Tyson Foods, other meat packers to benefit from executive order, liability protection

President Donald Trump said Tuesday (April 28) he’s issuing an executive order aimed at Tyson Foods and its competitors’ liability amid reports of coronavirus outbreaks at meat-processing plants that are disrupting the food supply chain.

Speaking at the White House, Trump said Tyson Foods faces a “unique circumstance” in terms of its liability. He plans to enact the Defense Production Act that will give the company and its competitors the guidance and protection they need to continue operating without facing lawsuits.

“We appreciate the administration’s efforts to help the food supply chain and we remain committed to protecting the safety of our team members as we continue our efforts to keep feeding American families,” Tyson Foods said in a statement. “The safety of our team members will remain our top priority as we work with the USDA on next steps. We’ve been screening worker temperatures, requiring protective face coverings and conducting additional cleaning and sanitizing. We’ve also implemented social distancing measures, such as workstation dividers and more breakroom space.”

Gov. Asa Hutchinson said he would wait to see the official language in the president’s executive order before taking a position.

The federal action comes on the heels of Tyson Foods Chairman John Tyson sounding the alarm bell for an industry facing huge challenges because of the COVID-19 pandemic. Tyson described the meat supply chain as “breaking” under the weight of COVID-19.

Given that Tyson Foods is the nation’s largest meat processor of beef, pork and chicken, the company has remained open to ensure grocery retailers and foodservice operators have the products to meet consumer demand.

Tyson Foods and competitors Smithfield, Cargill, Hormel, JBS and National Beef have all experienced some friction with environmental groups and state health officials over the safety of plant workers amid the outbreak of COVID-19 in areas across the country.

In Iowa, Tyson Foods pork processing plants were hit hard by COVID-19, prompting the company to temporarily close facilities and require testing of thousands of employees. Specifically, in Black Hawk County, the sheriff called for Tyson Foods to shut down its plant in Waterloo as positive cases escalated.

On April 17, Black Hawk County Sheriff Tony Thompson told local media Tyson Foods should close the facility, which the company did do a week later. The local deaths in that county had nearly doubled in one week to 138 and the first people had died when Thompson made that plea.

Tyson Foods had already closed a facility in Columbus Junction as the virus began to spread among its workforce. The company has since shuttered a large beef packing plant in Pasco, Wash., for the same reason. Tyson Foods executives said previously they are trying to balance the safety of the company’s workforce and provide food the nation needs.

Tyson Foods formed a COVID-19 task force to provide an operating game plan in conjunction with the Centers for Disease Control and Prevention (CDC) protocol for social distancing and employee safety guidelines such as wearing protective equipment, erecting plexiglass partitions to put barriers between workers on a production line and requiring social distancing in all common areas of the plants.

Smithfield Foods has already been sued by a workers group called Rural Community Workers Alliance. The lawsuit was filed in the Western District of Missouri. RCWA alleged Smithfield failed to provide adequate equipment for workers at a pork plant in Milan, Mo. The complaint alleges Smithfield punished workers for covering their mouths while coughing or sneezing, creating an actionable “public nuisance.” The suit claims it took Smithfield two weeks to provide workers in Milan protective masks after the company knew there was a risk. The suit also claims Smithfield incentivized employees to work sick with a $500 bonus for those who showed up when absences began to be a problem.

Smithfield said the claims are “without factual or legal merit.”

Trump’s executive order will stop legal complaints in their tracks as it orders processing plants supplying beef, chicken, turkey, eggs and pork to stay open. Trump said there is plenty of meat and production will continue. While meat production output could be lower in the coming weeks, there is room for some short-term price increases, but state attorneys general around the country will no doubt be on the lookout for any price gouging.

Meat company stocks rallied on the news of the federal order. Shares of Tyson Foods (NYSE: TSN) traded up more than 6% to $63.46 at mid-day Tuesday. Pilgrim’s Pride (NASDAQ: PPC) shares were up 5.5% on the news at $21.66.