Retail pork prices will rise and some pork producers will go out of business because of current crop conditions and subsequent feed availability issues, National Pork Producers Council officials warned the U.S. Democratic Steering and Outreach Committee during a meeting on rising food prices.
Neil Dierks, NPPC's chief executive officer, joined representatives of crop commodity organizations, hunger and food groups, labor unions, religious groups and renewable-fuels organizations in a discussion with several Senate Democrats on the global and domestic impact of rising food prices, the factors contributing to the trend and possible solutions.
“Food price inflation for pork will be a reality,” said Dierks, the only livestock industry representative to attend the meeting. Senate Majority Leader Harry Reid of Nevada and committee Chairwoman Debbie Stabenow of Michigan presided over the meeting.
Projections are that just to allow producers to breakeven pork retail prices will need to increase by at least 17 percent next year because of the run up in feed costs, which account for 70 percent of the cost to raise a hog. Corn prices have increased by 124 percent and soybean prices by 94 percent since last September. From October through April, pork producers lost an average of $30 on each hog marketed, and many producers since then have been forced to exit the business.
The two-year run-up in crop prices – corn was about $2.60 a bushel in July 2006 compared to $6.70 a bushel for July 2008 delivery – is due to several factors, including the new increased demand from corn-based ethanol plants. Additional pressures on prices and availability are being felt now because of weather conditions across the Corn Belt. USDA yesterday dropped its forecast for the 2008 corn crop by 390 million bushels.
“Given current crop conditions and projections for next year,” Dierks told the committee, “there will be tremendous stress on pork producers.”
He pointed out that as producers leave the industry retail pork prices will rise because of reduced production, resulting in less corn used for feed.
One solution to the need for more corn Dierks offered the committee is to release non-environmentally sensitive acres from the Conservation Reserve Program to crop production. NPPC previously has asked USDA to consider such a proposal.
NPPC also has urged lawmakers to strike a balance between food, fuel and feed needs when considering energy policies, including the recently approved mandate that by 2010, 15 billion gallons of renewable fuel come from corn-based ethanol. Additionally, NPPC has a policy that calls for the expiration of the ethanol blender’s tax credit and the tariff on imported ethanol.
“The interrelated issues of rising food prices, how crop availability and usage come into play and national energy policy are complicated,” said Dierks. “As an industry, we need to resolve these problems for our producers and for consumers.
“NPPC is grateful to the Democratic Steering and Outreach Committee for holding these discussions,” he added, “and hopes that the dialogue will continue.”
Source: National Pork Producers Council