Source: Jennifer Shike, Farm Journal’s Pork, 29 December 2021, photo credit: CallcentreHelper
A new year brings new opportunities. Economists encourage pork producers to consider these important questions.
1. Is the industry putting products in front of consumers that meet what consumers want?
“The question that should always be at the forefront of the producers’ mind is related to consumer demand,” says Scott Brown, an economist at the University of Missouri. “That applies to both domestic and international consumers. The growth of the U.S. pork industry depends on fulfilling consumers’ desires. A reduction in U.S. pork demand would be detrimental to the industry.”
2. Where are we at in regard to a supply and demand balance?
“We can’t put ourselves in a compromised situation as it relates to shackle space relative to available animals. That used to be a simple calculation. We had very predictable line speeds and knew how many animals we could harvest on a daily or weekly basis. But recently, that’s been difficult,” says Joe Kerns, president of Partners for Production Agriculture. “From a pork production standpoint, don’t get overly confident in starting to increase production output that we would normally see happen as a response to favorable economic margin. Some discipline within the production community is well-warranted, given the uncertainty within processing plants and their ability to further process animals and maximize revenue, which then allows them to pay more for the live hog coming to the shackles. Be cognizant of where are we in a supply and demand balance. Don’t get out in front of your skis or try to take advantage of a scenario that is characterized by increasing shackle space. I just don’t see it coming anytime soon.”
3. How can we expand production if we cannot increase packing capacity due to labor or regulatory constraints?
“Fortunately, production is currently aligned with available shackle space, but any meaningful expansion in the breeding herd or a recovery in productivity would quickly throw off this balance,” says Christine McCracken, executive director animal protein at Rabobank. “Attempts to add second shifts at our plants have in most cases been thwarted by a lack of labor, while announced expansion is still a few years away (at best) and will still require a willing workforce. Attempts to automate even the most difficult of jobs are slow and are unlikely to impact industry labor needs over the foreseeable future. Over the short run, we need to reconsider production expectations and supply chain constraints.”
4. How do we position ourselves for success?
“While it is easy to get lost in important day-to-day issues, it is important to periodically pause and consider big-picture questions,” says Lee Schulz, an economist at Iowa State University. “These can include (a) how the pork industry can best be positioned for success over the next 5, 10 and 20 years and (b) how individual actions of stakeholders throughout the industry can help (or inhibit) realization of this success?”
The South African Pork Producers’ Organisation (SAPPO) coordinates industry interventions and collaboratively manages risks in the value chain to enable the sustainability and profitability of pork producers in South Africa.
