Dave Preisler - Pork and the pandemic: Confronting another crisis

The global pork industry was already grappling with African swine fever when the COVID-19 crisis struck. As the pandemic tests the dynamics of the food supply and closes some facilities, what does the future hold for one of the world’s most popular protein sources? From a state that produces 18 million head per year, Dave Preisler, CEO of the Minnesota Pork Producers Association, shares how the battle-tested pig sector is confronting unprecedented challenges and applying lessons learned from ASF.

This episode is part of a special AgFuture series on the impact of COVID-19 on the food supply chain. Join us to hear how those on the frontlines of the global pandemic are working to overcome adversity and feed the world.

Hosted by Michelle Michael

As lead video producer at Alltech, Michelle travels the globe for the company’s award-winning Planet of Plenty™ documentary series. Michelle spent a decade as a video producer/reporter in Germany, reporting from military hotspots at the height of the war on terrorism. The National Press Photographer's Association (NPPA) has twice recognized Michelle as their solo video journalist of the year.

Co-produced by Brandon Whitworth

As the senior media production specialist at Alltech, Brandon co-produces the company’s award-winning Planet of Plenty™ documentary series. Brandon is a two-time Emmy Award winning television news photojournalist and three-time nominee. He has received several regional awards from the National Press Photographers Association for excellence in visual storytelling.

The following is an edited transcript of Michelle Michael’s interview with Dave Preisler. Click below to hear the full audio.

Michelle:       Hello! I'm Michelle Michael. In this special series of AgFuture, we're talking with those working along the food supply chain about the impact of COVID-19. My guest today is Dave Preisler, the CEO of Minnesota Pork and the Minnesota Pork Producers Association. Dave, thanks so much for being with us.

 

Dave:              You bet. My pleasure.

 

Michelle:       Dave, you're heavily involved in the pork industry, and at a national level, you represent Minnesota pig farmers. Tell me a bit about your role, what you do day-to-day to represent swine producers in your state.

 

Dave:              Sure. My primary role is really more along the public policy, public affairs side of things, so not only interacting with the senators and representatives that we have in Washington, D.C., but also working with our state legislature and, also, a whole host of state agencies. There are times when you wonder how some of those meetings go and the value of having all of those contacts, and then you run into a situation like this and, boy, your call list becomes pretty important, because it takes an awful lot of people and a lot of moving parts to try and deal with situations like this.

 

Michelle:       I can only imagine right now how things have changed for you. Describe for us what it's like right now in your shoes with COVID-19, your day-to-day.

 

Dave:              Sure. I'd say that the biggest thing is just, really, constantly being on the phone — conference calls, webinars — and trying to get the absolute best information, first of all, that we can share with our members. We're really driven by our members and their interests, which are pork producers, and so, everything that we do is really through that lens of what's the best for the hog farmer at that farm level. It's really, then, trying to connect those dots and see how we can move things forward. I will tell you, there is nothing easy about this whole thing, and I don't think that's news to anyone, and it's extremely complicated, but our job is to try and see how we can navigate through it, and that's what we're committed to do.

 

Michelle:       Certainly, the entire globe, right now, is trying to navigate this thing — and we have a very global audience. Can you explain to us how many pigs are in Minnesota compared to, say, Iowa, which is home to some 23 million pigs?

 

Dave:              Sure. Minnesota, annually, would produce about 18 million head, which would put Minnesota second — not quite a distant second — to Iowa. We would be just ahead of North Carolina. We have been a state that's experienced what I would call really sustainable growth over time, pretty steady growth each and every year. This is a really competitive place to raise pigs because we have plenty of feed and we have plenty of land from a standpoint of recycling the manure.

 

                        The other thing that we really have here are people — and people that are really good at what they do, whether it's employees and farmers at the barn level, vet clinics, feed companies, other pieces of infrastructure. They're just really good here, and it makes (this) a good place to raise pigs. That's why, over time, it's grown, and folks have been successful.

 

Michelle:       Many of those people you are referring to, we've met some of them firsthand, and they're very passionate people. When you look at their industry right now — the swine industry, specifically — what are you seeing? In some parts of the country, COVID-19 has halted production at processing facilities. What are you hearing or what are you seeing firsthand about the impact of this pandemic on those very passionate people that you're talking about?

