The National Pork Producers Council released its Q3 Economic Update. NPPC Economist Holly Cook talks about the update and some of the key takeaways.
Cook says, “NPPC’s Quarterly Economic Update provides a snapshot of current market trends that can be a resource for producers but are also important for congressional leaders and other audiences to understand the issues impacting the pork industry. In this latest report, we look at the implications of California’s Proposition 12 and dive into some of the other factors that are having a real impact on hog prices and margins right now. This includes high production costs and trends impacting pork demand, like real consumer incomes and the relative prices of other proteins. And we also look at current production levels and takeaways from the latest toxin pics report.”
Cook talks about what impact recent price increases will have on the overall profitability outlook. She says, “Over the last eight months, producers have been dealing with a very challenging economic environment that has resulted in the worst average losses in about 20 years. From May to July of this year, negotiated hog prices have increased by about 30 percent but are still $20 below where they were last year at this time, and production costs are higher. In the report, we look at the seasonality of hog prices as well as the factors that could help improve the profitability outlook, such as potentially lower feed costs and any improvement in consumer demand.”
The NPPC also explores the implications of California’s Prop 12 in the Q3 update.
She says, “This update helps explain why Proposition 12 creates major challenges for pork producers. California represents about 12 percent of the U.S. population, and their consumption is about 10% of pork production. But because California produces 0.1 percent of U.S. pork, the burden of complying with Prop 12 will fall on farmers in other states, and the costs of construction and compliance are significant. Higher costs also mean higher prices for consumers, and it’s important to share that the Supreme Court’s decision has far-reaching implications beyond the pork industry.”
She also talks about where industry stakeholders and other interested people can go for more information on the Q3 update. Cook says, “I would encourage any listeners to visit nppc.org and select the pork industry tab to find our economic dashboard that is updated quarterly, as well as a link to the Q3 report.”