The future belongs to those who can adapt to change and gain the best market access, said Brett Stuart of Global AgriTrends at the 2019 American Association of Swine Veterinarians annual meeting in Orlando on Monday. With global population rising by 78 million per year, the U.S. pork industry has a great opportunity to help meet the protein needs of a growing world population.
More food is needed.
In the next 100 years, more food will be needed than was consumed in the last 7,000 years. More than 815 million people are considered food insecure now. Every day, more than 6,000 children die of malnourishment. This is unacceptable, Stuart said.
“Food shortage is not an issue of productive capacity, however. It’s more of an issue of AK-47s and greedy dictators,” Stuart said. “I have done the math. World resources will be adequate to feed 9 billion if technology and productivity are allowed to spread globally.”
Currently, U.S. pork is not the largest global producer or exporter. But with $6.2 billion in exports last year, Stuart said the industry is globally-significant.
Week-in, week-out, U.S. pork is often the most affordable pork on the planet, based on comparable hog prices. While China holds more than half of the world’s hogs, and is the world’s “low-cost” manufacturer of many consumer products, they are nearly always higher cost hog producers than the U.S.
“Think of it this way: U.S. agriculture is generally the ‘China’ of the agriculture world,” he said. “We are typically the ‘low-cost’ producer of corn, wheat, pork, poultry, beef, rice, and soybeans; but particularly pork.”
This significant cost advantage suggests that U.S. pork should dominate markets everywhere, but Stuart said it’s more complex than that. An actual hindrance to being the low-cost supplier is just that: the fact that U.S. pork can undercut domestic prices in foreign lands.
“This works fine for consumers, but what about foreign producers? Farmers are strategically important in any country and thus politically protected,” he said. “Affordable U.S. pork is a threat to countries seeking to maintain self-sufficiency goals. And this ‘trade policy’ arena is where it gets complicated.”
So, what about China?
As the world’s worst hog disease ravages the world’s largest hog herd, pork shortages and a pull on global pork supplies are expected.
“This is a big deal. It’s a global pork ‘black swan’ event,” Stuart said. “African swine fever is like molten lava. It spreads slowly, but everything it hits, dies.”
U.S. opportunities in China require patience and continued pressure toward global standards, as well as continued market development, he added.
“My take on African swine fever in China is that the spread is very vast and deep,” Stuart said. “Greater than 15% of China’s sow herd has been liquidated already. Conservatively, I believe production will be down over 30% after liquidation stops.”
Is there a such thing as too much pork?
Demand is rising but not in a straight line. U.S. producers can over-produce. Stuart said the market sends very clear and direct signals regarding output. Based on per-capita U.S. supplies nearing the highest levels in 19 years (based on his 2018 forecasts), the market has been mostly fine with current levels.
“The continued expansion in 2019 takes per-capita supplies to the highest levels since 1981,” he said. “Adding in beef and poultry supplies takes my U.S. per-capita supply number to a record 205 pounds in 2019, up +21 pounds in five years. That level feels ‘heavy’ to me.”
Recent large investments into U.S. hog production and packing infrastructure by some “bold souls” will be needed in the future. The question remains how fast do we build and fill these plants with hogs?
With rising beef and poultry supplies, caution is warranted, he said.
The key is choice.
The bottom line is that people need food. Stuart said the key is choice. Preserving choice allows both producers and consumers to win.
Markets are very efficient at allocating resources. For example, lower-yield practices result in higher-priced goods and vice-versa.
Well-funded and well-organized social agendas seek to legislate yield-reducing and cost-adding regulations.
“Here’s the inconvenient truth – it is socially irresponsible to legislate yield-reducing practices,” Stuart said. “Nearly a billion of our common population is food insecure.”
Where is the future?
Stuart said he sees the next significant export growth opportunities as a basket of markets, not one single market. With duty-free access to Colombia, Chile, Central American nations (CAFTA and the Dominican Republic), the U.S. will be a strong force in those markets.
But there are other regions of the world seeking more pork, he added. The EU and Brazil sent a combined $374 million in pork to Africa last year. The U.S. sent just $2.6 million.
“A new U.S. agreement with South Africa is beneficial, as would be a potential agreement with Nigeria, hinted to by Nigerian President Buhari in meetings with President Trump last year,” Stuart said. “Granted, Africa is a unique market, but remember that U.S. pork prices (think hams and offal) are very competitive globally.”
Tapping into new markets holds the key to U.S. export growth. And the U.S. is well poised to capitalize on new opportunities, he said.