World Pork Expo – Preview
This week we will be at the World Pork Expo, a great opportunity to visit friends and colleagues. You can find us at the Genesus Tent. The following is part of a presentation we gave in Florianopolis, Brazil at AveSui on the state of the U.S. swine industry.
Our Perspective – USAThe United States swine industry form August of 2007 until quite recently has sustained the greatest financial downturn in its history. There has been an estimated 6 billion U.S. dollars in losses for producers. Many producers have gone bankrupt. The U.S. market hog inventory on March 1st was 4 million less than 2 years ago. This is a grim testament to the sow liquidation that has occurred. Even though Genesus is a Canadian company, our number 1 sales market is the U.S.A. In the U.S.A. Genesus has an office in Ames Iowa, and several thousand sows in multiplication.
The main causes of the financial losses
- High feed price spikes triggered by the U.S. government subsidies to stimulate corn usage for fuel ethanol. This insane program drove cost of productions to $30 per head losses.
- The U.S. domestic and global economic slowdown. Meat consumption is driven by disposal income. Lower disposable incomes in the past one and a half years globally and U.S. domestically cut pork demand lowering swine prices.
- H1N1 (swine flu) misnamed by the authorities and the media. The term swine flu stuck. U.S. export markets closed (China, Russia, and South Korea). Domestic demand declined as the mass media and government tried to outdo themselves in fear mongering. When the dust settled, the lower pork prices caused by decreased demand had by some estimates cost U.S. hog producers $2 billion in lost revenue.
- Genetics major player is PIC. Other companies include Genesus, Danbred, Newsham, and Gentipork. No other companies have a major presence in the U.S. market.
Summary*Pork is the number one meat consumed in the world. Globally over the last ten years there has been about 30 million pigs produced each and every year, this is a reflection of demand. Thankfully we are producing a product that the world craves. *One absolute truth is increasing disposable income results in higher meat protein consumption. *The recovery of the Global Economy will increase pork demand further. *As an industry one major point we must focus on to increase pork demand is meat quality. Proper color, tenderness, intramuscular fat, water holding capacity are drivers to improve the eating experience of the consumer. There are differences in genetics in regards to meat quality. We expect and are seeing demand driver packer beginning to focus on pork that the consumers prefer. *In the end we are a commodity business. Our long term competitiveness depends on lowering costs and improving efficiencies. *Technologies that improve health, sow productivity, feed conversion, asset utilization and meat quality will be utilized by our industry winners. *We are a tough business but fortunately the global dynamics on pork pricing will lead to profits for the next two years.
Categorised in: Pork Commentary
This post was written by Genesus