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Meat Processing Disruptions, Price Inflation to Continue

Our analyst examines the food supply chain, restaurant sales, and attractive shares for one name.

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Rebecca Scheuneman: So we've had a lot of people ask us if there's going to be meat shortages. There's been a lot of concern about that. A lot of reports in the media about that. And there's definitely been significant disruption in the meat processing supply chain. And the reason for this is that the process is very labor-intensive; it's not very automated. So you have employees standing in close proximity to each other, and therefore there's been a lot of problems with contagion of the coronavirus. So, you know, due to that, there's been a lot of disruption production of--especially beef and pork is down from normal levels. And we do expect that this will cause inflation with meat, and we're already seeing that, in fact, especially with beef and pork. So we do expect that that's likely to continue. And we do expect that, as these manufacturers seek to increase production by simplifying cuts, that consumers will also have less variety to choose from, but I don't think that the disruption will be so severe that there will be empty meat cases. So you don't need to worry about that.

Rebecca Scheuneman does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.