New Year – A time of optimism
It’s a New Year. Hope springs eternal. Got the following quote from a friend last week. For all Hog Producers it’s generally a good idea to be optimistic.
“Only optimists can create a great future. Only optimists can imagine it. Only optimists will put in the effort to make it. If you want to create a great future, believe it can happen. Choose optimism.”
Our Industry has a need and opportunity to address Pork Demand. Our thoughts:
- U.S. consumers are the richest consumer group in the world and have money to pay for meat protein. Our example is Choice Beef cut-outs last Friday $2.77 lb. Consumers vote with their money, and they have the money to pay a premium for Beef. Why Beef? Taste. Why would they pay more for any other reason.
- Last Friday U.S. Pork cut-outs were 84¢ lb. Beef $2.77 lb. Obviously consumers are willing and have the resources to pay for Beef. Why? Surveys show the number one driver of consumer demand is taste. We all know what “The Other White Meat” marketing program did. It drove taste out of Pork.
- “The Other White Meat” program was launched in 1987. Below is a chart showing U.S. Pork Production and consumption. U.S. total Pork consumption has increased fractionally from 1987 compared to production. This fractional gain in total consumption was despite the U.S. population going from 242 million in 1987 to 332.8 million a gain of 90 million people.
- Well over a billion dollars in producer Pork Checkoff money spent with much of its accomplishment on pushing taste out of pork and limiting demand.
- Producers produced more Pork since 1987 because domestic demand shrunk relative to population the industry was pushed to become externally export oriented and relying on the subsequent vagaries of the political – economic – social dynamics of exports. We got Pork exports because we were most of the time the cheapest Pork in the world markets. Not exactly what you want to build an industry for profit on. “We are the cheapest.”
- Today we have an industry losing gobs of money. The U.S. at least a $100 million a week loss. Canada $20 million a week loss. What are we doing as an industry to change? Is our solution to cut supply and hope for exports by being the cheapest? A quote often attributed to Albert Einstein comes to mind, “Insanity: doing the same thing over and over again and expecting different results.”
- The price of Beef three times the price of Pork clearly shows the effects of taste. Pork cut-outs also indicate the effects of taste. Last Friday:
| Ribs | $1.19 lb. |
| Butts | $1.01 lb. |
| Belly | $1.01 lb. |
| Loin | 81¢ lb. |
| Ham | 81¢ lb. |
Ribs, Butts, and Bellies all have taste from more marbling. Loins and Hams almost 50% of the carcass have been stripped of marbling and taste as we chased lean, lean, lean. Consumers vote with their money, and they aren’t voting for Loins and Hams. Before we destroyed the taste of Loins and Hams, they were at the top of Pork cut-out values.
We are optimistic that we can change our dynamics of Pork demand. Some enlightened packers, retailers and food service have the leadership and vision to revolutionize the Pork demand roadblock. We are optimistic our Pork leaders at NPPC and NPB are seeing the need to change focus from periphery issues to what is the elephant in the room – demand. Their own surveys tell them consumers main driver is taste. The vast percentage of consumers don’t care about antibiotics, pig housing, etc. They care about taste. The numbers of price of Beef and components of Pork cut-outs tell the story. An industry to have profits needs production shrinkage and the export vagaries coming from cheap Pork is one that needs a revolution. We need to address Pork Demand. Continuing producing lean Pork without taste is not the recipe for sustainable hog profits. It’s Taste. Big Taste.
Categorised in: Featured News, Pork Commentary
This post was written by Genesus