Many people have a lucky number — seven is perhaps the most common one. Athletes are notorious at this; they wear the same color socks, won’t cut their hair, run through the same pre-game routine, listen to the same music — whatever works.
For me, I’ve found odd-numbered years to generally be “better” than even-numbered years; and, well, 2012 is just winding down. Even the most vehement optimists would admit that it was one tough year.
It started just as the calendar turned over, with the Humane Society of the United States’ laser focus on pork production, food companies and gestation-sow stalls. I’m not going to run through the list of companies or the erosion process again, as I have outlined both of those previously, but as of this writing, 34 companies have signed on to eliminate gestation-sow stalls from their supply chains by 2022, if not sooner.
Feed supplies were known to be tight even before the first hints of this year’s early spring blossomed. We needed to get through the August “donut hole,” but record planted acres surely would restore balance. Then came the drought — the “worst in more than 50 years,” in case you’ve forgotten. Now, tight feed-grain and soybean meal supplies will dominate for yet another year, maybe more.
The result was forced culling across the board, whether it was sows, cows or eggs that didn’t get hatched. The question is, are we done? The answer is, not likely. Supplies of both pork and competing proteins will be less next year, but consumers’ appetites for high-priced goods will follow suit.
The U.S. and global economies remain shaky. Will Europe resolve its financial issues? Will the United States drop off the fiscal cliff and reignite the recession? Will consumers’ buying power erode further?
So in keeping with my “odd-year” superstition, I am looking forward to 2013 and a much better year. I’m sure you are too. Still, 2013 won’t come without tribulations.
Feed will still be scarce; many places need significant rain and snowfall to recover from the extreme moisture deficit that actually started mid-way through 2011. Big swaths of the Midwest did receive some nice rains this fall, and it’s tempting to forget that there was ever a drought. (Imagine consumers’ surprise in the supermarket next year. Not only won’t they remember the drought, they won’t make the connection to higher food prices.) While it’s good fun to criticize the weatherman, predictions overall have become quite accurate — we just don’t always like what we hear. Add up the outlook from numerous sources this fall, and there’s reason to be cautious about next year’s growing season. El Niño has not developed as expected, and that could mean “below-average snowfall from the Corn Belt to the Northwest,” points out AccuWeather.
The growing season always includes many sleepless nights, but being diligent about risk management and pricing opportunities will provide a tonic. Feed costs will make it hard, but 2013 will offer the occasional profit opportunity. Certainly continuous productivity gains prove that U.S. herds perform among the world’s best, and this past year has further sharpened your efficiency skills.
Of course, productivity relies somewhat on herd health, and yes, porcine reproductive and respiratory syndrome will still be a challenge. (Check out page 14.) But strategies to address PRRS improve with each passing year.
Exports have been the critical link to profitability and that won’t change. They’re the reason U.S. slaughter can exceed 100 million hogs annually and they’re the avenue for any potential future growth. With nearly 25 percent of your product heading overseas, you need a healthy global marketplace. Don’t bank on red-hot export sales in 2013, but U.S pork is in a position to perform well. As high as your feed costs are, they’re worse for producers elsewhere. E.U. producers are still your major export competitors, and between high feed prices and gestation housing mandates, a 10 percent production decline is likely.
But beyond economics, U.S. production systems, processing plants and product quality, consistency and safety also are in your favor on the export market. The long-overdue free-trade agreements (South Korea, Panama and Colombia) will start to show results. China is always the big unknown. While it’s filling more of its own pork demand, China will still need to shop for more..
Now, HSUS won’t go away; in fact it has gained strength. It has the formula down and will replicate its strategies within the pork sector as well as across the agriculture sector. (Dairymen need to get a clue.) Whether implemented by HSUS or another activist group, the formula is not dramatically different from the one applied to the bovine somatatropin issue, to the hen battery-cage issue, to the gestation stall issue or to the genetic engineering issue. With all the great minds, technology and ability in agriculture, we have not moved the needle dramatically in terms of addressing the activists’ challenges. And that could be our biggest risk-management oversight in 2013. Antibiotics, the environment (specifically land and water use) and “factory farming” will all be nagging challenges.
While you have a right to be a bit worn out after such a stressful year, you wouldn’t be in this business if you didn’t thrive on challenges and rise to exceed them. We are all very fortunate people, with tremendous innovation and opportunity. Remember that as the year winds down and you take a breath and prepare for a fresh start in a new year.