Wouldn’t it be nice to know what 2005 will bring? From a business standpoint, it would make strategic planning and profit projections a snap. It would allow you to be prepared, thereby reducing stress. Life would be so much easier.
Or would it?
Not knowing what might transpire makes life interesting and provides motivation.
There’s no way to know what exactly will unfold on any given day, month or year, but there are clues all around. Here are some factors that I see impacting pork producers in the year ahead. They’re not presented in priority order nor is this an all-inclusive list.
- More hogs: By the time you read this you’ll have the benefit of seeing USDA’s December Hogs and Pigs Report. Still, the September numbers did provide some insight into 2005. Early projections suggest that hog slaughter could be 3 percent higher than 2004’s record, estimated at 104 million hogs.
The real test will come in the fourth quarter, when market-hog numbers could squeeze slaughter capacity. While existing pork packers have improved efficiencies and increased capacities, there is still a fragile equilibrium.
Some analysts project a 6 percent to 8 percent price decline this year if pork can hold on to 2004’s unprecedented demand levels. The decline will be greater if demand doesn’t hold.
- Protein demand: This gets its own bullet point because the dramatic acceptance of high-protein/low-carbohydrate diets blew the roof off of demand last year. But consumers are fickle — especially those on diets — and betting on that groundswell to continue is risky. A more reasonable hope is that consumers will again recognize that meat is not evil, but rather part of a healthful diet.
Pork also benefited from beef and poultry industries’ disease set backs. Many international buyers turned to pork to fill their needs; that may not be as necessary in 2005.
- Animal welfare: Whether it’s Whole Foods, Chipotle, McDonalds or others, activists have the grocery and foodservice industries’ attention. Activists also serve on more company boards of directors today, working the angle from the inside.
The Humane Society of the United States and The Fund for Animals have teamed up to launch a political organization called HSUS Fund for Animals. It plans to grow its stable of activists, money and lobbying efforts.
Gestation crates will remain in their cross hairs. Consumers aren’t interested in the details, but they do have basic expectations as to how you care for animals. More industry insiders are saying “we have to look at gestation-sow housing openly and innovatively; it’s not a simple matter of crates versus pens.”
- Biosecurity and national security:
Foreign animal diseases, exotic diseases and emerging diseases are all real-world concerns for the U.S. pork industry. While it’s easy to set those thoughts aside, they need to be on your radar screen and incorporated into employee training programs.
These disease issues also are driving the national animal identification plan.
Through the beef and poultry industries’ disease misfortunes, you’ve seen how quickly markets are lost. As the pork industry continues its growing commitment to the export market, the importance of animal ID, herd health and national security will only deepen.
- Soybean rust: The 2004 hurricane season brought more bad news with it when soybean rust was discovered in Louisiana in November. Eight other states have faced the same outcome. Whether the fungus will resurface with this year’s crop remains to be seen. It can be controlled. It also can halt exports and reduce soybean yields by 80 percent.
Soybean meal is already costly to your bottomline; it could become even more so.
So, does this short list get you any closer to knowing exactly what will unfold in 2005?
Well, thinking through these and other possible developments can help you make plans, find answers and set direction for yourself and your business. And, that gets you closer to handling what life throws your way.