Published on 12/13/07

‘The other white meat’ helped by exports, hurt by feed costs

By Stephanie Schupska
University of Georgia

This year U.S. farmers will produce more pork than they ever have and will likely up those numbers again in 2008.

The United States will produce 22 billion pounds of pork in 2007. That’s 4 percent more than the previous year, said Curt Lacy, livestock economist with the UGA College of Agricultural and Environmental Sciences.

The U.S. farmers will likely produce 22.5 billion pounds of pork in 2008, he said.

Georgia’s pork industry took a dive in the 1980s and ‘90s but has since stabilized. Pork is worth $90 million annually in Georgia, ranking No. 20 in farm commodities.

“A lot of the hog industry is in the Athens, Lexington and Watkinsville area,” Lacy said. “There are several pockets around the state. A lot of producers will farrow (birth) their pigs here and send them to another state for finishing.”

Pork-loving Americans aren’t the only driving force behind increased meat production. With worries over avian influenza and embargoes on U.S. beef, pork exports are up and expected to increase to 2.2 billion pounds in 2008.

“The combination of these two animal health events has made pork a very attractive substitute to international customers,” Lacy said. Although U.S. beef is making a comeback in Asia, pork’s rising popularity overseas is expected to continue as countries affected by bird flu are likely to substitute pork for poultry.

That’s the good news. The downside is that increased prices for corn and soybean meal have Georgia farrow-finish pork producers looking at “best a break-even proposition” in 2008, he said.

Just like every other livestock producer, hog farmers have to deal with increased corn and soybean meal prices due to increased biofuels production.

“Feed cost will play a bigger role in profitability than sales prices for many hog producers,” Lacy said. “Corn prices are expected to remain strong over the next few years as more corn goes into ethanol production.”

For 45 consecutive months, U.S. hog producers saw profits. That came to an end when feed prices jumped and hog prices dropped.

This year farrow-finish producers averaged returns of $9.18 per head marketed through October, according to reports from Iowa State University. “This was about one half the $17.99 per head profits posted in 2006,” Lacy said.

Demand for pork is expected to be good for the next several years. But they won’t necessarily be easy years for hog producers.

“It looks like it will be tough sledding for the next 12-24 months,” Lacy said. “Even though demand and hog prices are expected to remain stable, continued high feed costs in 2008 will pressure net returns.”

Total red meat and poultry production is expected to set a record, too, of 90 billion pounds, or 1 percent more than 2006.

Stephanie Schupska is the communications coordinator with the University of Georgia Honors College.