants — which already complained of a labor shortage — can accept all the pigs that farmers are raising for slaughter. In some states, workers tested positive for COVID-19 and plants closed as a result.

"That weighs heavily on farmers' minds, I would say," Stevermer said.

A Tyson Foods pork plant in southeast Iowa shuttered temporarily after more than two dozen workers tested positive for COVID-19, and a smattering of beef and poultry plants have closed in other parts of the country.

Unions are tracking the spread of the virus, and monitoring poultry processors in the southeastern U.S.

No meatpacking plant that Minnesota farmers primarily send hogs to has shuttered, but a Smithfield pork packing plant in Sioux Falls was identified as a coronavirus "cluster" by South Dakota public health officials on Wednesday, the Forum News Service reported, after more than 80 plant workers tested positive for the virus.

Somewhere around half the animals the plant processes come from Minnesota, whose hog farming is concentrated in the southwest part of the state.

Smithfield had not shut down the plant as of late Wednesday.

Preisler said capacity is declining around the country, and some farmers are feeding their pigs less protein so they don't grow as quickly, on the chance they won't be able to find a market for them as readily as before.

Sleepy Eye, Minn.-based Christensen Farms produces 3 million hogs for slaughter each year in five states.

One of its key packers, Seaboard Foods, a company based in Kansas City with a plant in Sioux City, Iowa, said it is open and operating at full capacity, while screening visitors, making "sanitization and temperature-taking stations available to our employees before and after work," cutting nonessential travel and providing masks to employees.

"The U.S. Government has identified the food supply as critical to the nation's infrastructure and has communicated the food industry has a special responsibility to continue to produce food to help feed our nation," a spokesman said a statement. "Seaboard Foods embraces and accepts this great responsibility."