When future historians of the hog industry look back, I believe they will point to 2024 as being a pivotal year where two very important trends emerged. These historians will admit that while nothing dramatic happened over the year due to these trends, it is nonetheless, the beginning.
The first (and most sobering) trend is the beginning of the end of pork exports being the value-added leader it was in prior years. Demand requires two fundamental ingredients: people and money. For ages, we could depend on the fact that every year there would be a little more money and a lot more people.
In early 2023, the Chinese government quietly made an announcement that put cracks in these two cornerstones of demand. For the first time since the Great Chinese Famine, their population shrunk. Apparently, there was an over counting of the 30-to-49-year-old cohorts by some 100 million. This overestimation, combined with the disastrous “One Child” policy means the Chinese population is shrinking a decade ahead of even the most pessimistic estimates.
An Unlikely Hero
While China is not the largest buyer of U.S. pork, it does mean that of the historic top five importers, China, South Korea and Japan are all in the declining population club. Not only are there going to be fewer people in our biggest export markets, but as the proportion of retirees to workers increases, disposable income will decrease as money is diverted to funding elder-care services. While it would be impossible to estimate a precise economic impact on the U.S. pork industry, I believe we will see a permanent decrease in value of anywhere from $2.51 to $25.31 per head finished by 2050.
This has the potential to devastate U.S. pork, but an unlikely hero is about to take center stage: big data. As an industry, we have been slow to appreciate the true value of data, but I think that is a corner about to be rounded, and in 2024, we will see some of the early advances begin to take hold.
Every day, farms produce a tremendous amount of data. However, the majority of that data rarely, if ever, makes it into the hands of decision-makers. Often, that data gets siloed away for a single purpose (when to raise curtains, when to breed, when to change rations, etc.) and what does get to the producer is heavily summarized into KPIs based on averages.
In the past, this volume of data was more prohibitive than helpful, leading to an industrywide blind spot. Specifically, how much money is being left on the table due to inefficiency along the production chain is roughly $25 to $75 per head finished. But there has been a glacial shift in the industry thanks to advancements in technology and increasing awareness. I believe 2024 is when we hit critical mass and start to see major improvements in production being driven by big data. Like watching a rocket take off, the first moments can seem painfully slow, but it’s the beginning of something extraordinary.
Read more:
What Will Drive Big Change and Profitability in the Future of the Pork Industry?
Demand Mindset: Where Will Pork Production Go Now?
The Mythical Performance Curve for Net Sow Output
Reinvest in the Demand Attributes of Generation Z
