Several economists, lenders and others have suggested that cutting a half a million sows from production is necessary to return the U.S. pork industry to profitability. “Ultimately, the U.S. pork industry will need more demand, lower feed costs or lower supplies to be profitable,” says John Lawrence, professor of agriculture, Iowa State University. “Long term supplies are impacted by sow numbers, but in the short run there are things that packers and finishers can do to help reduce supplies.”

Packers must be able to sell the product and run their plants efficiently. However, for the long run sustainability of the industry they should consider removing the incentive for heavy carcasses at least in the short run. This would entail reducing discounts on light weight carcass discounts or increasing discounts on heavy carcasses or both. This is not a cure all. If it is successful at encouraging lighter carcass weights there will be a period of increased marketings and a glut of pork on the market. It may not be possible to handle additional marketings in the fall of the year when supplies are already large. Also, packers or downstream buyers must be willing to store the surge in supplies as hogs are pulled ahead. This supply will come back on the market later when, hopefully, prices are higher.

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Source:  Iowa Farm Outlook & News