Whew, what a year 2008 was. Let’s not do that again, okay?
Every year it seems by the time the old year ends, you’re just ready to tackle something new. There is something cleansing about actually flipping the calendar over and facing the fresh start that a new year offers.
Perhaps not since late-1998’s hog market crash has the pork industry welcomed a new beginning more than this year. Of course, 1999 wasn’t exactly a cake walk; it presented plenty of its own rough patches as the pork industry began a slow recovery from record-low hog prices. But hog prices weren’t the problem last year, input costs were, and 2008 set its own records in terms of losses.
While it may be little comfort, you’re not exactly alone this time around. Your fellow agricultural colleagues — livestock and crop growers alike — have been through their own roller-coaster rides related to profitability. Sure, by mid-summer record corn prices were pushing against the $8-per-bushel mark, but you would be hard pressed to find many farmers who were able to sell much corn at that level. By the time winter winds blew, the late-harvested crop was fetching prices only in the mid-$3-per-bushel range.
Ethanol went from boom to bust — literally, for some ethanol plants that closed their doors. Crude-oil prices set a record at $147 per gallon on July 11, only to give $100 back by Christmas. As we’re all learning more clearly these days, crude-oil prices influence ethanol prices, which influence corn prices — for the good and the bad. While a reprieve in high gas prices is welcome, the drop also reflects the ailing nature of the
As for the general economy, who isn’t shuddering at the thought of what has already transpired and what could still lie ahead? Job losses, home foreclosures, business bankruptcies, record personal debt, rising costs — your product’s customers are in a tough spot. While a long list of factors led to this economic crash, Americans need to be honest with themselves that they created some of this mess with irresponsible spending — and saving. On a positive note, I’ve heard that enrollment in money-management classes is on the rise.
Then, if anyone remained skeptical about Thomas Friedman’s assessment that today the “World is Flat,” the global economic doldrums that followed those of the
So what lies ahead? Wouldn’t it be great to know?
How many times last year did you hear market analysts, financial advisors and others talk about the unprecedented trends, lack of historical guidance and rising volatility? Well, none of that is likely to change, at least for a significant portion of 2009. Many analysts, advisors and such are looking past 2009 and on to 2010 as a “better year.”
For the pork industry, a couple things do look brighter. You’ve had opportunities to lock in input prices and hog sales, to secure a bit of a profit. Of course, that’s provided you could get your lender to cooperate.
Today, pork tracks more closely with chicken than beef, so if chicken supplies tighten it could lend support to hog and pork prices. Reports are that consumers have already started trading down and are shopping for value, which pork tends to offer. They’re also shopping more for in-home use, and are eating out less. Again, both bode well for pork.
A bit nerve-wracking is what lies ahead for pork exports. In 2008, exports were your savior — at times claiming as much as 25 percent of
Not unlike 1999, 2009 is going to be a rebuilding or a transitional year in many ways, not just for agriculture or the pork sector but for the nation and the world.
In that vein, regardless of your political preferences, let’s all hope that the new president has a smooth, quick and productive transition. Former Iowa Gov. Tom Vilsack has been tapped to become the next USDA secretary. His animal agriculture reviews were mixed while in Iowa, but in general, he’s seen as a moderate with a steady hand. Let’s hope so, as rationality and stability are certainly what’s needed.
Let’s hope that 2009 puts us on a path to change and recovery, because we are all in this together, and we could all use a fresh start.