Financially, the pork industry appears to be getting back on its feet—but it’s still pretty wobbly in the knees.
Pork industry economist Steve Meyer of Paragon Economics says, even though producers have experienced some good profitability over recent months, they still have a long ways to go to make up for the big losses of 2007 and 2008.
“My calculations show that during ’07-’08, we lost about six billion dollars in equity at the production level—maybe a little less than that because some folks did a pretty good job of risk management,” Meyer says. “But with six million dollars lost—my calculations say we recouped about 20 to 25 percent of that during 2010 and early 2011. But now we’re back into a loss situation.”
And Meyer’s forecast for the coming months is not very rosy, either.
“My forecast, based on the futures from last Monday, would say that we would have losses for the next 12 months—and some sizable losses in the fall, based on where the future markets are at right now,” he says. “That’s based on the Iowa State University production parameters—and those will put breakeven costs up in the 90 dollar range from July forward.”
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