The Most Important Pork Industry Questions Heading into 2024
A new year brings new opportunities. But no one can deny 2024 will bring its share of challenges for pork producers. Economists encourage pork producers to consider these four important questions heading into the new year.
1. What do I need to do to survive?
“Intuitively and understandably, we want to know when the pain will be over. I do not think that is the right question,” says Joe Kerns, president of Partners for Production Agriculture. “Our job is to take a frank analysis of our individual position in light of the economic reality. Once we have made the decision to participate in this industry, we have to focus on making the best short-term decisions and delaying any unnecessary expense for as long as it takes to return to profitability. We would like to pride ourselves on our ability to think long-term, but the harsh conditions do not afford that privilege and we are going to have to hunker down a bit longer. We may need to have faith that the economic sun will shine again. We just have to hang on long enough to participate. Therefore, I think the most important question is not of the global nature of ‘When will this be over?,’ but a more local concern of ‘What do I need to do to survive?’”
2. What is the total effect of California’s Proposition 12 on pork producers?
“This remains an important question in 2024,” says Scott Brown, an economist at the University of Missouri. “Although the expected impacts are clearer today than six months ago, less pork consumption in California in 2024 could make the outlook for hog prices even less favorable.”
3. Will domestic and export demand be enough?
Altin Kalo, chief economist at Steiner Consulting Group, asks, “Will that demand be robust enough to allow producers to eke out a margin and avoid more small producers from abandoning production, leading to further consolidation and concentration?”
Christine McCracken, executive director animal protein at Rabobank, agrees that the biggest question she believes producers should ask is about pork export demand’s sustainability and the potential long-term opportunity, especially in Mexico.
“U.S. pork remains a low-cost protein alternative in several key markets and the industry has done a great job developing markets not only for variety meats, but also for whole muscle product in recent years,” McCracken says. “Yet exports already make up 25% of U.S. pork production, and the upside may be limited. After nearly 9% growth in 2023, it may be challenging for the U.S. to maintain this export pace given a relatively weak global growth outlook. The changing political landscape will likely have mixed effects, with net trade impacts neutral for U.S. pork exports.”
4. Will trends in farm size, contract production and packer-ownership of hogs continue?
“The structure of the pork industry has changed and will continue to change in the years ahead. Structural change refers to the number and size of operations, who owns them, and how they relate to others in the pork value chain,” says Lee Schulz, associate professor and extension economist at Iowa State University. “The 2022 Census of Agriculture data is set to be released in February 2024. This data will capture some of the structural changes currently underway in the pork industry. In addition, price discovery has garnered less attention in recent years, but underlying issues have not gone away. Will those discussions take center-stage again in 2024?”
Read More on the 2024 Pork Outlook:
Good News for the U.S. Pork Industry: It Can’t Be Worse in 2024
2024 Pork Industry Outlook: Finding Opportunity Through Challenges
