Dive Brief:
- Pork production reached a record high last month, increasing 4% from the previous year to 2.13 billion pounds, with hog slaughter up 5% to 10.2 million head, Meatingplace reported.
- While pork production rises, export demand — particularly to China — is falling, with weak prospects ahead for 2017, according to Rabobank's latest quarterly pork report.
- In addition to rising supplies and slower exports, hog prices and pork industry profitability are also declining due to increased domestic competition from beef and poultry, Rabobank said.
Dive Insight:
This situation sounds all too familiar for food and agriculture producers in recent months. If the situation doesn't improve, pork producers could start hoping for the same outcome that several other commodities have: a USDA bailout.
After already announcing a $20 million bailout for cheese producers in August, USDA announced another $20 million bailout for the industry earlier this month. The agency also provided $11.2 million in financial assistance to milk producers in August due to tightening dairy margins and purchased $11.7 million worth of shell eggs and egg products to assist egg producers later that month.
At this rate, pork could be next. Pork producers are seeing a combination of challenges other industries have also experienced, such as pressure on prices in the domestic market due to oversupply and rising competition from similar categories, like milk and cheese. Pork is also struggling with export challenges in major foreign markets, just as eggs did following last year's bird flu outbreak.
Manufacturers may be able to work closely with their suppliers to develop products that utilize more pork to relieve some of the current supply glut. They would be able to capitalize on the current low prices for pork, while pork processors could reduce some of their stockpiles and encourage prices to bounce back.