Impacts of COVID-19 and Price Transmission in US Meat Markets

Coronavirus 2019 (COVID-19) has caused ongoing disruptions to U.S. meat markets via demand and supply-side shocks. Abnormally high prices have been reported at retail outlets and meat packers have been accused of unfair business practices because of widening price spreads. Processing facilities have experienced COVID-19 outbreaks resulting in shutdowns. Using weekly data on wholesale and retail prices of beef, pork, and poultry, we characterize the time series behavior and dynamic linkages of U.S. meat prices before the COVID-19 pandemic. We model vertical price transmission using both linear and threshold autoregressive (AR) models and vector error correction (VEC) models. With the estimated models, we then compare price movements under COVID-19 to model predictions. All three meat markets are well-integrated and we observe unexpected, large price movements in April and May of 2020. Early COVID-19 related shocks appear to be transitory with prices returning to expected levels at a pace consistent with the speed of transmission prior to the pandemic. This well-functioning market process suggests a degree of resilience in U.S. meat supply chains.