June 6, 2013
Pork profits, exports, herd health and demand came through loud and clear as top issues for directors of the National Pork Producers Council when they visited with industry stakeholders on the eve of the World Pork Expo Tuesday.
"Producers need to focus more on managing risk, and we are," explains John Weber, a Dysart, Iowa, producer. "Producers know what they can sell the carcass for six or eight months down the road. They need to look at feed costs. They can calculate their margins. They need to lock in good margins when they are offered. Every year producers get an opportunity to lock in a profit. The issue is determining how far out to lock in the margins when they exist."
Algona, Iowa, producer Conley Nelson visits with industry stakeholders Tuesday.
Before leaving the farm to come to the World Pork Expo in Des Moines, Iowa, Weber locked in some June 2014 hog margins.
NPPC president Randy Spronk, Edgerton, Minn., echoes that sentiment. "We look at hog futures, corn futures and soybean meal futures every week. We calculate the hog crush margin every week. When we see acceptable profits, we lock them in."
Pork exports should recover. U.S. pork exports have lagged thus far this year. One reason is the strengthening dollar. Another is trade issues arising over ractopamine. Spronk is optimistic on U.S. pork exports going forward. He views ractopamine restrictions as a trade barrier. It's been approved by the U.S., many other countries and the World Animal Health Organization.
"Producers are finding ways to still deliver product to those countries," he says. "We are very concerned about the use of technology. Technologies help producers boost production, improve performance and hold down costs. We need to help consumers understand that efforts to block scientifically proven technologies boost their food costs and can limit supplies."
Technological gains also help protect the environment. Spronk explains that relative to 50 years ago:
- Pork's carbon footprint per pound of production is down 35%
- Amount of land needed to produce a pound of pork is down 78%
- Amount of water needed to produce a pound of pork is down 40%
Spronk views China's Shuanghui International buying Smithfield foods as constructive because it will boost U.S. pork exports to China.
Producers and consumers want choices. Besides profitability, herd health and exports, Algona, Iowa, producer Conley Nelson views choice as a key issue for both producers and consumers.
"As producers, we want to maintain choice of production practices," he says. "In general producers do not want food companies dictating production practices when those companies do not know what all is involved. Producers want to be able to make informed decisions on how best to meet the demand and to run their operations."
Consumers also want choices. They want to know where and how food they buy is produced.
Creating an environment where producers have options and can make choices plus consumers have options and can make choices sounds like the ingredients needed to make a market. That spells opportunity.
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