American Meat Institute Chairman Rod Brenneman, president and chief executive officer of Seaboard Foods, testified today before the House Agriculture Subcommittee on Livestock, Dairy, and Poultry on behalf of the U.S. pork industry. “There are many challenges facing the economic viability of the pork sector including higher input costs for feed and energy, an over-abundance of supply in the domestic market, weakening demand and international trade barriers,” Brenneman said.
Brenneman told the committee that prices paid for feed had doubled from 2006 to 2008, largely due to higher corn and soybean meal prices. “While there are various reasons for the increase in feed prices, certainly one of them has been the determined government policies to promote the use of corn for ethanol. This effort, while seeking a desirable goal which is to lower the U.S. reliance on fossil fuels, has had an unfortunate, unintended consequence to the U.S. meat industry and ultimately to consumers,” he said.
Brenneman explained that from a supply side, the productivity of U.S. pork producers has continued to increase and the long-term trend is approximately 1.5 percent per year. Brenneman said that the U.S. pork industry was producing too much pork to match up with the demand that has been weakened, and that eventually, “we will need to ‘right size’ the industry by either a further reduction in supply, an increase in demand, or more likely, some of both.”
On the demand side, Brenneman noted that there were several reasons for the current state of depressed prices. “Economic factors facing both domestic and foreign consumers in a recessionary period can be pointed to as one reason for low hog and pork prices and lower export demand,” he explained. “You can imagine the impact on prices when you combine an over-supply of pork with decreased demand and closed market access around the world,” he added.
Brenneman told the committee that another reason for the drop in hog and pork prices was the outbreak of the novel H1N1 influenza. Those fears led to U.S. pork being banned by 17 countries, including Russia and the fastest growing market for pork exports, China.
Brenneman concluded by pointing out two areas he felt the committee should pursue immediately. First, the Secretary of Agriculture should immediately make available Section 32 funds for additional purchases of pork for various federal food programs with a maximum emphasis on purchasing meat from sows with the objective to reduce breeding stock to reduce hog numbers. Second, the U.S. Trade Representative should work to open export markets to U.S. pork, particularly China, which continues to impose non-science-based restrictions on U.S. pork since the outbreak of novel H1N1.
View the testimony is its entirety.
Source: American Meat Institute