Key to Restoration of Pork Industry Profitability

by 5m Editor
17 November 2011, at 11:34am

US & CANADA - A US-based agricultural economist credits increased pork exports for the dramatic turn around in profitability within the pork industry, writes Bruce Cochrane.

Dramatically higher feed costs have squeezed the profitability of North American pork producers.

Dr James Mintert, an agricultural economics professor with Perdue University, told those on hand yesterday for Saskatchewan Pork Industry Symposium 2011, the way to get higher prices to recoup those costs is to put fewer pounds of pork in front of North American consumers and the way to do that is to reduce production, which has happened, and to look at other sources of demand, primarily the export market.

Dr James Mintert-Perdue University

The good news I think for North American pork producers and really North American livestock producers in general has been the fact that the export market growth has been quite phenomenal.

If you look back we really started to ramp up meat exports in general back in the mid-1980s so there's been a steady uptick in terms of growth in those exports over that whole time frame from the mid-80s till now but we've really seen those ramp up pretty dramatically the last several years and that's been a huge factor in terms of our ability to recoup higher prices in the export channels and from domestic consumers.

To put that in perspective I think so far in 2011 pork exports from the US to all destinations have been up about 14 or 15 per cent compared to the same period in 2010.

If you go back just a little farther and compare US pork exports in 2011 to 2007, they're actually up about 54 per cent which is a tremendous increase in a very short span of time.

Dr Mintert says that's resulted in smaller supplies of pork available for North American consumers which, combined with increased exports, has caused prices to surge and allowed producers to recoup their production costs and put most producers in the US and Canada back in the black in 2010 and 2011 and he's confident most of the industry will be operating in the black in the year ahead.