Optimism and uncertainty are what Iowa pork producer, Randy Froncois, says keep him up at night.
Iowa pork producers, Francois and Mike Berdo joined “AgriTalk” on Wednesday to discuss top-of-mind challenges and their outlook for the industry. Here’s some of the quotable moments from their conversation.
Crops in the Field
“Everything looks really good. The crops are all in. The late planted beans we got done last week needed the rain, and they got it. We’re going to start sidedressing. Everything looks really good,” Berdo says.
“We’re sitting really good right here in Northeast Iowa. The crop is planted and kind of in the early stages. Probably a little bit behind on heat but looks like that’s in the 10-day forecast. So, we got that good moisture and now good heat to come,” Francois adds.
Pork Demand
“I’m just amazed that we’ve got record inflation, record fuel prices, and all that stuff. I’m only in a town of 10,000, but I have not seen any signs of anything slowing down for meat demand here at the local level. The grocery store is packed. People are buying. It just blows my mind.” Berdo explains. “I think COVID-19 is kind of a blessing, maybe. Because if we wouldn’t have had COVID-19, would demand still be there with this high inflation? Everybody wants to get out. Everybody wants to be around one another now. We were locked down for a year and a half, and I think that is what’s driving this demand here.”
“Pent-up demand is going on, and I think you’re going to start to see, once the summer winds down a little bit, the sticker shock at the pump to be getting into people’s pocketbooks. People are going to have to start making decisions. Are they going to go out or are they going to start cooking for themselves at home?” Francois adds. “During COVID-19, people learned that they could cook at home. So, I think we’re going to shift back to that.”
Freight Challenges
“When it comes to the freight rates, and I think that comes down to your Amazon products, there is a base price plus a fuel surcharge. We’re seeing that shipping pigs out and getting bean meal in. The trucking transport companies haven’t increased flat rates. All they’re doing is adding a seasonal fuel surcharge,” Francois says. “The farmers’ fear is that as price continues to go up, when the bottom end comes out of these markets, our prices are going to stay elevated. Hopefully, from a transportation industry standpoint, we’re seeing these fuel surcharges that can hopefully disappear instead of our entire base rate increasing,” he adds.
“This trucking shortage is crucial. We’ve even experienced that here trying to get rid of hogs. People want to drive, but it’s just a matter of getting the truck here on time because they’ve got other loads to cover,” Berdo says.
Pork Prices at the Store
“We’ve got a great product out there,” Berdo says. “People are willing to pay for it and it’s moving.”
“Looking at the supply side, the last pig report, we had 94% pigs on feed [year-over-year] and everybody thought maybe that was going to be how the market could see higher prices.” Francois explains. “I think what the industry is actually seeing right now is we’re not running much slower than last year’s kill numbers. While we were supposed to be 6% behind year over year, market really has not come to fruition as far as what they were expecting. I think our supply is currently pretty high out in the industry, and I think the exports might be a little slower.”
General Outlook on the Industry
“I’m very optimistic about the future,” Berdo says. “I think the uncertainty lies with input prices. You can lock prices in at what seems to be pretty favorable levels, but are the inputs going to follow when you get to that point? Especially in the hog industry, we’re locking in our feed needs. Luckily, we’re able to produce a large portion of our corn. While the inputs are higher on [corn], at least our feed costs, maybe aren’t as high as other guys out there.”
“Personally, I’ve never been more optimistic in my almost 20-year farming career,” he adds. “It pays to be diversified, and I’ve never been more optimistic.”
Randy Francois operates a diversified corn and soybean row crop operation and a wean-to-finish pig farm, along with his parents and another business partner.
Mike Berdo is part of a family operation with a wean-to-finish pig farm and 1,000 acres of row crop acres. They also have a cow-calf herd and finish their own cattle.
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Read More:
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Listen to the full interview:
