From This Point On: Pork Industry Labor and Production Paradigms

There’s no question 2020 has made us take a deeper look at our strengths, weaknesses, opportunities and vulnerabilities. One thing remains constant – change needs to happen. We can’t just go forward doing things the way we’ve always done them because that’s the way we’ve always done them. 

"If I can get the industry more of what Bob Morrison would do for the industry. Ask questions and listen before you act. We need that more than ever as I look at the pork industry going forward,” said Mark Greenwood of Compeer Financial during the 2020 Allen D. Leman Swine Conference.

I’ve always been a big supporter of listening to the ideas of young people. Good ideas are good ideas, no matter how old you are. Some of the best ideas often come from those working in the trenches.

For example, Spenser Becker, a 25-year-old graduate student at Iowa State University, believes finding the right people to fill roles across all aspects of pork production will present a major challenge for her generation. 

“Our greatest challenge will be pushing the limits of innovation and utilizing our creativity and the technology at our disposal to solve these problems and provide solutions moving forward,” Becker said. 

Labor: The limiting factor
COVID-19 hasn’t helped labor challenges in packing plants and on the farm. It has just made them bigger. Some experts predict packing plants will continue to run at 90% to 95% of their former capacity for the foreseeable future. That’s between 128 million to 135 million market hogs harvested annually as compared to 100% capacity of about 142 million. To put that in perspective, that number was 117 million in 2016. We’ve added 25 million head annually into our capacity in a short three years.

“When you consider that increase, that’s phenomenal,” says John Nalivka of Sterling Marketing. “We’ve increased capacity by 22% over last three years. That’s a relatively short period of time to raise capacity that much. Because of that, it’s imperative all the pieces work.”

Nalivka says we have to remember slaughter capacity is just one piece in the entire system. You can slaughter hogs all day long, but you still have to find a home for that final product. Labor continues to be the limiting factor.

A new production paradigm
Myrl Mortenson, president of the Hanor Company, said he spends a lot more time thinking about and balancing pig flows.

During the Leman Conference, he said, “Before, if you had excess pigs and you couldn’t take them into your own integrated system, you could certainly go to other systems and have a home for these extra pigs. I think that luxury is gone.”

Producers will need to stay self-contained in the environment in which they sell their pigs, he said, adding, “Hitting those numbers is going to be a real issue for producers.”

Mortenson believes the industry will need to shrink to meet those criteria. He said it won’t necessarily be caused by farms going away as much as sow populations decreasing because there is not enough capacity to harvest all their offspring. 

“We have too much pork. The world demand is what it is. Every year production gets better. We have put a system in place in our company that every year, we're going to have to shrink our sow numbers. If not, our pig numbers will get out of bounds with what we have the capacity of slaughtering,” he said. 

That takes a lot of discipline and planning -- and a willingness to change your perspective. 

"It’s a new paradigm for the whole industry. Never would you have thought balancing your pig flows would be so important and so vital. We need to match our pig flows with our available shackle space,” Mortenson said.

From strategizing pig flows to equipping tomorrow’s workers, challenges are ahead. But opportunities are, too, if we stop and listen.

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