Factors Resulting in Profitable Pork Prices

CANADA - A US-based agricultural economist says, thanks to a smaller meat supply and a modest improvement in pork consumption, North American pork producers are finally once again turning a profit, according to Bruce Cochrane.
calendar icon 7 May 2010
clock icon 3 minute read

From late 2007 through 2008 and virtually all of 2009 North American hog producers lost money.

University of Missouri agricultural economics professor Dr Ron Plain observes a smaller meat supply and slightly stronger demand have pushed prices back above the cost of production.

Dr Ron Plain-University of Missouri

Both the US and Canada have cut back on their swine herd.

US's last quarterly survey in March said our sow herd was down 3.9 per cent from a year ago.

Canada's 1 April inventory numbers said they were down 5.8 per cent in sow numbers.

As far as who's cutting back, this time it's not just the little guys.

The large hog producers have also cut herds a lot.

In fact probably here in the United States the hog farmers that did the best through the long stretch of red ink the last couple of years was those who raised a good portion of their feed rather than buying all of it and that tends to be more the smaller and mid-size producer.

Meat demand has not been strong the last couple of years.

We've had a strong recession here in the United States and pretty well the whole world has had a tough economic time of it for the last couple of years.

When unemployment is up and economies aren't doing well you see a back-off in demand for meats and that was the case this time around.

Consumption for pork here in the United States has been declining and in fact total consumption of meats is expected to be down this year for the second year in a row.

Dr Plain says one big question is, when this rapid run-up in hog prices gets passed on to the grocery stores, will consumers keep buying pork?

He says if the economy is strong enough that consumers keep buying despite the increased prices then these prices are likely to be sustainable.

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