No one would argue there’s a lot for producers to wade through right now. It can be hard to discern where to put your focus first with so many things trying to catch your attention.
I asked some economists what they would share if they had 5 minutes to sit down and chat with a producer.
Altin Kalo, head economist at Steiner Consulting Group, says, “The pork business is still a good business to be in despite the challenges. Global demand continues to grow, and U.S. producers stand to benefit.”
Manage Risk
The most important message Scott Brown, an economist at the University of Missouri, would share is that volatility in pork and feed markets will continue.
“We have experienced an incredibly volatile period in the last few years, and I believe that will continue. Demand for pork and feed appears to be more inelastic, especially at the farm level. In simple terms, small changes in pork and feed supplies can lead to large price changes for these commodities,” Brown says.
This increasing inelasticity of demand leads to both highs and lows in prices, which means risk management becomes even more critical in the months ahead.
Don’t Underestimate Exports
“We know 2023 was one for the record books, not in a good way,” points out Erin Borror, vice president of economic analysis at U.S. Meat Export Federation. “But through the challenges, we have seen opportunities for U.S. pork in the global market and exports continue to add value to the industry, with export value per head averaging a record $64.25 in Q1 2024 and a record 30% of production (25.8% when excluding variety meats) going international.”
She says there is room for continued consumption growth, and this will continue to drive demand for U.S. pork, as will the increase in U.S. market share, depending on the country.
“U.S. exporters have not dropped prices to grow exports. Pricing is historically strong and export volume is near record large, showing the strong demand in a diversified set of markets,” Borror adds. “Mexico has been critical to U.S. export growth and that market has benefited from the relatively strong peso, economic growth, and pre-election stimulus. Mexico is also consuming more pork and the U.S. is key to that consumption growth.”
Unfortunately, the U.S. has not been expanding free trade agreements. However, she says the agreements the U.S. has remain critical to the industry’s success.
“Rising competitor Brazil does not have free trade agreements with our key partners and this continues to be a significant disadvantage for them. Looking ahead, we must continue to tell the positive story about U.S. pork production and nutrition, along with the overall benefits of U.S. agriculture. Consumers seek information, but they also continue to purchase based on taste and we must not lose sight of that most important aspect,” Borror says.
Boost Traceability
Christine McCracken, executive director, animal protein at Rabobank advises producers not to take their eyes off foreign animal disease preparedness efforts.
“I would reiterate the importance of traceability and Secure Pork Supply, not only in the event of a foreign animal disease, but also as a potential tool for value capture. The rapid spread of H5N1 in dairy cattle to nine states from what appears to be an isolated source, and the subsequent restrictions on animal movement should serve as a reminder of the risks of not having these tools in place ahead of a potential event.”
Listen to Each Other
For Lee Schulz, an economist at Iowa State University, there is great value in taking time to listen to each other.
“I have learned far more from producers than I have ever taught them. There’s an old saying, ‘You have two ears and one mouth for a reason.’ Put another way, when you speak, you’re repeating what you already know. But when you listen, you might learn something new,” Schulz says.
So, if he had an opportunity to sit down with a producer, he’d like to be the one asking the questions.
“I would ask them to share with me what keeps them up at night? What opportunities exist for them to achieve their goals? What do they see as barriers or challenges to success? I have my short list, but a producer-informed list is more valuable,” he adds. “Some of my most impactful Extension and research efforts began as discussions with producers, mostly where I just listened.”
We will be uniting together June 3-8 for PORK Week across all of our Farm Journal platforms to elevate the important role the pork industry plays in feeding the world. Share your stories and post photos on social media using #PORKWeek to help us honor the pork industry. From “AgDay TV” to “AgriTalk” to “U.S. Farm Report” to PorkBusiness.com and everything in between, tune in and join us as we acknowledge the most noble profession there is: feeding people.