 

Dave:              Well, first of all, it's really personal, because we're talking about families — and families living (here) that they've been making over the years, and what they've built up within their communities. It's also personal for communities, and I think that's something that folks need to understand: that it's not just about the farm. It's also the communities that those farms support, nurture, grow and bring along. That's — when we get times like this, it's not only difficult on the farm. I mean, it's really difficult on the farm, but in turn, it's going to be difficult on real communities. That's the discussion that we're having as we talk with our legislators and representatives at a state level and at a federal level, is that things like this have real consequences for rural communities.

 

                        So, as we're communicating with people, one of the things that we are urging folks to do is to call, especially, their senators and representatives that do represent them in Washington, D.C., and talk with them about what the impact of this has been — whether it's not being able to sell pigs, the current market condition in general — and then bring it right down to the personal level as to what that does for their family and for the communities that they live in. I think those are going to be the most effective stories as we try and work with people that represent us in Washington, D.C., because then, they know what the actual personal impact is. That's something, I think, that's incredibly important to do, and we would hope that all of your listeners follow through and do that same thing, not only for their own farm, but also for the customers that they're serving.

 

Michelle:       What are some of those specific stories that you're hearing right now, Dave, about the impact on the community and the producers?

 

Dave:              I think, first of all, we start at the producer level. We know we've got some pretty incredible disruptions at packing plants. Currently, we have a major packing plant in Sioux Falls, South Dakota, that is closed. We have another packing plant that is attempting to open back up in Iowa, which has been closed for a little over a week now. We've also got some real slowdowns that have occurred to varying degrees at different plants around the United States, and some of that may be just a very slight slowdown because of either (dealing with) issues or being able to have enough employees. Some of that may be real, from a standpoint of employees that are experiencing illness, and quite honestly, some of it is fear, so there's a combination of things there on the employee side.

 

                        The other thing is, as we look at moving pork and what's happened in the whole dynamic of a moving product right now, is that, by and large, the restaurant industry in the United States is shut down. There's still some takeout work that's going on, but that's really a small portion of what was going on in the restaurant or food service side. So, you have this giant pivot that's occurring, with packing companies trying to take material that would have gone to restaurants and move it into retail. That's just something you don't do overnight, so you have that combination of labor issues, health issues, and then, also, that pivot that it takes to try and reroute product. Those, I'd say, are two of our biggest things as we look at the whole packing sector and continue to try and work through that.

 

                        We're just currently at a spot, at least right now, where we're not having a matchup of pigs that are available for processing and the available packing space that's out there today, and so, we have farms that are doing a whole host of things trying to slow pigs down and nutrition companies actively working with farms to try and help them through that, but you can only do that for a short period of time.

 

Michelle:       Right. You talk about shutting down a plant. That certainly has a ripple effect. What happens at the farm level? To keep it simple, a farmer has to keep feeding his animals for growth, for meat quality. Now what? What do farmers do? What do producers do in this situation?

 

Dave:              I think those difficult decisions, quite honestly, are starting to be made right now. I have no doubt that we will see pigs, healthy pigs, that will be put down on the farm in order to adjust to what's going on right now. I think the only question mark is how many, and I don't think anyone has got an accurate forward view of what that number will end up being, because it really depends on how that packing dynamic changes and adjusts and how soon, for example, the plant in Sioux Falls can come back and how quickly the plant in Iowa can ramp up and, then, what happens with other plants that have got some slowdowns right now. That's a dynamic that, quite honestly, changes every day, and so, I think it's difficult to predict how many. All I can tell you is that it will happen and it's starting to happen. I think it's just a question of where it brings us. I think we're going to have many more difficult decisions in about a week, from everything that we're hearing from farms, if we don't see this packing dynamic change.

 

Michelle:       There are an awful lot of unknowns at this point. How, in your eyes, will this affect the availability of pork? There have been some stark warnings and reports of those factories closing, as you mentioned. As workers themselves test positive for COVID, should we, the consumers, worry about a shortage in the supermarket, for example?

