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 Industry Partners


Prairie Swine Centre is an affiliate of the University of Saskatchewan


Prairie Swine Centre is grateful for the assistance of the George Morris Centre in developing the economics portion of Pork Insight.

Financial support for the Enterprise Model Project and Pork Insight has been provided by:



Author(s): DiPietre, Dennis
Publication Date: January 1, 2006
Reference: Carthage Veterinary Service, Ltd. 16th Annual Swine Conference
Country: USA

Summary:

Factors supporting high hog prices are BSE, Avian Flu scares; increase demand for pork especially in other countries; relative strength of the dollar against other currencies makes US pork less expensive in other countries; US meat industry is increasing skill at meeting other country demand attributes; and growth and income boom in China and India creating increased demand for food. Other factors that support high hog prices are difficulty permitting sites limits expansion; building materials are undergoing increased demand pressure due to re-investment; repairing damage and demand from China, India and other rapidly growing economies; sudden demand for buildings has driven prices up along with materials costs; packers are expanding to meet market demand; companies will compete with each other and will create negotiating power up chain; and finally, higher input costs, such as corn, may eventually structurally raise hog prices but not profits. However, these trends will evolve. China and India will have a business cycle (inflation, recession and then diminished demand); China will take Asia down with it as it goes, this will put heavy downward pressure on commodity prices such as oil, steel, lumber, concrete and feed grains; and China will have to become environmentally responsible. Also, oil prices could easily be cut close to half under the right plausible scenarios; lower oil prices will impact ethanol demand and price packer chain space will not remain plentiful; without factors which sustain high meat demand remaining in place PRRS and circo virus will become more and more manageable, raising “productivity gains”. Rising emphasis on animal welfare demands create audits and refocusing will continue on husbandry and individual animal observation and treatment demand for pork in the US will fall as aging boomers consume far less meat. Government regulation and up chain demands related to traceability, bio terrorism controls, and site ID will gradually become a reality though sometimes appearing stalled. Family meals and home-cooking will gradually rise, partially reversing the 30 year trend. The largest niche markets for food of all kinds will be for flavor-restored attributes and perceived safety. However, in the end the consumer will always win and everyone down-chain will be under pressure to do it better and less expensively.

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