NPB, NPPC Seek More Trade
Published: Friday, January 26, 2024
National Pork Board CEO Bill Even and National Pork Producers Council Regional Manager Josh Scramlin attended the Indiana Pork Board's annual meeting last Wednesday in Indianapolis to give updates on the industry's overall condition.
In the past 14 months, Even said the focus of the pork industry has been on demand.
"Historically, hog prices haven't been that bad," he said.
But the average cost of production and breakeven levels from 2017-20, producers averaged at approximately $60 per hundredweight (cwt.). Post-COVID, the breakeven prices jumped to $99 per cwt. for 2023.
Consumer demand of pork rose in the COVID era due to an influx in government funding.
"But kind of like that sugar high when you give your kids a bunch of candy and Mountain Dew, when that comes down, there's a bit of a crash on that," Even said. "And we're seeing that now in the American economy and the spending power of the American consumer."
Demand levels, as judged by prices paid to producers, for wholesale pork in 2022 were at about $105 cwt., but have dropped in 2023 to $90 cwt.
Sow slaughter numbers are back into a reduction range. The weekly percentage for January is roughly 1-1.05%.
"Essentially, we're pulling more out of the breeding herd than we're putting back in with gilt replacements," he said.
Mexico is the top market for trade, both in the amount of pork bought (volume) and the price they are paying (dollar amount). Markets are up 13% and 15%, respectively. China is the No. 2 top trade market but has dropped 4% in volume and 7% in the amount of money paid for pork products. Overall, U.S. pork exports are up about 5%.
In 2014, the pork industry experienced record profits. Afterward, the industry expanded, upgrading farms and facilities, and pork production increased exponentially.
"We're really pumping out a lot of pork! And that's really what puts the pressure on us now when—you know, it doesn't matter if it's a Republican political party or Democrat political party—there hasn't been a lot of push toward new free trade agreements. And so that puts us in a bit of a bind right now as an industry that does a really good job exporting," he said. "That's kind of the landscape of the pork industry heading into 2024."
What is being done about it?
The NPB has a two-pronged approach: building trust in the industry and adding value to pork products.
To build trust, NPB is focusing on myth-busting, investing in the RealPork initiative, foreign animal disease (FAD), transport quality assurance (TQA), pork quality assurance (PQA), Agview and more. To add value, the focus is on domestic market development, international market development and educating the consumer.
Checkoff funding is split between seven projects: 20% or $9.55 million is dedicated to international market development, 18% is dedicated to FAD and RealPork each, 16% or $7.75 million is dedicated to domestic market development, 15% goes to human nutrition, 11% goes to the We Care promotion program and sustainability, and 2% goes to operational excellence.
"(In) the human nutrition space, the pork industry has been bluntly AWOL for the past 20 years. We've dabbled in it and played around at the margins, but the new generations are asking some different questions about food," Even said.
Between 2022-32, the majority of consumers will shift from Generation X and Millennials to Generation Z and Generation Alpha, with Generation Beta making a rise, according to Even. He said that while Gen Z is consuming more pork, they are not buying it as the centerpiece of the meal, but as an ingredient. This is largely due to the shift from Italian to Mexican as the preferred cuisine in the U.S.
"Building trust and adding value have to be two sides of the same coin," Even said.
Pork is often seen as having low nutritional value. Statistically, consumers buy meat first based on price, then by flavor, and nutrition and convenience share the third highest basis. To address this, NPB is marketing nutritional pork recipes to show its benefits and versatility.
In the international market, the European Union is regulating themselves out of production, according to Even. This opens more opportunities for U.S. pork to pick up more international market shares.
To show the environmental sustainability of the industry, NPB is encouraging farms to get involved in showing their sustainable farm practices, which will also work to build industry trust.
"At the end of the day, there's good years and there's bad years and there's tough years," Even said. "But your self-worth as a person and who you are and what you do for your family and in your community is always more valuable than what your net worth might look like."
Scramlin is the NPPC regional manager for Indiana, Michigan and Ohio.
NPPC was able to extend the line speeds for the Coldwater, Mich. plant. Instead of harvesting 1,106 pigs per hour, roughly 1,400 pigs per hour can be harvested.
Without that extension, producers would incur a $10 per head loss, Scramlin said.
Another thing NPPC has been focusing on is exports.
"Remember, exports and foreign animal disease are intricately tied together," he said. "So, we would instantly lose about 29% of our market if we were to get a foreign animal disease outbreak."
Something NPPC is maintaining is a protection zone around Puerto Rico, which is especially important due to the spread of African swine fever to the Dominican Republic and Haiti.
Addressing ballot initiatives and government policies, Scramlin said NPPC is monitoring congressional changes, such as in Texas, Montana, Idaho and Utah. Another major change is a population decrease of 2.5 million people in Los Angeles County in California.
"Those are the dynamics that NPPC is watching and keeping tabs on because it does influence how we interact with different states and what we're watching for," he said.
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