Pork is a growth industry, says Ron Plain, and U.S. pork is increasingly competitive. Plain, who is the D. Howard Doane Professor of Agricultural Economics at the University of Missouri-Columbia, spoke recently at the Swine Profitability Conference in Manhattan, Kansas.
Annual U.S. pork production has increased an average of 1.5 percent per year for 82 years, from 1930 to 2012, making it one of the most stable ag industries, he explains. Here are some of the major trends Plain sees for pork production in the coming months.
Movement to the Midwest
Another trend is that hogs are moving closer to areas where corn is produced, says Plain. Manure management is one reason: crop farmers can use manure in their nutrient management plans, and DDGS are price-competitive. In addition, it’s cheaper to raise corn than to buy it.
Plain believes ethanol production is peaking. “Forty-two percent of the 2012 corn crop would be run through an ethanol plant, but we’re about to the end on that,” he says. “Demand is about to peak out at 15 billion gal./year. Corn yield is going up, but if ethanol levels off, we’ll have more corn for feed and the economics of pork production are going to get better.
“What happens to the 2013 corn crop will in large part determine how profitable your operation is going to be in the next few years,” he continues. “The key thing I wish I could predict is the weather. It’s all about the rain we get this summer.”
Producers had the second highest year for hog prices last year, “though you might not have known it by looking at your balance sheet,” he adds. “Packer margins were tight last year, but I don’t see a change in packing plants. Meat prices will go up, because there are more Americans and less meat. We will have .5 percent more pork this year than last, so we should be able to push prices up.”
“The United States is third in pork production behind China and the European Union, but we export more pork than any other country,” says Plain. “In Nov. 2012, over a third of the pork moving in international trade was from the U.S. and we are becoming increasingly competitive.
“In any given month, 23 to 25 percent of all pork produced in this country gets exported,” he continues.
“Exports are incredibly important to our industry and will become even more important.”