Prices not too bad, according to Pork Board president
Hennen says pork producers facing a number of challenges
Hog producers in Minnesota face many challenges, but Minnesota Pork Board President Brad Hennen says recent prices have been favorable.
“There is not really a single price mechanism that everybody uses across the industry. To say that farmers are getting a good price is not always a single number. The farmers that get paid based off of a number what everybody else is getting paid — getting paid the same thing that my neighbor is getting paid — that’s sort of the formula that is out there,” the Ghent hog farmer said.
“Right now that number isn’t too bad, but there are times where that number is not very good. There’s also another common formula that I want to get paid what the packer gets paid when he sells it to the grocery store.”
Hennen said that formula tends to be a better price, but it also can be volatile and harder to attain.
“Not every producer has access to that kind of market pricing formula,” he said. “Over the past year I would say the difference between those two formulas — and there’s a lot of variations on those formulas — you might get one of those two extremes or you might be getting somewhere in between. But the difference between those two formulas is commonly 20 bucks and there has been as much as a hundreds dollars per head. So to say that farmers are making money would be making an assumption on the price on a particular farmer and receiving may or not be accurate.”
As a producer, Minnesota ranks high in several categories, according to the Minnesota Pork Board. Minnesota ranks second in the number of pigs raised and second in value of the pigs. Minnesota pig farmers marketed 16.9 million pigs in 2020 and there are more than 3,000 pig farms in the state.
As far as economic value, Minnesota recorded $7.28 billion in economic activity in 2020. Gross sales in pork from the state in 2020 was $2.2 billion. And raising pigs creates an additional 44,000 jobs like construction, trucking, feed milling, accounting and food processing.
Of course labor issues are a big challenge for any large farm and even small farms,” Hennen said.
COVID pandemic impacts production
Like other industries, hog productions faced major obstacles during the current COVID pandemic with many packing plants shutting down for a period of time.
“None of these operations are up to 100 percent capacity. I think they might be running on average 95 percent of capacity, which would be normally a problem this time of the year running into October, November. Production is down a little bit. I think the latest hog report had us down two to four percent,” Hennen said.
“Since we are down, the supplies are manageable. But going forward that could very well be an issue again for our industry in terms of the capacity to harvest the animals that we produce. We continually improve productivity every year. That’s a great thing because we’re making our product more available. It makes generally our costs of production lower in order to be more productive. But it obviously creates challenges in terms of do we get paid for our product.”
Hennen said the pork industry is facing the same challenge as other industries when it comes to getting supplies. Shortages of various supplies and building materials is now common. But Hennen stays positive on the present and future.
“Those changes to our industry sometimes create opportunities too. So the fact those challenges caused our industry to retract a little bit, in total numbers actually creates a profit opportunity for us as well,” he said.
Drought hits Minnesota
Besides COVID, hog producers in Minnesota are facing challenges due to this summer’s drought in Minnesota. Hennen said feed is another driving factor in profitability for hog producers.
“Some farms in Minnesota raise all of their own feed and usually have access to sell. This year they might have either have a lot of access or they might have to buy more feed. There are some farms in Minnesota that buy all of their feed. So it’s all over the board. He cost of feed is also one of the drivers on why our production overall in the U.S. is down this year. The cost of feed stuff is one of those factors that determine whether a producer is going to expand or contract its production.
Prop 12 in California far reaching
California voters approved Proposition 12 in 2018, the Farm Animal Confinement initiative. The law requires that covered animals be housed in confinement systems that comply with specific standards of freedom of movement, cage-free design and minimum floor space.
It identifies covered animals to include veal calves, breeding pigs and egg-laying hens. It prohibits a farm owner or operator from knowingly causing any covered animal to be confined in a cruel manner. It also prohibits animals from being confined in a manner that prevents lying down, standing up, fully extending limbs or turning around freely.
Hennen said California’s new law could potentially impact all US. pig farms because that state has 15% of the population in the U.S.
“Pretty severe regulations on pork production. The dispute is still tangled up in the courts to some extent. Part of the problem is California has its own regulators have not put forth enough detail to give a clear picture how their own rules will be implemented,” he said.
Hennen said there virtually no hog production in California, but its regulation will likely affect raising hogs throughout the U.S.
Competing in world markets
Hennen says the U.S. pork industry is doing “quite well.”
“Our industry and our national organization has done a tremendous job of not only increasing the amount of pork that we export, but actually greatly diversifying it. So even though certain countries, particularly China, are very fickle in the amount of pork that they buy, it varies form year to year. We don’t rely on one country for those exports, even though a couple of specific countries might have a significant downward movement,” he said.
“So that’s really kudos to our people that are involved in the export market. Whether it would be the packers, whether it be our National Pork Producers Council which negotiates tariffs and things like that, or whether it’s the National Pork Board, which actually advertises in various countries throughout the world, or the organizations our industry in involved with.
“They have done a tremendous job opening doors throughout dozens of countries around the world in order to sell more of our products and that way, we essentially done’t have all our bacon in one basket.”