Pig farming faces tough road to profitability

In an interview with RealAg Radio host Sean Haney, Christine McCracken, Rabobank's senior animal protein analyst, says pork producers are currently suffering losses of $40 to $50 per pig. Despite a modest reduction in feed costs, high production costs and price pressures may require action to be taken to reduce production.

An industry that experienced strong demand during the covid-19 pandemic is now dealing with declining consumption and oversupply in a post-pandemic environment. McCracken says supply is currently outstripping demand and it will take time to correct this imbalance.

EXPORT markets don't seem to offer much relief from the pork glut, and McCracken doubts consumers will change their protein preferences much. Despite strong exports driven by declining pork production in regions such as CHINA and Europe, global economic issues such as inflation and the economic downturn could reduce demand for pork.

In addition, California's recently supported Prop 12 animal welfare initiative could undermine domestic markets. The law that sets area requirements for livestock in production systems stipulates that all pork sold in California must be produced in accordance with these regulations. With a significant portion of current pork production not meeting these new regulations, the industry could be flooded with excess pork that is not suitable for export or shipment to California. This can lead to additional problems for manufacturers.