Jan. 1 marks a change for U.S. pork producers as California’s Proposition 12 takes effect. American Farm Bureau Federation Economist Bernt Nelson discussed pork market conditions in a recent podcast.
“We’ve got some bearish fundamentals going on in the pork market. We just had USDA’s Quarterly Hogs and Pigs Report released. We found out that we’ve still got quite a few hogs in the inventory. The breeding inventory was up 3% from this time last year, so what this means is we have more hogs in the market than we have demand,” Nelson explains.
Prop 12 is about to create even more uncertainty for the pork market. California possesses about 13% of the demand for U.S. pork. Nelson says when Prop 12 goes into effect, the pork industry will lose that 13% of demand from the conventional marketplace.
“Now that we’re facing a decreased inventory in the beef market, that leaves us asking when will consumer demand start to pick up for pork products, or will they, as pork is a very close substitute to our beef prices,” Nelson adds.
The big question on everyone’s mind is how will the market adjust after Jan. 1?
“The fact that it takes effect on Jan. 1 leaves so many people asking questions and very little to do to prepare for it,” he says. “When this takes place, the only pork that will be allowed for sale in that California market will have to be compliant with Prop 12, so that automatically removes many of our conventional producers from that marketplace. And so, until we see some increased demand domestically and continued demand in our export markets, we’re going to be at the mercy of whatever comes into play here.”
Read More:
Prop 12’s January 1 Deadline Looms: What It Means for Agriculture
