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Increased production pressures pork profitability

A livestock economist says pork demand is not keeping up with production, and producers are losing money. Steve Meyer with Ever.Ag says the only way producers can return to profitability is if the industry reduces supply.

He says that is easier said than done.  “Largely because we’re reducing the sow herd, but productivity is going up at a faster rate than we’re reducing the sow herd,” he says. “So right now, I can’t project a very good 2025 until we start taking some action to reduce total supplies.”

Meyer says producers do benefit from increased efficiency in their operations. “Because you produce more pigs out of the same set of fixed costs and the same sound,” he says.

But, he tells Brownfield, with that incentive, everybody’s going to be more efficient.  “But you have to pay for it when it on the market side when those pigs are coming to market.”

In early December Smithfield announced it is taking steps to address the oversupply of pork.  The company says it would end contracts with 26 hog farms in Utah to optimize its supply chain as consumer demand has weakened and input costs are higher.

Shane Smith, president and CEO of Smithfield Foods says it is a historically challenging time for hog production and the company has had to make difficult decisions to aid in rebalancing production, including addressing harvest capacity in the East Coast, reducing the show herd in Missouri, and closing finishing operations in Utah.

AUDIO: Steve Meyer, Ever.Ag