Future Leadership in the Pork Industry, By Kent Bang from Compeer Financial

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It was good to see so many pork producers and pork industry associates at the National Pork Industry Conference (NPIC) in mid-July. Compeer’s Chief Diversified Markets Officer, Mark Greenwood, and I had discussions following the meeting about all the young industry leaders that were in attendance and it really feels like the future will be strong with the next generation as well.

Reflecting a bit on history at NPIC, and all the work done by producers, veterinarians, allied industries, and state and national producer organizations to build the industry to where it is We know this is an ever-changing landscape and the future will continue to have challenges in front of it, but it is from a solid foundation that it will be able to move forward.

I first think of the innovation that occurred over the last decades to make the U.S. competitive in every aspect of production — now leading the world in that regard.   With a coordinated effort of genetic improvement, meat quality evaluation, nutrition and management strategies to maximize potential, coupled with packer-processing innovation; the quality of the product we produce has improved tremendously over the years.

The work that has gone into building our pork exports is evident in opening new trade agreements and promotion of pork in those markets through the years.  To think that 25 years ago we first became a net exporter of pork for the first time, and today we are approaching 30% of total production being exported.

I believe opportunities brought us to where we are today.  Pork product prices have continued to be quite strong in recent months maintaining positive margins for pork producers.  Robust pork demand, particularly for loins, hams and bellies have provided producers with prices that outpace very high costs of production.

For the last week of July in 2021, hog prices, based on the Net Negotiated Market, was $108.88 and cutout averaged $123.83.  Pork primal belly, ham, and picnic were all at twelve-month high levels driven by demand for product and a limited supply.  With somewhat limited exports at this time (China), it is clearly being driven by domestic demand for pork.

The markets have received some help from smaller supply due to a reduced breeding herd and disease challenges from PRRS.  It is interesting to look at pig harvest over the past 22 weeks (ending 7/31/22) and comparing to the prior two years.  When comparing to 2019 we have nearly the same production and clearly much better prices.

Average weekly pig harvest in the 22 weeks ending July 31:

2019      2,373,666 head

2020      2,369,294 head                 -0.2%

2021      2,381,415 head                 +0.5%    +0.3% compared to 2019

 

The pork industry will continue to have opportunities and challenges.  Improving herd health, controlling costs and managing price risk rank among the highest.  Another challenge will be doing a better job of telling the story of animal welfare, food safety and quality, and sustainability of the pork sector to name some of the others.  I believe the next generation of leaders will be up to the challenge to build the industry stronger on those pillars.