Pork Demand: Not a Product Concern, It’s About Affordability
After a strong year in 2022, pork producers face profitability challenges fueled by low hog prices and high feed costs, followed by what looks like a decrease in overall pork demand.
However, in a recent AgriTalk segment, Glynn Tonsor, professor of ag economics at Kansas State University, explains how there’s more to the overall pork demand picture than what meets the eye.
Considering current pork demand, Tonsor says it’s more than just a pork problem. In his recent Meat Demand Monitor, he notes, “Domestic demand for beef, pork and chicken peaked in 2022. Regardless of the species, demand is lower today.”
Additionally, he explains how it’s not a pork quality concern, such as a a safety concern, event or issue that has pushed people away—it’s an affordability of meat protein challenge, as a reaction to other factors.
Tonsor’s most recent report shows only 20% of the public says their household finances are better than they were a year ago, while 80% say they’re either worse or the same. He adds, “The buying power for most residents has declined, they've tightened their household budget, and that's hit the meat protein complex.”
While Tonsor does not dismiss the fact that pork demand has slipped, he notes that since all meat proteins are in the same boat, there’s no need to change the product per se to recover. The hope is that the macroeconomic environment will improve so the affordability of the items will also improve.
As the pandemic started and through the next 18 to 24 months, Tonsor says he was pleasantly surprised by the strength in pork demand. However, as the government payments ended and consumers became more uncertain, shoppers tightened their wallets.
“At some point, you know, the credit card bills had to be paid, we didn't have additional government checks and inflation kicked in. Right, I’m 42, and I've never lived through eight-percent inflation until recently, and I’m far from alone in this country on that.” Tonsor adds.
A Period of Change
It’s likely that the hog industry is in the midst of a period of change, suggests Chip Flory, host of AgriTalk.
Tonsor says the profit situation for producers is most definitely a challenge. It brings back memories of the late-90s, he says, when there were more hogs than capacity to harvest. Most recently, the Supreme Court’s ruling to uphold California’s Proposition 12 brings more uncertainty.
However, Tonsor says, “I want to interject though, as the U.S. swine industry has always been resilient and I'm very confident it will come out of this. Profits will improve, in part, because pork demand will improve.”
Tonsor believes in the industry’s strength, yet he also acknowledges reality.
“I'm a big believer in the resiliency of the industry. It'll come out of this. But not everybody's going to come out like they were before, for sure,” he says. However, the product in the meat case will continue to attract the domestic and foreign consumer, he adds, which is a sustaining signal.
While the volumes of pork moving may be lower, Tonsor says there’s more to the equation.
“We’ve come off our peak, but we need some historical context on that as demand itself is okay and hasn’t fell through the floor,” he notes.
In the upcoming months, producers across the country will likely continue to face an uphill climb in pork production. However, as Tonsor explains, it’s not a pork product issue—it comes down to affordability.