By Tom Polansek
CHICAGO (Reuters) - The U.S. Department of Agriculture is seeking to reassure meat producers it will keep slaughterhouses staffed with federal inspectors as fears about potential shutdowns due to the new coronavirus hammer livestock prices and fuel concerns about food supplies, meat industry groups said on Monday.
Livestock markets have been hit hard as the spread of the virus threatens workers that companies rely on to process and inspect meat.
Prices for cattle and hogs could fall further if coronavirus cases force companies like Tyson Foods Inc (N:TSN) or WH Group's (HK:0288) Smithfield Foods to close slaughterhouses. Shutdowns would remove markets for farmers to sell their animals and could temporarily tighten meat supplies.
The USDA said it would use its authority and "all administrative means and flexibilities to address staffing considerations" during the outbreak.
Agency officials told the National Cattlemen's Beef Association that the USDA will ensure it has replacement inspectors ready to staff slaughterhouses if necessary, said Colin Woodall, chief executive of the trade group. Farmers and industry groups said there were no confirmed shutdowns.
"We need to make sure that we're keeping the beef flowing," Woodall said.
American shoppers have picked grocery store shelves clean on products ranging from beef and chicken to disinfectants due to the outbreak.
Poultry producer Sanderson Farms (O:SAFM) said it can process more chickens for retail customers if needed and that none of its employees or farmers have reported cases of the virus. The USDA said an agency employee tested positive.
The United States Cattlemen's Association has asked whether the agency could ease staffing requirements for meat inspectors to avoid supply disruptions if coronavirus threatens operations, said Jess Peterson, senior policy adviser for the trade group. The association wants meat to be produced safely, he said.
"We're just looking for flexibility so that nothing gets shut down," Peterson said.
April live cattle futures have tumbled 14% this month on concerns about the virus shutting slaughterhouses and causing an economic slowdown that could reduce beef demand. Boxed beef prices rose on Monday and Friday while futures sank.
The USDA is examining the markets for possible anticompetitive behavior, said Peterson, who said he spoke with USDA Under Secretary Greg Ibach.
The agency in August launched a separate investigation into widening prices between cattle and beef after a fire at a Tyson Foods slaughterhouse in Kansas shut the plant.
Farmers said coronavirus has the potential to wreak even more havoc if it shuts multiple slaughterhouses.
"That's my worst nightmare," said Peterson, a rancher in Montana.