A court ruling that could potentially reduce line speeds at processing plants is one dark cloud hanging over the sector
The U.S. pork industry is fighting attacks and challenges on all sides.
It’s a familiar situation for the industry, but it makes predictions about producers’ futures difficult.
Farmers are making money today, but they’re recovering from big losses and don’t know how badly some of today’s threats hit them.
“Right now it’s profitable,” said National Pork Producers Council executive director Neil Dirks during a news conference at the World Pork Expo.
“I’m not sure that producers are back to (where they started) from where they were from two years of trade retaliation, followed by the pandemic, but it’s certainly a better atmosphere for producers.”
U.S. farmers and processors have faced multiple blows in the past few years:
- A trade war with China that brought punitive tariffs against American pork.
- The risk of African swine fever appearing in North America, leading to much planning and new biosecurity measures.
- The pandemic causing major disruptions to slaughter and hog marketing.
- Chronic problems finding workers, made worse during the illegal immigration crackdown of recent years.
As well, the last few months have seen new risks arise:
- A court ruling on processing line speeds that could cause packing plants to run out of capacity this fall.
- A California ballot initiative, which succeeded, requiring the state to enforce animal housing rules on meat coming from out of state, rules that many industry people say can’t be met by most producers or processors.
- A surge in construction material costs, causing farmers to reconsider expansion plans or even maintenance of existing facilities.
The line speed rule for processing is particularly worrisome to the industry, said NPPC’s Nick Giordano, because it could cause a glut of hogs this fall.
A federal judge in Minnesota found that the U.S. government had technically erred in assessing how workers were affected by higher processing speeds, which had previously been approved, so those speeds should revert to previous limits.
Giordano said that if that ruling stands, U.S. packing capacity could immediately fall 2.5 percent.
“It’s going to disproportionately hurt small producers,” said Giordano.
“It’s going to give more market power to processors.”
California’s Proposition 12 is another vexation for producers, who will have trouble meeting its requirements, even though many of the details still haven’t been worked out.
Under its rules, pork shipped into California will have to have come from pigs living in certain housing conditions.
Pork that doesn’t meet those standards could be confiscated.
“California is a huge market,” said Michael Formica, NPPC’s general counsel.
“We don’t know what the final requirements are going to be.”Important details don’t yet exist, including how pork shipped through California will be treated. California contains major ports from which U.S. pork is shipped.
The law is set to go into force at the end of 2021.
NPPC president Jen Sorenson said hog farmers are keen to see the U.S. join the CPTPP, but don’t expect action from President Joe Biden on that soon because of other government priorities.
However, producers have been happy to see immigration legislation that promises easier procedures for getting and keeping foreign-born workers.
“Pork producers are largely dependent on foreign-born workers,” said Sorenson.
“Livestock agriculture is suffering from a serious labour shortage.”
The World Pork Expo was not a virtual event. It was held, as always, in Des Moines, Iowa, at the state fairgrounds, with exhibitors, speakers and attendees allowed to walk the grounds and hallways, free of most pandemic restrictions.
Farmers are making money, but the problems of the recent past plus the challenges facing the industry today are providing for a restrained feeling compared to what one might expect to find from looking at today’s pork prices.
“It isn’t all profit,” said Dirks.