Meat plants have proven to be a major cause of many COVID-19 clusters. What few realise is the extent to which they are facilitating the virus’s spread. Outbreaks have occurred worldwide in countries such as the UK, Germany, Canada and Australia. As of late August, such events have affected almost half of the industry.
There are two reasons as to why meat processing plant have found themselves at the centre of these outbreaks. First, the cold and moist environments in which staff stand shoulder to shoulder facilitate the spread of the virus. Second, many meat processors, notably in the US, have sought to reinforce to their operations rather than prioritising safety at every turn, leading to considerable outbreaks, which then devastate communities and often require plant-wide shutdowns.
In my June interview with Farm Online, I was asked why there had been relatively few outbreaks at meat plants in Australia. I said that this was likely due to Australia having fewer COVID cases and not necessarily because of better protections. I should have been more forceful with my wording.
Fast-forward to August, where a second wave has already led to more than 700 daily cases in Melbourne, the state has moved to a stage-4 lockdown. Fourteen outbreaks originated at meat plants, totalling 874 confirmed cases, or 5.6% of all cases in Victoria. Deloitte estimates that the second wave will cost the Australian economy up to $100 billion (~0.5% of annual GDP).
Worker protection policies are inadequate
Meat companies and the Victorian Department of Health and Human Services (DHHS) are, no doubt, working tirelessly to reduce the risk of outbreaks and protect their workforce. DHHS has introduced more stringent guidelines and requirements for meat, poultry and seafood plants under stage 4 restrictions. In summary, these guidelines include:
Reducing capacity to 67% of peak workforce capacity
Daily temperature testing
Full personal protective equipment and social distancing measures
A detailed policy for handling suspected and confirmed cases
Based on lessons learned from the US experience, union reports and media coverage, however, it would seem that there are several additional measures that companies must take in order to protect worker health, limit community outbreaks and press ahead with their operations.
Companies are underreacting to the first case
DHHS guidelines state that companies must “prepare to identify close contacts and provide staff and visitor records to support contact tracing” and also, consider closing parts or all of their operations. In practice, this has often amounted to a ‘deep clean’ of the room where the virus-carrier was working and the obligatory quarantining of the people who had worked the same shift in the same room. As the virus has a 5-day incubation period, produces no symptoms in 20-50% of cases and for many, takes several days to receive test results, other workers will likely be infected and spreading it further by the time the first test comes back positive. Of the 14 abattoirs with outbreaks, the average plant has seen 39 infections. Processors are underreacting. If we are to curb the spread early, we need to understand that the virus spreads faster and further than we expect.
This would, therefore, require more widespread testing than is currently stipulated by DHHS policy, and a willingness to temporarily close operations while staff await test results. A strong response was reported at Midfield, “when the business had a coronavirus scare, operations closed as a precaution for three days… and testing of all staff began first thing”.
Workers need to be at the centre of the solution.
The meat industry has a history of undervaluing worker rights, especially those of casual or migrant workers, which, in turn, exacerbates the crisis. Workers at JBS ceased work on 28 July 2020 after the workers felt JBS had done too little to protect their safety. According to the United Workers Union, a letter was written to JBS “asking them to explain how they will keep workers safe. The company responded by telling the union they will meet with them only after workers return to work.”
DHHS suggests, “[w]here reasonable and practical: hold consultations with workers to identify and assess the COVID-19 risks in the workplace that the employer can control.” While I appreciate the difficulty in transparent communication with potentially thousands of workers, people need to understand the risks that they face in this pandemic.
Financial incentives cannot be ignored.
I believe the most underappreciated and least discussed risk is the role that financial incentives play in spreading the virus. DHHS states, “Employers cannot require workers to work when unwell.” The Government has also provided a $1,500, 2-week ‘Pandemic Leave Disaster Payment’, which is available to those who have exhausted sick leave.
While this is a step in the right direction, it is insufficient. The US experience presents many examples of workers who came to work with mild flu symptoms because they could not afford to take the time off. This was before the $1,500 support scheme came in, though this is not available to those with sick leave entitlements, and at half of the industry’s wages, it is too little for many.
Pandemic leave must:
Not be tied to sick leave
Cover full-time and casual workers
Apply to workers when the entire plant closes, to stop workers from seeking work elsewhere in the interim (which was the case at Golden Farms during the 14-day shutdown).
Investor Action
Meat processors are not infectious disease experts. Managing the risks of a contagious and novel pandemic is incredibly challenging. Moreover, Victoria’s government has not provided adequate regulation to protect meat workers. One whistleblower discussed how the government unequivocally failed to manage a confirmed case at a meat plant.
Investors stand to lose a lot if they defer to the companies and DHHS, in terms of worker and community health, and the profound impact that outbreaks can have on the economy. These meat clusters form a sizeable proportion of the ~16,000 cases and have resulted in a $100-billion loss to the Australian economy due to the second wave. For Australia’s institutional investors, it is difficult to overstate the impact that each outbreak will have on their entire portfolio. National GDP in the September quarter is expected to decline by 5.0% as a result of Victoria’s lockdown.
This lesson applies to both Australian and overseas investors. A strong policy is needed before the wave of infection actually reaches a region. With a vaccine many months away, it is unclear what the future holds for other Australian states and indeed, other countries that are currently managing the virus.
Investors, even those who hold relatively little in meat processing, must engage with processors on these key issues, to protect long-term value and health in the Australian market.
FAIRR insights are written by FAIRR team members and occasionally co-authored with guest contributors. The authors write in their individual capacity and do not necessarily represent the FAIRR view.