Update on pig production in the US
Gerard McCutcheon attended the Interpig meeting in Iowa in early June. InterPig consists of representatives of a group of countries (currently 15) that compare pig production costs on an annual basis using an agreed method.
The data generated allows comparisons to be made in the cost of production in the participant countries. Whilst attending this meeting Gerard gained an insight into US pig production.
Iowa is the No. 1 pork producing state in the US. Nearly one third of the US hogs are raised in Iowa. There are over 5400 pig farms in Iowa. There are close to 75 million pigs in the US pork sector which is more than 50% the size of the EU pig population. The sow herd in the US is approximately 4.8 million sows. 2021 and 2022 were good years in terms of profitability. Now in 2023 the US farmers are losing $41 per pig. The cost of production has gone up $14 ($8 non feed variable costs and $6 to fixed costs) as a result of the rise in inflation.
The price of pigs dropped from $106 to $86 in mid March 2023 and has remained low since. This was in response to a drop in the Futures market –and the price has remained low since then. In the US
the general population was paid COVID payments, but these payments ended late in 2022 and so the effect of inflation was not felt so much by consumers until the payments ceased. The effects of inflation appear to have caused consumers to reduce their meat consumption.
Prop 12 is the big news there at the moment based on a decision in the California Supreme Court which requires all pork to be supplied in California to come from pigs reared in loose gestation places. This is supposed to take effect on 2nd July 2023. There may be some allowance not to implement this until the end of the year. The sector hopes for a reasonable transition period – but it is not sure and this is also creating uncertainty in the pork market. At present California produces less than 1% of the pig meat but consumes 13% of all US pork. The implications are serious and could influence how Interstate trade is conducted in the future.
All in all the pig producers in the US are worried about how they will survive the next 12 months unless pig prices rise and production costs start to reduce.