US Swine Economics Report

Regular report by Ron Plain on the US Swine industry, this week discusssing the question of why a smaller per capita pork supply hasn't brought higher retail pork prices.
calendar icon 7 October 2003
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Ron Plain
Ron Plain

Through August, the average retail price of a pound of pork sold in grocery stores was $2.63275, down 5.075 cents (1.89%) from the same period in 2002. Adjusted for inflation, retail pork prices were down 4.20%.

Under conditions of steady demand, one would expect a 4.2% decline in the deflated retail price of pork to be associated with a 3.15% increase in the per capita supply of pork. But the per capita pork supply is not up; it's actually down slightly from last year.

Through August, commercial pork production totaled 12.755 billion pounds, down 1.25% from the first eight months of 2002. Net pork trade was slightly less favorable during the first seven months of this year than last year (trade data for August is not yet available). Pork has moved out of cold storage slightly faster this year than last. Thus, the available supply of pork during the first eight months of 2003 appears to have been 0.56% greater than for the same period in 2002.

The U.S. population is constantly growing. There is approximately 0.89% more Americans this year than last. Thus a 0.56% increase in total available supply of pork translates into a 0.33 smaller per capita supply of pork.

The question of why a smaller per capita pork supply hasn't brought higher retail pork prices is hard to answer, especially since the retail price of beef is up 8.45% compared to January-August 2002.

There are three primary theories. One theory is that the steady increase in the amount of pork with added water is effectively increasing the pork supply more than USDA is reporting.

Another theory is that the steady movement to leaner hogs over the last five decades has finally resulted in pork cuts that are less tasty than they used to be.

The third theory is that the other white meat campaign has been so successful that people do not think of pork as a red meat at a time when the Atkins Diet fad has more Americas wanting to consume red meat. Through August, pork, chicken and turkey demand are down. Only beef demand is higher.

Which theory, if any, is right? I wish I knew.

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