By Caleb Shull
As our industry enters 2027, producers once again find themselves in a challenging environment marked by negative forecasted profit margins due to rising costs and uncertainty surrounding pork demand. While our industry has navigated one of the tougher porcine reproduction and respiratory syndrome (PRRS) seasons in recent history, the challenges ahead are increasingly more structural in nature.
The most pressing issue for pork producers in 2027 is profitability. Feed remains the largest cost of production. While grain farmers have benefited from increased prices, swine producers are feeling the pain. Non-feed costs also continue to elevate, with labor costs continuing to climb, transportation expenses increasing, interest rates remaining elevated and construction costs showing little signs of returning to pre-pandemic levels. Equipment, repairs, utilities and insurance have similarly moved higher.
At the same time, pork demand has struggled to generate the pricing needed to offset these increased costs. The result is an industry operating with significantly tighter margins and producers that must rely on operational efficiency more than favorable market cycles to restore profitability.
Positioning Pork for Success
Export markets remain critically important to the U.S. pork industry, contributing to roughly a third of the total demand. However, international competition is likely going to become more intense, whether it be other countries investing in the necessary technology to improve efficiency or countries expanding production in areas with cost advantages. Global economic uncertainty and trade dynamics are also considerations for the future of export growth.
Domestic demand is equally, if not more, concerning. While beef prices have reached historic highs, consumer willingness to pay premium prices for beef has remained strong. Pork, by comparison, has struggled to generate the same results among consumers.
Pork is currently positioned as a less convenient protein than poultry and a lower-quality product compared to beef. How do we solve this issue? Do we make pork more convenient? Do we improve the pork eating experience? The right answer is likely both. As an industry, we must rally together to position pork for long-term success.
The Looming Wean-to-Finish Bottleneck
Another growing issue in our industry is the availability of pig spaces and lack of new construction of wean-to-finish barns. Very few barns have been built since the inflation of costs and interest rates associated with the pandemic. While our sow herd has remained largely stable, the productivity of our sows continues to improve.
One of the benefits of having significant disease pressure in 2026 was it postponed some of the space challenges our industry is poised to face. While several remodels of older facilities have occurred in recent years, we cannot continue down the path of limited new construction without further reducing our sow herd.
The obvious solution to this problem is to pay more for space, which will justify building the new facilities. However, profit margins do not exist today to substantially increase the rent payments for facilities.
People and Biosecurity: Our Real Competitive Edge
Despite all the challenges facing our industry, opportunities still exist for producers. A renewed focus on operational efficiencies will offset rising costs. Investments in biosecurity to keep your sow herd healthy should also continue to pay dividends, driving throughput and lowering costs.
Often overlooked, it might be time to also refocus on people and relationships. Our industry has always been relationship-driven. During periods of profitability, relationships create opportunities. During periods of challenges, relationships create resilience. Remembering the people that helped you get to where you are today may be the key to ensuring your success tomorrow.
Caleb Shull is the director of research and development for The Maschhoffs.
