Sometimes the biggest issues hiding in our industry aren’t about disease outbreaks, input costs, or regulations. They’re about the way numbers are calculated — numbers that directly affect the price producers receive for every hog sold.
One of those numbers is the pork cutout value. And right now, the way it’s calculated could be costing pork producers billions.
The Problem Nobody Talks About
Here’s the situation:
When the pork cutout value is calculated, labor costs are deducted from the primal values before rolling up into the total cutout figure. That means every dollar spent on processing labor comes off the top before the cutout number ever hits the market reports.
But when beef cutouts are calculated? Labor isn’t deducted at all.
That difference means pork is starting the pricing race with a disadvantage. The cutout number for pork — the same number influencing hog prices across the country — is artificially lower by design simply because of the accounting method.
The Financial Impact on Producers
Let’s put real numbers to this.
- Over the last decade, labor costs in processing plants have risen sharply.
- The U.S. produces roughly 27 billion pounds of pork each year.
- At current labor rates, removing those costs from the cutout calculation equals billions of dollars in lost value annually.
On a per-head basis, this works out to around $14 per market hog — money that simply disappears from the pricing system before it ever reaches producers.
In an industry already struggling with thin margins, volatile markets, and herd health challenges, this is a financial hit no one can afford to ignore.
Why It Matters to Everyone in the Chain
This isn’t just a producer issue. Lower cutout values affect:
- Market Transparency – An undervalued cutout sends weaker price signals back through the chain.
- Competitiveness vs. Beef – Beef benefits from a calculation method that keeps its cutout value higher, while pork starts lower before markets even react.
- Producer Economics – For many operations, that $14 per head is the difference between red ink and black ink.
The bottom line: an outdated calculation method is working against the entire pork sector.
What Needs to Happen
It’s time for the industry to ask tough questions:
- Why does pork deduct labor while beef doesn’t?
- Should pork cutouts be calculated on the same basis as beef for a level playing field?
- What would billions in recovered value mean for producers, packers, and rural communities?
Aligning pork with beef standards wouldn’t be a handout. It would be about fairness, accuracy, and competitiveness.
A Call to Action
Industry groups, packers, and policymakers need to come together on this issue. If the pork industry can push for reform in cutout calculations, we could put billions back into the value chain over the next decade.
Producers deserve a system that reflects the true value of the product leaving processing plants — not one that artificially discounts it before it ever hits the market.
It’s time to level the playing field. The future of pork pricing — and the livelihoods of thousands of producers — depends on it.
