The pork industry is always up against variables and unknowns that make the future hard to predict. Although these economists admit you may have heard this advice before, here’s what they would encourage you to remember as you prepare for 2025.
1. This year is no different than others.
Government helps subsidize risk management for producers so taking advantage of LRP and LGM programs makes a lot of sense,” says Altin Kalo, chief economist at Steiner Consulting. “Futures are currently over $100 per cwt in the summer, implying cutout will be in the $105 to $110 range. While we could always make a case for prices to be even higher, especially if porcine reproductive and respiratory syndrome (PRRS) is much worse this year, downside demand risks are significant as well. Having a consistent risk management plan allows producers to continue to do what they do best: raise hogs. You can always bet on NFL games if you like to gamble.”
2. Managing inputs broadly proved fruitful to producer profitability during 2024.
“Continue to hone and strengthen your risk management strategies. There should be opportunity to lock in profits, and increased frequency of ‘black-swan-type’ events further enhances the importance of these tools for producers,” says Brian Earnest, lead economist, animal protein at CoBank.
3. Maintain focus on biosecurity.
“Strong management remains critical to ensuring the health and safety of our domestic pork supply. Consistency is key and, as we have seen in the past few years, small mistakes can have a lasting impact on an operation. An error in execution can be even more serious than an error in judgement. Build a plan, execute your plan and constantly review your plan,” says Christine McCracken, senior animal protein analyst at Rabobank.
4. Key decisions are made when times are calm.
“Much is discussed about strategies when times are tough. In reality, the most important decisions are often made when times aren’t so tough,” says Lee Schulz, chief economist at Ever.Ag. “If one of the goals is to produce profits for personal use, then profit taking is in line with operational goals. If the overriding goal is to grow the business, consider strategies to acquire productive assets. If the ultimate vision is long-term profitability, plan ahead for future times when generating profits might be more challenging.”
5. Use a layered approach to risk management.
“Understand your operation’s detailed cost structure and profitability drivers,” says Dave Weaber, senior animal protein analyst with Terrain. “Managing equity and capturing maximum profits can be antagonistic goals. Approach risk management as a layered plan of different tools versus an all-or-nothing approach. This can help manage equity, protect dollars spent on inputs like feed, facilities and labor costs, and protect returns.”
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