President George Bush's visit to World Pork Expo received all the buzz, but the big news from this year's event comes from Glenn Grimes.
Quite frankly, this is the man pork producers should be scrambling to see and listening to attentively. Of course, the University of Missouri agricultural economist is a familiar face at pork industry meetings. Meanwhile, this was the first time a U.S. President has bothered to stop by the pork extravaganza.
Also, Bush made the crowd feel good. After more than a year of attacks from the People for the Ethical Treatment of Animals, Waterkeepers Alliance, anti-checkoff and any number of other groups, you deserve to feel good about your profession.
Buckle your seatbelts, the fourth-quarter is going to be a bumpy ride.
During the summer of 1998, Grimes tried to get your attention about the market's future. Well, he's trying to get your attention again.
Market predictions are only as good as the numbers in hand at any given time, and the numbers around the time of WPX were clearer than they were two months prior.
As of mid-June, hog slaughter for the previous nine weeks had been running more than 5 percent above 2001 levels. That's 2.5 percent higher than USDA's March report suggested.
Perhaps some hogs are moving to market early, but it usually doesn't tally those kinds of numbers. The sow-herd data isn't showing growth, so what's the source of those extra hogs? Canada is one source, but there's also the stabilized productivity that USDAhas reported. That's confused more than one person.
If market hog runs continue to exceed 2001 levels by 5 percent into October, November and December, Grimes and his colleague Ron Plain, say that slaughter could hit 27.8 million head. That would be more than 200,000 head over fourth-quarter 1998 levels. The problem then was packers' ability to slaughter that many hogs – that problem still exists.
How low could prices drop this time? Who knows, but it could be as bad as 1998. Remember, the marketplace is staring at a lot of chicken and beef as well.
Since this writing, USDA will have released its June pig-crop report. The question is can you believe whatever the numbers say? For most of this year, Grimes has pointed to the fourth quarter as a critical period were hog slaughter could squeak by or cause a crash. The point is, you've had ample warning.
Let's face it, we'd all be happy if this gloomy forecast turns out wrong.
Grimes and Plain are recommending that you pull hogs ahead into the third quarter. "If all producers speed up marketings by 4 percent to 5 percent during July, August and September, it will pull three to four days of slaughter from the fourth quarter," they note. Fourth-quarter slaughter would still exceed last year by 2 percent, but levels would be more manageable.
Concerned that your marketing contract won't accommodate that plan? Well, now is the time to test the pork chain's ability to communicate and work together. The packer has a lot to lose by burdening slaughter capacity as well.
On another note, funding issues are looming over your industry's associations as well, which can come back to haunt you over time.
Timing is everything and the hog-market outlook is not exactly conducive to the National Pork Producer Council's new producer-consent-funding program, to begin Sept. 1.
The National Pork Board's nickel reduction in checkoff, due in October, will cut into its programs, but the projected long-term price declines will hurt even more. By next June, USDA will ask pork producers whether they want to vote again on the mandatory program. Low hog prices always spell trouble for checkoff support. Also, there's still a lot of confusion among industry participants about who's who and what's what within those two organizations.
It's easy for me to say that these two organizations need your support more than ever. But here's some more reality – without them you are on your own. When it comes to the regulatory, legislative and public-policy issues in particular (all of which NPPC addresses) you can't afford to be on your own.