Immigration Raids May Affect Meat Prices

The Associated Press
Friday, December 15, 2006; 11:03 AM

WICHITA, Kan. -- When hordes of police and immigration officials stormed meatpacking plants in six states this week, the illegal workers arrested may not have been the only victims.

Consumers and the industry itself may be feeling the repercussions in a shortage of meatpackers, higher wage costs and, ultimately, higher prices for the beef that lands on America's tables at home and in restaurants.

Some analysts see the current emphasis on enforcement in the meatpacking industry as the precursor to getting an immigration bill through Congress _ by demonstrating the government's capability to enforce laws at the work site.

"The meatpacking industry has become dependent on an unauthorized labor force, and it is not good government to destroy an entire industry. In some way, there is going to be a meeting of the minds," said Mark Reed, a former immigration regional director who now runs his own consulting business, Border Management Strategies, in Tucson, Ariz.

Every labor-intensive industry _ the hotel industry, the construction industry, agriculture _ will be similarly impacted, he said.

"It just happens the meatpacking industry is in the cross hairs right now," Reed said.

Continued massive immigration raids would cut cattle prices paid to cattle feeders and cattle producers while raising the cost of beef for consumers, said James Mintert, an agricultural economist at Kansas State University.

It would also reduce the available labor supply _ putting the U.S. meatpacking industry in a position more comparable to the Canadian slaughterhouses, which have much higher labor costs because they have less access to cheap immigrant labor.

"You are going to end up paying higher wages," Mintert said.

Swift & Co. said its meatpacking plants were running at reduced levels a day after nearly 1,300 employees were arrested in a massive immigration sweep that temporarily halted operations.

Cattle slaughter numbers had been running about the same as a year ago the day prior to arrests. The immigration sweep on Tuesday cut the nation's daily cattle slaughter numbers by 9 percent, Mintert said.

Still, Mintert cited preliminary data from the Agriculture Department's federally inspected slaughter numbers showing that by Wednesday slaughter numbers nationwide had recovered and were up a fraction from a week ago as other meatpackers picked up the slack at Swift's plants.

"It looks like what took place had limited impact _ we had a one-day impact," he said.

Swift said in a written statement that its operations had resumed at reduced levels on Wednesday at the plants in Greeley, Colorado; Grand Island, Nebraska; Cactus, Texas; Hyrum, Utah; Marshalltown, Iowa; and Worthington, Minnesota. Production was expected to be below normal in the short term, but the company did not provide further details and did not return a call for comment.

At Tyson Foods Inc., the world's largest meat processor, the raids did not result in any significant change to the company's livestock buying efforts, and plants were operating normally at expected production levels, said Tyson spokesman Gary Mickelson.

It is uncertain how much impact increased immigration enforcement at the nation's slaughter plants would have on consumer meat prices.

"If the price of meat goes up a little bit, so what? There is nothing as expensive as cheap labor because we pay for this cheap labor in other ways _ higher insurance costs, higher taxes," said Mark Krikorian, executive director of the Center for Immigration Studies.

He cited a study his group did a few years ago looking at what impact the loss of illegal immigrant labor would have on consumer prices for fresh fruits and vegetables, a far more immigrant-intensive business than meatpackers.

Their study found that in summer the retail price of fresh fruit would go up 6 percent for the first couple of years, and then settle to about 4 percent higher, Krikorian said.

The last time a major shift in the nation's meatpacking industry occurred was in the 1960s and 1970s when the industry shifted away from the urban areas in the Midwest and located to the Great Plains, where they drew more on immigrant labor.

During the 60s and 70s meatpacking wages were relatively higher than at manufacturing plants, running about 14 to 18 percent above manufacturing wages at that time, Mintert said. By 2002, meatpacking wages were running 25 percent below manufacturing wages.

Accompanying the wage drop was the decline of unions in the plants. In the late 1970s, about 45 percent of the meatpacking industry was unionized. By the late 1980s, that had dropped to 21 percent as more immigrants took jobs in the industry, Mintert said.

Kevin Good, a senior market analyst for Cattle Fax in Denver, said any disruption to the cattle market from the raids will be short term as other plants absorb the excess cattle. He said beef prices so far have been relatively flat.

"It is part of doing business," Good said of the raids.

© 2006 The Associated Press