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“Interesting Times”
by Darrell Anderson
The current market situation in the livestock sector is one of the most amazing in my lifetime. Each day this week, the cattle market has established new record highs – it’s over $95 today! While I never thought I’d live to see the fed-cattle market brushing up against $1 per pound, I knew I would never live to see a spread of nearly $60 between the live hog market and the beef market. But here we are, living right in the middle of it and experiencing it every day! Sometimes I think the comedian Lily Tomlin was right when she said, “The chief cause of stress is reality.”
There is plenty to be stressed about if you’re involved in the hog industry today. Soybean prices are higher than expected as yields have been disappointing – this will result in higher meal and feed prices for the next year. Supplies of pork have been higher than anticipated – due in part to the extra hogs coming south out of Canada.
To further complicate the situation, the demand for our product continues to suffer, even though we are a bargain in the meat case compared to the beef products surrounding us.
I have been totally baffled by these somewhat-unexplainable set of circumstances that have plagued our industry in recent months. I’ve had my suspicions, but really didn’t know if I was justified in my reasoning. That was, until I read a news release this week from Ron Plain, the University of Missouri Extension Economist. He confirmed exactly what I thought was happening on the issue of a smaller per-capita pork supply that hasn’t brought higher retail pork prices.
Ron speculated that there are three possible scenarios, or “theories” as he called them, that have caused this unusual situation. I want to share them with you, as I endorse all three of the theories.
One theory is that the steady increase in the amount of pork with added water is effectively increasing the pork supply more than USDA is reporting. I couldn’t agree more. I’ve been critical of our friends in the packer/processing sector that have taken it upon themselves to “pump” the majority of our product instead of paying for a truly higher-quality product.
Their logic: they are making the product “goof-proof” for the consumer, and are providing a real service to all of us. The reality is, they are altering the taste of pork, and are selling 10-15 percent more pounds of retail product, all of which is added water. Oh, and who do you think is reaping the profits from this added tonnage? It’s not the producer.
Another theory is that the steady movement to leaner hogs over the past 20 years has finally resulted in pork cuts that are less tasty than they used to be.
Five years ago, I warned in this column that there would be a day of reckoning if we continued down this path of leanness at all costs. It’s easy to be critical of the show ring and our judges for taking us down this path, but in reality, most buying grids from packers still give way too much credit for extra leanness. It is simply a response to the economic incentive that has been offered.
In addition to the problems created by lower levels of marbling and juiciness in the product, we have sows that can’t survive in the farrowing barn and have difficulty breeding back – in part due to lower appetites and less fat reserves.
The third theory is that the “other white meat” campaign has been so successful that people do not think of pork as a red meat, at a time when the Atkins diet fad has more Americans wanting to consume red meat.
This is the most-interesting, and in my opinion, the most-logical explanation of the current phenomena. I read last week that 32 million consumers are following the Atkins diet or some derivative thereof! That’s an incredible amount of folks wanting to consume high-protein sources of red meat. It doesn’t take a rocket scientist to figure out that the pork industry is not getting our share of that demand!
NSR sponsored a pork-quality seminar for some of our breeders at Iowa State University last month. It was an incredibly insightful morning, as we learned from a highly regarded food scientist that “redder is better” when it comes to selecting pork cuts in a meat case.
Well, that doesn’t fit very well with the “other white meat” promotion. Most of our very best product is being sorted off the line at the packer and sent to Japan or a special premium niche market. The average consumer in this country is looking for a pale product with very little external or internal fat – no wonder they are disappointed when they get it home and prepare it.
So do we all just throw in the towel and hang it up? No, I am certainly not suggesting that. But I do think it is important to realistically assess the situation, so you can make plans to position yourselves in the marketplace.
I was reminded this week of an interesting statistic: since the beginning of time, the number of sunsets has exactly equaled the number of sunrises.
There will be a brighter day for our industry, and in fact, I fully expect NSR members and purebred swine breeders to help lead the industry into some of the changes that I think are needed.
We are investing a lot of staff time and resources into helping breeders identify superior genetic lines for muscle-quality traits, and we are ready to roll out our first EPD reports for those traits. This information, along with all of the DNA samples being gathered, could place our four breeds in a very enviable position in our industry. We still have some of the brightest minds in the industry working on solutions to these problems, and I’m confident that NSR breeders will lead us through these “interesting times.”