 

Dave:              Yeah, I think that you've got, again, a few things going on. We have heard from CEOs of food companies and packing companies laying that warning out. I know that the CEO of Smithfield was very clear about that in press releases that they've had just in the last few days, laying warnings out there about food availability going down the road. Again, I think, without a doubt, there's going to be some sort of an effect. What we don't know, again, is to what degree. We will have heavier hogs that will go through plants as we have things backed up, so that's going to create a dynamic there, but then again, it ends up being that consumers still have to consume that product. I think, again, (I don’t have) a crystal ball; it's depending on how long this goes on in our current situation. Again, we will have decisions made on farms where they're going to have to decide whether to breed sows or not; also, what to do with putting down healthy animals on the farm. I don't really know that we're going to see that kind of food availability piece for, probably, a few months or several months, because it takes a while for that to fully work through the system.

 

Michelle:       When you talk about putting down healthy animals on the farm —  COVID-19 is unprecedented. Is something like that unprecedented as well in your industry?

 

Dave:              It is. There have been other times in history — specifically, 1994, 1998, 1999 and 2008 — where there have been some incredible times from a standpoint of being challenging economically, where there were heavy losses that occurred at the farm level. The thing, I think, that's unfortunately different about this one is that there are just so many other dynamics. For example, for the most part, what happened in those other downturns is we just had a fairly simple non-matchup of supply and demand and a fairly simple supply and demand curve. We had a lot of pigs, not enough packing capacity and/or demand for that product on the other side, but we've never had the dynamic of workers, really, in the whole thing and worker health and that sort of piece.

 

                        The other thing that we've never had is just a complete switchover in a really short period of time from food service over to retail, and those are two dynamics that I don't know that anyone has ever modeled, because they certainly haven't happened in real life. So, I think that makes this much different, and it makes it a whole lot less predictable than a simple supply-demand curve that we saw with other downturns previously in our histories, if we look at the marketplace.

 

Michelle:       Sure. Now, talking about the workers, with social distancing in full force around the globe almost everywhere right now, how do workers stay safe, and how is that impacting the availability of workers in the swine industry?

 

Dave:              Yes, there are a couple of things there. We do have packing plants today and, really, within the last, I'd say, ten days or so, that have been really active in supplying personal protective equipment over and on top of what they normally would. The other piece is doing some staggered entry and exit out of packing plants, some staggered breaks, staggered lunch breaks, that sort of thing, to keep people separated. Then, most plants, too, especially the ones I'm familiar with here in the upper Midwest, are also installing Plexiglas barriers between workers on the line, very similar to what we see — in fact, exactly similar to what we see — in grocery stores in the checkout lines today in order to help create that barrier, create that social distancing that everyone acknowledges needs to happen in order to prevent spread and improve (or limit) exposure.

 

The other thing, again, that I've seen with the packing plants that we've interacted (with) here is they're taking this very, very seriously. They've got a commitment to their workers, to keep them safe, and I know they're taking that seriously — plus, they know they need to have healthy workers that continue to operate their plant to provide food. That combination, hopefully, will be good for us as we try and continue to work through this, but so far, again, what I've heard from our plants — they've been working very closely with our state Department of Health on the human health side to make sure that things are being done in the best way possible to protect workers. I think as long as we do that, we're doing our best, and then, hopefully, that's good enough as we move forward.

 

Michelle:       Certainly, Dave. Talk to me about the seriousness of this situation. How many plants — (if you know) numbers, percentages — how many plants are closed or face closure at this time? How many producers fear that they'll close?

 

Dave:              If we look at percentage-wise, we've got probably somewhere close to 9% of our packing capacity that is shuttered right now. That is a moving target, so that can certainly change from day to day. I want to make sure I caution folks on that, that that can move. What that has done is that there are a whole host of farmers that have got pigs and are market-ready and, as of today, don't have a spot to go with those pigs. Unfortunately, one of the downsides of, especially, the plant in Sioux Falls going down is they were probably one of the largest buyers of pigs from independent pork producers, and so that, in itself, probably affects more individual farms directly than, maybe, some of the other plants, if they would have gone down, and so it spread some of that pain out into other families, other communities. The other thing is that, whether the plants that you are delivering to are (or are) not shut down, it's still just creating an overall tightness in the whole industry that, obviously, results in hog bids that are much less than they would have been without all this.

