National Pork Board CEO Weighs in on Prop 12, PRRS and Processing
Pork processing is starting to see a turnaround, Bill Even, National Pork Board CEO, told AgriTalk guest host Michelle Rook on Tuesday.
Why? Weather is one force at play, he notes. The warmer temperatures in the Midwest right now are making it easier to get trucks back on the road and pigs moving. Not to mention, the extreme winter conditions made it difficult for workers to get into the plants and people to get into the farms.
“A year ago, packer margins were in the red. Right now, they're in the black. So, there's an incentive on the processing end to keep those plants open and running and moving through the supply. Right now, we're seeing some daily kills around 490,000. There will probably be some larger Saturday kills and they will run these plants pretty hard right now.”
Of course, as Even points out, it’s winter in the Midwest. But the weather isn’t the only reason producers are looking forward to spring.
“2023 is going to go down in pork history is probably the largest capital losses, even eclipsing what the industry experienced back in 1998. And that's nothing to shake a stick at,” he says. “The good news is we have fresh corn and soybeans from the harvest. We've seen the pressure on corn and soybean meal prices and that's really helped us from a cash flow standpoint for a lot of operations. It's going to take a long while though, to fill up this deep hole of equity burn that a lot of producers have faced.”
Although hog prices aren’t necessarily that bad, the real issue is the cost of production, Even explains.
“Pre-2020, the cost of production was around the low 60s per head, and that got pushed up into the upper 90s in 2023,” he says. “Producers got caught in that classic cost-price squeeze. Lower feed costs are going to help and that's why a lot of producers are looking forward to spring.”
Producers aren’t complaining about lower incidences of porcine reproductive and respiratory syndrome (PRRS) either, Even says.
“There's been lower incidence of PRRS generally across the country looking at some data. However, if you do have it, some of the strains are much more severe. If you dodge the bullet, you're in good shape. But if you end up with it, it's going to be tough to shake,” he says.
The other headwind in 2023 carrying over into 2024 is Proposition 12, Rook adds. “What's the effect been so far?” she asks.
Looking at the numbers over the middle of the year last year until the end of the year, he says prices went up, availability went down, and fresh pork sales dropped.
“On the plus side, though, ground pork is not covered by Prop 12. Ground pork sales have actually been increasing. It's a mixed bag,” he says.
The retail grocery industry in California is seeing a lot of supply imbalance, Even adds.
“Some places are short, other places are long. You may see Prop 12 compliant loads being moved at a discount in some places, and in others, they can't get hold of it in order to stock the shelves. There's a lot of turmoil right now in the California market that's impacting price and availability for the consumers out there,” he explains.
One of the only bright spots in 2023 for pork producers was exports.
“On the export side, demand has been really strong,” Even says. “2023 data is not all in yet, but it’s probably going to close out around $8.1 billion, which would be in the top three record years for U.S. exports.”
Listen to the full interview on AgriTalk here.
Read More:
Meet the New President of Iowa's Pork Industry
Freedom to Operate and Promotion Top Resolutions Passed by Iowa Pork Industry
