Costs high for pig farmers today, but profits still there
World Pork Expo returns to Des Moines, Iowa, on June 9-10, so we asked Bill Even, CEO of the National Pork Board, a few questions about the swine industry.
SF: JBS was hit by a cyberattack recently. Is this something that concerns you?
BE: Yes. We have a checklist of best practices and a cyber security expert available for help. We had the state associations double-check their systems to make sure they are carrying whatever level of cyber security they can afford. It’s all part of overall crisis planning for the industry. Regardless of what black swan event comes after you, you should have backup plans in place. It’s a criminal business enterprise and the new norm. It will take awhile for industry and law enforcement to get caught up. It’s international in scope, and that makes it even more difficult to manage.
SF: What concerns do you hear from producers right now?
BE: There are a lot of conversations around the policy direction the Biden administration will focus on. And of course, people are looking at operational costs, including feed inputs and material costs. Whether it’s lumber, steel, concrete, or labor – everything is at an entirely new level. New barn construction is 20% to 30% higher in costs. Producers are primarily focused on operational efficiency.
SF: What is the disease situation in the country?
BE: PRRS was harder and more widespread, with a different variant, in the winter. A combination of aggressive culling due to the pandemic and problems we were experiencing a year ago, combined with some hiccups on the disease front in the wintertime, has led to what you are seeing in the market right now. Between exports and a shortage of supply there is really strong demand. If producers have their feed inputs hedged and managed correctly, it’s turned out to be a pretty decent year. Margin calls are another thing.
SF: What is top of mind for the Pork Board?
BE: We are focused on sustainability. The UN Food System Summit this summer and fall will generate a lot of conversations about how food is raised, what kind of food is on the plate, and what sort of national or global policies will come into play. Once you get past the day-to-day challenges of disease, construction costs, inflation, and labor shortages, you focus on this whole sustainability movement and how that fits into the conversation about food systems.
SF: Speaking of labor, how rough is it out there?
BE: It doesn’t matter if it is in processing or at the farm level, people say they are 10% short of where they would like to be to feel comfortable with their labor.
SF: What did the pork industry learn from the pandemic?
BE: The agility and the ability to pivot and manage issues in real time was critically important. The Checkoff board of directors restructured the organization so we could turn on a dime, adjust budget, reallocate, and think on our feet. All these issues play out locally. The relationship with state associations, local officials, and state veterinarians were very important.
SF: How much are producers concerned with corn and soybean prices?
BE: Right now that revolves around how far out they are managing their feed costs. There is a lot riding on a successful crop this year. It doesn’t matter if you are in the pork, cattle, seed, or ethanol business, you are wondering what your feed cost input is going to look like come fall. A good growing season is very important. All the end users of feed grains are keenly aware of growing conditions globally right now.
SF: Are you still concerned with African swine fever?
BE: It’s the top priority for the Pork Board in prevention and prepardness. It’s still an ongoing chronic problem in China. There are issues in India. All that plays into the global supply shortage of pork.
SF: What are other priorities for the Board?
BE: We have shifted a big chunk of our traditional domestic marketing budget dollars into consumer trust and image brand communications. Real Pork is the flag we are flying. That is a significant difference in the Checkoff today. We don’t do marketing in the traditional sense that people thought of in the past. We are much more sophisticated around trust and image messaging and who we are as people, as producers, and as a product.
Generation Z consumers worry about things my dad didn’t worry about. We have to be prepared to answer those questions. They are not just looking for calories. They are looking for the trust and image piece of the brand.