“It appears that the hog production industry is reacting to soaring grain prices by reducing herd size,” said C. Larry Pope, president and chief executive officer of Smithfield Foods Inc., the leading US pork-producing firm. “The industry seems to have begun a necessary correction.”
Indeed, Smithfield announced Feb. 19 plans to reduce its US sow herd by between four percent and five percent, or 40,000 to 50,000 sows, which company executives said ultimately will result in production of as many as 1 million fewer market hogs a year. Currently, Smithfield annually raises 18 million market hogs – more than 28% of the US total of 64 million.
“Given the economics for raising hogs today, we cannot continue on the current path,” Pope said in making the announcement. “Something has to change.
“Grain costs continue at record levels, with the potential of escalating, given the current US government policy favoring corn for ethanol,” he continued. “Today, the economics are very challenging, and we believe that these increased costs will translate eventually into still-higher food costs for the American consumer. In the meantime, Smithfield is taking immediate action to improve the efficiencies of our live production operations.”
That said, Smithfield is continuing to enjoy substantial gains in pork profits. The Smithfield, Va.-based firm announced Feb. 28 that its operating profit from the pork sector for the 13-week period ended Jan. 27 was $221.5 million, far more than double the $99.6 million pork profit for the comparable quarter a year earlier. For the same timeframe, hog production showed a loss of $80.7 million, compared with a hog production profit of $4.5 million a year earlier.
One factor in the pork profit rise was Smithfield’s May 2007 acquisition of Princeton, MO-based Premium Standard Farms, Inc., the latest in a series of industry acquisitions by Smithfield in recent years. However, continually rising export demand is also playing a significant role in the successes achieved by Smithfield and industry wide.
“We enjoyed very strong fresh pork margins that were much higher than historical levels as a result of lower hog costs and strong industry exports,” Pope said. “Fortunately, we were able to capitalize on these margins during a period of very high slaughter rates.
“Pork exports are expected to continue to grow, which will lend support to the hog and pork markets,” Pope added.
In 2007, US pork exports totaled more than 1.3 million metric tons (nearly 2.9 billion pounds), up three percent over 2006 volume, while the dollar value of those shipments totaled more than $3.15 billion, up 10% over the previous year, according to the US Meat Export Federation.
For the month of January, total US pork exports showed even more dramatic gains. Metric tonnage of 94,141 was up 17% over the volume in January 2006, while dollar value rose 22%, to $227.2 million, according to the US Department of Agriculture.
A pork export market forecast released Feb. 19 by the US Meat Export Federation indicates sustained acceleration of the upward trend.
“Despite a forecast for reduction in US pork production in 2009, 2010 and 2011, USDA expects pork exports to continue to grow steadily, most likely fueled by strong global demand and the weak US dollar,” the USMEF report said.
“The USDA originally projected pork exports to increase fiv
Pork exporters continue to ‘live high on the hog’
by Paul Scott Abbott Mar 09, 2008
By Paul Scott Abbott, AJOTBuoyed by sustained gains in demand from Asia, US pork exporters are continuing to “live high on the hog,” having recorded in 2007 a 16th consecutive record-setting year for international shipments.
Skyrocketing costs for feed stocks, spurred to a large extent by federal policies encouraging US farmers to grow corn for use in the making of ethanol, are leading pork producers to cut back sow herds. Corn prices have more than doubled over the past two years.
“It appears that the hog production industry is reacting to soaring grain prices by reducing herd size,” said C. Larry Pope, president and chief executive officer of Smithfield Foods Inc., the leading US pork-producing firm. “The industry seems to have begun a necessary correction.”
Indeed, Smithfield announced Feb. 19 plans to reduce its US sow herd by between four percent and five percent, or 40,000 to 50,000 sows, which company executives said ultimately will result in production of as many as 1 million fewer market hogs a year. Currently, Smithfield annually raises 18 million market hogs – more than 28% of the US total of 64 million.
“Given the economics for raising hogs today, we cannot continue on the current path,” Pope said in making the announcement. “Something has to change.
“Grain costs continue at record levels, with the potential of escalating, given the current US government policy favoring corn for ethanol,” he continued. “Today, the economics are very challenging, and we believe that these increased costs will translate eventually into still-higher food costs for the American consumer. In the meantime, Smithfield is taking immediate action to improve the efficiencies of our live production operations.”
That said, Smithfield is continuing to enjoy substantial gains in pork profits. The Smithfield, Va.-based firm announced Feb. 28 that its operating profit from the pork sector for the 13-week period ended Jan. 27 was $221.5 million, far more than double the $99.6 million pork profit for the comparable quarter a year earlier. For the same timeframe, hog production showed a loss of $80.7 million, compared with a hog production profit of $4.5 million a year earlier.
One factor in the pork profit rise was Smithfield’s May 2007 acquisition of Princeton, MO-based Premium Standard Farms, Inc., the latest in a series of industry acquisitions by Smithfield in recent years. However, continually rising export demand is also playing a significant role in the successes achieved by Smithfield and industry wide.
