USDA: Price Spread For Pork Products Increases As Processing Plant Labor Shortages Continue

The Editors’ Pick series is a collection of some of the best-read Charts of Note from 2021. USDA, Economic Research Service (ERS) editors selected these charts as worthy of a second read because they provided context for the year’s headlines or shared key insights from ERS research. This Chart of Note was originally published September 29, 2021.

The Coronavirus (COVID-19) pandemic has continued to exacerbate longstanding labor shortages in the U.S. pork processing industry. Because the production of deboned products requires more labor, associated prices are higher than bone-in product prices, which have smaller labor requirements. Weekly price spreads between a specified assortment of deboned pork cuts and a bone-in ham weighing 23-27 pounds highlight the price differential.

When labor shortages are acute-as in the spring of 2020 when COVID-19-related infections of processing plant employees caused some plants to slow or temporarily shut down production-plant managers often shift labor away from deboning activities. The price of deboned pork products then increases in accordance with reduced supplies, while bone-in product prices decline as supply expands.

This results in wider price spreads. Although the price spread declined through early May 2021 as hog numbers declined in a typical seasonal pattern, it did not return to pre-COVID levels. In mid-to-late August, the price spread became increasingly variable and featured several spikes, suggesting that COVID-related impacts on the labor availability of employees is ongoing, and that price spread turbulence is continuing.

This chart is drawn from the September 2021 issue of the USDA, Economic Research Service Livestock, Dairy, and Poultry Outlook.