In what is for many, the first time they have witnessed a significant and sustained demand drop in the pork industry, the reasons for it and the way forward to success are perplexing. It is natural to be proud of the product you are producing, which is indeed healthy and safe. But does it have the flavor to take it forward successfully in the demand profiles of the next generation, both in the U.S. and around the globe?
Impact of a Major Paradigm Shift in Pork Production
The great reinvestment of the 1990s took pigs out of the dirt and placed them in scaleable systems of production where disease, though never absent, seemed more controllable than achieving scale through the purchase of more and more feeder pigs from auction houses or small farrowers throughout the Midwest and south.
One of the significant outcomes of this period of reinvestment and scaling up was big reductions in cost per unit of production. Following on the logic of large systems, genetics companies set their target on producing seedstock that could create large numbers of relatively uniform, healthy pigs which lost the fat and thereby gained tremendous cost savings in feed efficiency and even growth rates.
Customers Are Buying Less for the Same Price
Unfortunately, one of the problems that arose is when those cost reductions ran their course and become part of the expectation. Pork purchases began to be driven by several changes in demand patterns, and low cost itself, though often listed first among the criteria upon which food purchases are made, was no longer king.
The unique situation which industry participants now must find ways to conquer is a complex combination of reductions in demand where less is purchased at the same prices, and broad losses in purchasing power due to inflation, which has hit food more severely than most items as a class of goods. We add to that the increases in cost of production which come from global instability and war in key agricultural areas like the Ukraine, and you have this pincer process driving profitability to extended red ink.
Is the Pork Industry Focusing on the Right Things?
It is being argued in the industry, among those willing to stick their necks out, that the product itself is no longer meeting the demand profiles of the emerging and future demanders. While the industry grabs at opportunities to reinvest in production settings and technology, in a response to what is believed to be future demand, such as sustainability and multiple animal welfare challenges like sow housing and trade restrictions like Proposition 12, little attention is being given to domestic demand traits that command higher prices because they invariably raise cost of production.
The overwhelming focus of demand enhancement has been global promotion to increase exports and an awareness enhancement program domestically which does things like educate chefs and purchasers in the hotel, restaurant and institutional trades. These are all good things, but is the most important thing losing out?
What is the Most Important Thing for Consumers?
For the future, it seems to be a combination of taste and the right combinations of demand attributes which create food, instead of “low-cost lean muscle tissue.” These include where (local, family farm, etc.); how the pigs are raised (humanely and with a lot more space than cost savings have made possible); what the pigs are fed (non-GMO, organic, etc.) and how they are harvested.
This trend runs across not only the meat complex, but vegetable and fruit production, too. When genetic changes that increase yield or size, reduce the size of seeds and produce more uniformity of growth, the almost invariable outcome is the stripping away of flavor attributes.
The age group of 25 to 35 is far less cost-conscious and far more focused on purchasing “experiences” versus hard goods. Therefore, bland tasting meat and poultry that basically operate as “spice carriers” if any flavor is to be present at all, are losing share.
The ability to buy fresh meat from small and savvy producers with high taste, but less efficient genetics, is made easy now with the Internet and a culture that has moved toward online shopping for everything from cars to pork chops. One major packer has exploited this trend with a major meat purchasing website, including recipes, low-cost shipping and a large variety of cuts often passed over by traditional super markets.
To move forward in the coming decade, along with a focus on new demand creation for the same product (reaching out globally for new buyers), there must be a serious and extended reinvestment in the demand attributes of this new generation.
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