Wednesday, April 18, 2007

Challenges Facing U.S. Pork Producers

Dale Miller, editor of National Hog Farmer, posts a monthly editorial on his journal's website. In his first installment for 2007 he outlined five major challenges he thought pork producers would face in 2007. To read his full article, click here, but, in brief, here are what he sees as the key issues, with a few of my comments (and a sixth issue) worked in as well:

1. Ethanol -- The national push for energy independence is increasingly coming into conflict with pork producers' need to feed their animals. New ethanol plants keep coming on line in the midwest, driving up the price of corn, making it harder for pork producers to break even.

2. Immigration -- A 2005 Pew Research Center study estimated that over one-fourth of the meat cutters and food-processing workers are illegal immigrants. Recent Immigration and Naturalization Service raids on meat packing plants have produced panic in communities surrounding packing plants and led the meat industry to demand immigration reforms. There's a good NPR story here from December 2006 about the raids on Swift. You can find a Reuters article about Hormel's drive to get Congress to pass long-term immigration policy changes here.

3. Alternative Energy for Swine Diets -- This is related to the ethanol issue, as producers and researchers look to find alternative feed sources for their animals.

4. Integration -- The pork business continues to consolidate, with two companies (Triumph Foods and Smithfield Foods) seemingly destined to control about a quarter of U.S. hog production.

5. Circovirus -- Porcine circovirus-associated diseases (PCVAD) have caused lots of problems in the U.S. and Canada, on top of a persistent problem with PRRS (porcine reproductive and respiratory syndrome).

The only issue missing from Miller's report, in my opinion, is animal welfare. Proposition 204 in Arizona, which requires that pigs and calves used for veal on factory farms be given enough room to turn around and fully extend their limbs, passed with 62% support in November 2006. In January 2007, Smithfield Foods announced that it would phase out gestation stalls in their company-owned sow farms over the next 10 years, a market-based decision that will undoubtedly have ripple effects throughout the industry. At the National Pork Industry Forum in Anaheim in March this issue in particular was front and center, as the industry rolled-out a new animal welfare assurance program called PQA Plus. You can find my earlier post about the Pork Industry Forum here.



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