 

Michelle:       You talk about plants closing due to workers being sick. I've heard from vegetable growers in California that they think part of what's hurting them is that people are afraid that their food is becoming infected with COVID, that the vegetables actually would be infected with COVID. Are you seeing the same thing in meat?

 

Dave:              No, not necessarily. I think, early on, there were some questions about that, but the science so far has been really, really consistent, and that really just isn't the case. As long as folks are following the same sort of things that they would have always done from a standpoint of food safety, there is absolutely zero increased risk here. I think, as we look at, quite honestly, some of the fruit and vegetable pieces that we've heard from folks, (the reality) is that people are trying to limit the amount of trips to the grocery store, period, so they may only go to the grocery store — some were trying to figure out how they can go maybe only once every other week. So, if you're dealing with fresh fruits and vegetables and people are only going to go to the grocery store every other week, some of that is going to go out of condition before you can actually eat it, and so, there are some other dynamics, I think, that happen with some of that, too, depending on the product.

 

Michelle:       Dave, you talk about those individual producers suffering. Are they going to be able to bounce back or even stay afloat during this time? What are you hearing?

 

Dave:              I think that depends on a number of things. There have been some folks, now, that have been successful working through some small business administration programs. Paycheck Protection Program is one of them that we've heard some success with, with farms. There are some other small business administration programs that farms are working through, through their lender. I do think it's really going to depend on, again, that relationship that they have with their lender — (and also,) obviously, the existing amount of equity that they've got in their farm, what sort of marketing plans that they had in place. I think that effect is going to be different for each individual farm, but I don't see anyone being unscathed. I think it's just a question of degree for each farm.

 

                        I do know, too, that Congress and the administration is actively working on some aid packages, at least at this recording. We've not heard what those exactly will be. Our asks, though, have been for direct infusions of cash back to farms — and truly back to farms, so that they've got that to try and hang on with and reorganize with.

 

                        The other is a $1-billion purchase that the government would make of pork products. Again, those are requests right now. USDA is certainly working through those requests, because there are other industries out there, too — whether it's the dairy side, beef cattle, ethanol, fruits and vegetables and so on — that also have asks of the federal government and of the money that's available for right now. We're hoping that we'll know relatively soon because, then, that will help guide us as to next decisions and next asks, either out Congress or the administration. It also starts to give a little bit of a clear roadmap to lenders and how they will end up working with their respective farm borrowers.

 

Michelle:       Dave, on the government side of things, what are you hoping to see? We hear about bailouts or aid packages. What is best-case scenario for the swine industry?

 

Dave:              I'd say a best-case scenario is if we can have the ask that we're making this week, and that is cash payments out to farms to help with liquidity. The second piece is a government purchase to try and take product off of the marketplace to have some relief there — plus, that product would go into food shelves, which serves a need on that standpoint, as we look at our general economy and displaying the number of people that have been laid off. I think an absolute tragedy is to throw away good food. Unfortunately, I don't think we're going to be able to avoid that completely, but as we look at trying to provide for our fellow person out there, if there are ways that we can work through to provide food for people, I think that's incredibly important as we work through this because, again, it's a tragedy to throw away food if we don't have to.

 

Michelle:       It's an absolute tragedy, and of course, farmers, they're not strangers to hardship. The global industry was already grappling with African swine fever when COVID-19 struck. Are there lessons from African swine fever that are being applied to this new challenge today?

 

Dave:              Yeah, they really are — from a standpoint of, especially, if we do get into situations of putting healthy animals down. There are some plans that we put into place and some demonstrations and drills that we'd already started on. Going back to a little bit earlier this winter, looking at some issues around depop and disposal — though there's some of that that I do think will be useful, it's not exactly the same, because we're dealing, in this case, with healthy animals versus animals that have a foreign animal disease. It actually gives us a little more flexibility — in fact, quite a bit more flexibility — with healthy animals, but we still have to do it responsibly. That means we're doing it timely and we're making sure that we're protecting the environment as we deal with those sorts of things.

 

                        Also, most importantly, too, is that the people that work with pigs on a daily basis, they're really wired to save pigs and to do the best they can to raise pigs. They're not wired to put them down, especially when they're healthy. I think there are people and mental health things that we're going to have to be cognizant of if we're forced into these situations, because again, the folks we've got working in barns and the owners of pigs, they truly care about the animal and want to do the right thing. If we get forced into some of these pieces that really are not real great choices, we need to make sure we're taking care of our people in that whole piece, too.

