For more than two decades, World Pork Expo (WPX) has kicked off the summer for those of us in the pork industry. It’s always fun and interesting to meet up with old and new friends alike. With the event slotted in the mid-point of the year, it’s a chance to gain some insight into the pork sector’s opportunities, challenges and plans. It’s also a good time to measure the overall temperature of those raising the pork that feeds the world as well as those who provide the industry's goods and services.
It is amazing what sunny, temperate, non-humid weather will do for people’s spirits. Typically early June’s unsettled weather patterns feature temperatures that are too hot or too cool, and at some point during the three-day stretch it brews up a storm. This year, the weather was just right.
Of course weather that people prefer is not always what’s best for young and growing crops. Driving from the west across Iowa, I found crops to be smaller than expected. While the early and record-setting warm spring allowed planters to roll along quickly and well ahead of schedule, a dry May for much of the Corn Belt slowed corn’s growth progress, a bit less so for soybeans. This week’s USDA Crop Progress report dropped the corn rating to 66 percent “good to excellent.” That compares to 77 percent last year and the 10-year average of 69 percent. Soybeans also lost ground, moving from 65 percent to 60 percent “good to excellent” in a week.
Sure, most of the growing season lies ahead, but most places are trying to recoup a moisture deficit that started last fall and didn’t improve through a nearly snow-less winter. The National Weather Service shows most of the Corn Belt is 1 to 2 inches short of rain over the past few weeks. The growing crop’s moisture demands will increase in the weeks ahead.
USDA still has its yield estimate pegged at 166 bushels per acre, increasingly the trade is thinking along the lines of 162 bushels. The point of real concern for supply, demand and carryover issues is 155 bushels. Soybeans are a whole other story, even with good growing weather, supplies will be tight, and soybean meal prices high.
All in all, pork producers have caught a bit of a break on feed costs, and that always lifts their spirits. Add in a long-awaited downturn in market hog numbers, and producer profitability has improved, actually doubled in a week. Whether that will last a couple weeks, a month or two has yet to play out, but for now producers are claiming $20-per-head profits, versus the $10 of the recent past and certainly more than the $4 to $5 projected for this fall. Depending on their risk management strategies and abilities, any given producer could be doing much better or worse.
Something that had put a damper on their moods at WPX was the outside pressures being placed on gestation-sow housing. Admittedly, no one likes being told what to do and it’s even harder when the people doing the telling are far removed from the daily realities. So, even producers who run group-sow systems, those considering it or those who recognize the importance of brand management don’t like what’s evolving.
But what’s bothersome is the potential strong and deep divide within the industry on the future approach to gestation-sow housing. Divide and conquer—plays right into the activists’ plan.
“Haven’t we learned anything,” was the response from an industry veteran of the environmental hassles from an earlier decade. “We need to focus on finding our own options and solutions versus waiting and letting others dictate what we must do. If we have 10 years, we better get moving.”
At WPX, the National Pork Producers Council (NPPC) and University of Missouri agricultural economist Ron Plain reported on a just-completed survey of operations with 1,000 or more sows. The results involved 70 firms, and 3.6 million sows and breeding gilts, which represents 62.6 percent of the U.S. herd. It found that 17 percent of sows/gilts are housed in open-pen gestation after they were confirmed pregnant. Animal activists and food companies had estimated the number at 30 percent; the pork industry expected it to be 10 percent. Two years from now, survey respondents set the number at 23 percent.
For all parties, that 10-year span will go by fast, and everyone has underestimated the challenges and the impact. But it will be best for pork producers, and the hogs, if they and their industry supporters seek out answers for themselves.
In terms of more immediate impact, we must turn to fall slaughter and potential 2013 developments. While there are plenty of reports about additional finishing space being built due to past shortages, worn-out facilities and heavier-weight hogs, the bigger question is whether sow space is being added. That’s harder to get a handle on because it’s less clear whether the 2,400 sows you hear about here and 5,000 sows there add up to 10,000, 20,000, 40,000 or more, depending on how many times the same females are counted. Suffice it to say that there are a few more sows being placed. Of course the June Hogs & Pigs Report will tell us more.
The point remains that hog slaughter this fall will test packer capacity. Even if sow numbers hold steady and productivity increases 1.5 percent to 2 percent, there will be too many hogs for packers to handle in the fall of 2013.
So, much like the sunny skies during WPX, the temperature of pork producers was optimistic, but cautious. And those three-days in June offered a nice touchstone for the hard-working, committed folks who bring us the No. 1 consumed meat in the world.