5 Pork Industry Trends You Need to Know
06.15.21 Kristi Lange
Keep a pulse on issues facing farmers with the top 5 pork industry trends to watch:
1. Hog markets and consumer demand
Demand is a major game-changer for swine producers. The industry is seeing some of the highest wholesale pork prices since 2014, with some items seeing record prices. Drivers of the current market surge include a demand shift due to broader inflation pressure, higher incomes and consumer preferences. Another reason for improved hog markets is a decline in hog inventory numbers and strong exports.
Hog prices started the year strong and are expected to average $71 per hundredweight (cwt) in Q3 and near the upper $50s per cwt in Q4. Demand for pork is up 5.7% year-to-date (based on real per-capita expenditures for pork, a measure of pork demand).
2. High feed costs
While the market outlook is bright, high feed costs could impact long-term profitability for swine farmers. Farrow-to-finish product costs are up at least 30% compared to last summer. Corn price estimates are averaging $4.30 per bushel in 2021, with current corn prices much higher at $6.85 per bushel. One driver of this is China’s increased demand for feed, which continues to reduce U.S. grain stocks.
While current hog prices mean many producers will be in the black this year despite high input costs, it will be important to prepare for the future and have strong management practices in check when the market corrects itself.
JBS Foods, the second-largest pork producer in the world, was recently hit with a ransomware attack. The company paid an $11 million ransom to keep production going. Overall, JBS lost less than one day’s worth of food production.
Cyberattacks like this one are on the rise and threaten to disrupt the food supply chain and impact farmers’ profitability. Not only that, farmers themselves could become targets of cyberattacks in the future.
4. Proposition 12
Proposition 12 has been looming over the swine industry since 2018 and will have significant impacts on the swine industry when it goes into effect in January 2022.
This legislation outlines housing standards for breeding pigs, stating each sow must have at least 24 ft. of usable floor space. In many current facilities, this will result in a loss of 20% of space and a 3%–5% loss in farrowing rates. Currently, only 4% of the U.S. sow housing meets the required facility standards. It will cost producers an estimated $1,600–$2,500 per sow to convert facilities to comply.
Proposition 12 will impact any whole pork meat sold in California, regardless of origin — thus impacting the entire country. Because California is the largest domestic market for pork, this new regulation will likely drive pork prices higher in the state and drop prices in the rest of the U.S.
Labor availability continues to be a hot topic for the swine industry, focusing on working towards a stabilized workforce. Programs such as the TN Visa program and the H-2A temporary agriculture workers program can help farmers tap into different labor sources.
Biosecurity (especially regarding African Swine Fever), innovation and technology expansions and waning interest from today’s youth have played a role in labor challenges across the industry.