 

Michelle:       It's important that you bring that up. You talk about the mental health side of things. You talk about potentially putting down healthy animals. What does that look like from the eyes of a producer or somebody who works in a barn?

 

Dave:              I think it's a stress that people just probably didn't think about. I think it comes back to (being) as simple as (the fact that) people want to hire folks that work on their barns, again, that are empathetic, that are caring, that want to do the right thing, and it'll be tough on them. I think that the important thing is for employers and other family members to recognize that and to help people through it. Now, I'm not saying that there's a magic way to do it, other than the first acknowledgement, to just make sure that you recognize it and, then, take that into account if we end up getting forced into those decisions.

 

Michelle:       Dave, how do you think this pandemic is going to change the swine industry in the long term? Will there be changes, for example, to farm size, prices, production, biosecurity?

 

Dave:              Quite honestly, I think, (on) the biosecurity side, we're doing pretty well. I think there are continual improvements on that (that need) to happen, no matter what. Farm size — I think, unfortunately, what happens in things like this is that it does tend to be more of a drive towards consolidation, when you have things like this happen. I think that, no matter what industry you're in — the pork industry, other parts of agriculture, other businesses — that tends to be one of the consequences that does come out of it. I think, just depending on what sort of equity that farmers end up getting to and the work they do with their lender and, consequently, any sort of inflow of cash that may come from the federal government is really going to dictate, then, what the industry looks like coming out the back end. We will have a pork industry coming out the back end, and it will be competitive, and we'll provide safe, affordable food, just like we always have. It's just probably going to look different. We just don't know (to) what degree it will look different. Without a doubt, I think that lenders may look at some different requirements from a standpoint of equity, going forward, to account for some of these black swan sort of events that seem to pop up, but that's yet to be determined, too.

 

Michelle:       Do you see any kind of a silver lining to what is happening right now for swine producers — any kind of opportunity, so to speak, in the midst of this crisis?

 

Dave:              Well, that's a good question. Oftentimes, it's really difficult to see a silver lining in things like this. In hindsight, one silver lining is a lot of the planning and relationships that have been built based on African swine fever and foreign animal disease in general; they really do help in situations like this. When you're in a challenging time and you need to be working together with folks to try and address things, that is no time to be exchanging business cards for the first time. So, I think this does give us a lesson that relationships with folks that can help your business and to build those things over time are incredibly important, whether that's at the farm level or whether it's at the association level or business level. Just never take those connections for granted, because you never know when you're going to need them, and those things need to be developed over time.

 

Michelle:       Speaking of taking things for granted, with our food supply threatened at this time, in your eyes, does it change the way the consumer sees agriculture? In your opinion, are they looking at agriculture now in a more positive way?

 

Dave:              I think that, in some cases, they may be. I think the other thing that goes with that is that — I think the first natural thing for folks (to do) is to look inward, so they're going to look towards their own personal financial situation, whether they have a job or not, when they will get back to work. I think some of those more immediate things are going to probably be on more (of) the general public's mind first, but I do think it's instructive already, even with some of the panic buying and so on that's going on in grocery stores. Whoever thought that you would worry about where (your) toilet paper would come from? As we see meat shelves that are not as full as what we're used to, or going in to buy a can of soup and there's no soup left, there are some things that are kind of, I think, instructive.

 

                        We've got a fantastic food supply in this country, but the chain itself, every once in a while, can get a little threatened. We're seeing that right now, so we shouldn't take it for granted, and we should be grateful for the food production we have in this country. I think some people will be more appreciative of it, but it's also our job to produce food. That's why farmers are in this business, and they're going to continue to do so and do it in a way that's responsible. I think we'll see a shift, but we'll see what occurs there down the road.

 

Michelle:       So many things changing. There's just a great cost on many levels with what's happening right now, and of course, nobody can predict what's next. We all hope it's sooner rather than later that this whole thing is over. Dave Preisler is our guest today, the CEO of Minnesota Pork. Thank you so much for joining us today.

 

Dave:              My pleasure, and we all wish for better days, and we hope they come soon.

 

Michelle:       For additional resources on COVID-19, visit alltech.com.

 

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