Mexico, Beef, Beer and the U.S.

May 18, 2020

Mexico's attitudes toward both industries contrast with America's.

Two news items I recently posted happen to be about Mexico and the coronavirus: They’re running out of beer, but they have plenty of beef – enough to export to the U.S.

The beer situation came about because of a decision by the Mexican government not to declare breweries vital operations that must remain open. That’s why beer drinkers are roaming the streets of Tijuana and other Mexican cities, while we here in the States are awash in suds.

As a dedicated beer drinker, I’m glad to see the domestic supply taken care of. On the other hand, this is a good illustration of how the American attitude toward declaring businesses OK to open is a bit, shall we say, loose, compared with other countries. I just hope this doesn’t come back to bite us.

Which brings us to the second item, about how Mexican beef processors are in a position to step up exports to the U.S. to make up for shortages here. This is because the Mexican beef industry is not nearly as centralized as America’s. They have no mega-plants running 24/7, where shutdowns cause huge ripple effects across the supply chain. In fact, no Mexican meat plants have been shut down due to coronavirus, and none of their meat workers have died from it.

This would appear to be another illustration of how small is beautiful.

Now, the American meat industry didn’t get where it is by accident. All the consolidation, mega-plant construction, streamlining of inventory and other efficiency measures came about for one basic reason, to give Americans what they want: Cheap, safe meat.

Which is great, until a situation like the current one comes along. Then it becomes clear that what looked like a lean, efficient supply chain is, in reality, painfully fragile.

I’m not sure what can and should be done about this. You would think that the market would evolve to meet conditions, which after all is the essence of capitalism. But conditions like this pandemic are so (thankfully) rare that industry will have a hard time evolving and adjusting. Let’s hope it won’t be too hard.