Pork America is US cure for instability
Pork America is US cure for instability
By Stuart Lumb
THE US pig industry has faced hard times recently, but prices are increasing so producers are boosting production and recouping their losses, but challenges lie ahead.
Estimates of producer break-even costs are currently 50-55p/kg ($35-$38/100lb) liveweight. Prices have been above break-even since January, averaging 62.5p/kg ($45/100lb) for the first five months of the year, an increase of more than 50% on the same period last year.
But the situation was worse in 1998, when pigs were selling for $8 (£5.25) each. This led to producers setting up Pork America, a producer-owned service-based business.
It is the USs first national producer marketing organisation and aims to get in closer contact with packers and processors to develop new systems to sell as close to retail as possible. Pork America aims to stabilise marketing and hopes to offer producers three year contracts for their pigs.
But pork promotion in the US is done by the National Pork Producers Council (NPPC), which has staff permanently based in Washington to lobby politicians.
It also produces high quality promotional material. The council has been promoting pork as "the other white meat" for some time and this advertising campaign is working well.
The American view is that pork must be cooked like beef – with a touch of pink in the middle. This naturally retains succulence and flavour and makes for excellent eating quality.
While pork is enjoying a resurgence in the US, producers are also increasing productivity, according to NPPC chief executive Al Tank. "Slaughter weights are rising and this year will see the greatest amount of pigmeat ever produced in the US," he says.
Although the US has also seen a 3.5% increase in productivity with the same number of sows, its slaughter industry is suffering. According to Mr Tank, an Iowa packing plant killing 11,000 pigs a day closed on June 9. This means production will exceed slaughter capacity, and he urges producers to ensure they secured slaughter outlets well in advance.
But thats offset against the 4.2m pigs imported for slaughter from Canada last year. The opening of a new packing plant in Manitoba, handling about 2m pigs/year, should reduce the volume exported to the US for slaughter and free up some space.
Besides reducing slaughtering capacity, packers and producers are facing challenges from the immense buying power of major UK supermarkets such as Tesco and Asda. Mr Tank believes US producers must learn from what has happened in the UK and that producers and packers must become closer.
But he is also optimistic about the improving trade relationship between the US and China as China will be a net importer of pigmeat as its populations standard of living increases. He says that once trade relations are normalised – depending on the WTO – this could lead to producers receiving another £3.30/pig ($5/pig), as there is huge demand in China for offal-type products and hearts, feet and uteri.
USPIGINDUSTRY
• Prices rising from low base.
• Producer marketing organisation.
• Slaughtering capacity falling.