“We enjoyed very strong fresh pork margins that were much higher than historical levels as a result of lower hog costs and strong industry exports,” Pope said. “Fortunately, we were able to capitalize on these margins during a period of very high slaughter rates.
“Pork exports are expected to continue to grow, which will lend support to the hog and pork markets,” Pope added.
In 2007, US pork exports totaled more than 1.3 million metric tons (nearly 2.9 billion pounds), up three percent over 2006 volume, while the dollar value of those shipments totaled more than $3.15 billion, up 10% over the previous year, according to the US Meat Export Federation.
For the month of January, total US pork exports showed even more dramatic gains. Metric tonnage of 94,141 was up 17% over the volume in January 2006, while dollar value rose 22%, to $227.2 million, according to the US Department of Agriculture.
A pork export market forecast released Feb. 19 by the US Meat Export Federation indicates sustained acceleration of the upward trend.
“Despite a forecast for reduction in US pork production in 2009, 2010 and 2011, USDA expects pork exports to continue to grow steadily, most likely fueled by strong global demand and the weak US dollar,” the USMEF report said.
“The USDA originally projected pork exports to increase fiv
“It appears that the hog production industry is reacting to soaring grain prices by reducing herd size,” said C. Larry Pope, president and chief executive officer of Smithfield Foods Inc., the leading US pork-producing firm. “The industry seems to have begun a necessary correction.”
Indeed, Smithfield announced Feb. 19 plans to reduce its US sow herd by between four percent and five percent, or 40,000 to 50,000 sows, which company executives said ultimately will result in production of as many as 1 million fewer market hogs a year. Currently, Smithfield annually raises 18 million market hogs – more than 28% of the US total of 64 million.
“Given the economics for raising hogs today, we cannot continue on the current path,” Pope said in making the announcement. “Something has to change.
“Grain costs continue at record levels, with the potential of escalating, given the current US government policy favoring corn for ethanol,” he continued. “Today, the economics are very challenging, and we believe that these increased costs will translate eventually into still-higher food costs for the American consumer. In the meantime, Smithfield is taking immediate action to improve the efficiencies of our live production operations.”
That said, Smithfield is continuing to enjoy substantial gains in pork profits. The Smithfield, Va.-based firm announced Feb. 28 that its operating profit from the pork sector for the 13-week period ended Jan. 27 was $221.5 million, far more than double the $99.6 million pork profit for the comparable quarter a year earlier. For the same timeframe, hog production showed a loss of $80.7 million, compared with a hog production profit of $4.5 million a year earlier.
One factor in the pork profit rise was Smithfield’s May 2007 acquisition of Princeton, MO-based Premium Standard Farms, Inc., the latest in a series of industry acquisitions by Smithfield in recent years. However, continually rising export demand is also playing a significant role in the successes achieved by Smithfield and industry wide.
“We enjoyed very strong fresh pork margins that were much higher than historical levels as a result of lower hog costs and strong industry exports,” Pope said. “Fortunately, we were able to capitalize on these margins during a period of very high slaughter rates.
“Pork exports are expected to continue to grow, which will lend support to the hog and pork markets,” Pope added.
In 2007, US pork exports totaled more than 1.3 million metric tons (nearly 2.9 billion pounds), up three percent over 2006 volume, while the dollar value of those shipments totaled more than $3.15 billion, up 10% over the previous year, according to the US Meat Export Federation.
For the month of January, total US pork exports showed even more dramatic gains. Metric tonnage of 94,141 was up 17% over the volume in January 2006, while dollar value rose 22%, to $227.2 million, according to the US Department of Agriculture.
A pork export market forecast released Feb. 19 by the US Meat Export Federation indicates sustained acceleration of the upward trend.
“Despite a forecast for reduction in US pork production in 2009, 2010 and 2011, USDA expects pork exports to continue to grow steadily, most likely fueled by strong global demand and the weak US dollar,” the USMEF report said.
“The USDA originally projected pork exports to increase fiv
Paul Scott Abbott
For more than a quarter of a century, Paul Scott Abbott has been writing and shooting images for the American Journal of Transportation, applying four decades of experience as an award-winning journalist.
A graduate of Northwestern University’s Medill School of Journalism, with a master’s magna cum laude from Trinity Evangelical Divinity School, Abbott has served as president of chapters of the Propeller Club of the United States, Florida Public Relations Association and Society of Professional Journalists.
Abbott honed his skills on several daily newspapers, including The Cincinnati Enquirer, The Richmond (Va.) News Leader, Albuquerque Journal and (South Florida) Sun-Sentinel, and was editor and publisher of The County Line, a weekly newspaper he founded in suburban Richmond, Va.
A native Chicagoan, he is a member of American Mensa and an ever-optimistic fan of the Chicago Cubs.
