America Has Too Much Pork
Tens-of-millions of wild pigs roam our private and public lands. These free-range animals are far more wholesome than those raised in the cruel, filthy pig farms by America’s pig oligarchs, the largest of which, Smithfield (quoted below) is owned by the Chinese. Free range pigs are kept off the market by the oligarchs acting in unison with the agencies that are supposed to be regulating them for the benefit of the public.
The result is the so-called “feral pig problem”; artificially high prices to consumers; often-infected pork laced with hormones, antibiotics, and additives; falling incomes to small pig raisers; and environmental damage.
Nothing about this should come as a surprise. Monopolies like Big Pork are NOT manifestations of free markets. Monopolies ALWAYS lower quality, depress wages, and raise prices.
NOTE: this article was originally published to WSJ.com on May 26, 2023. It was written by Patrick Thomas.
Glut of pigs squeezes hog farmers and meat companies, but consumers aren’t seeing lower prices
Years of rapid expansion have left the $54 billion U.S. pork industry oversupplied as demand wanes, costs rise and new regulation looms, according to meatpackers and farmers.
So far, though, the glut of pork on the market has yet to translate into lower prices for consumers.
Hog farmers in the U.S. are being squeezed and even driven out of business as they lose money at their worst rate in decades. Meatpacking companies, including Smithfield Foods, Tyson Foods and JBS, said pork profits are shrinking, leading some in the industry to scale back operations ranging from hog farms to processing plants.
“The entire industry is under a tremendous amount of pressure,” said Shane Smith, chief executive of Smithfield, the biggest U.S. pork producer.
In Iowa, where hogs outnumber people, farmer Dwight Mogler said he is losing about $30 to $40 on each pig he produces, and he hasn’t been able to make a profit so far this year. Farm expansion plans, new equipment orders or larger renovations have all been put on hold.
Next year, Mogler said, he plans to shrink his hog-farming operations, which include 4,400 breeding pigs, and won’t renew supply agreements with his meatpacking customers.
“If we have to be half this size 12 months from now, we’ll be half this size,” he said.
U.S. hog farmers had their worst four-month start to the year financially in more than two decades, according to estimates from Iowa State University.
Pork producers expanded farms and processing plants in recent years as overseas demand boomed. Hog herds in China, the world’s top pork consumer, were devastated by an African swine-fever outbreak in 2018.
Exports from the U.S. hit a record 7.3 billion pounds in 2020, according to federal data. In 2022, U.S. pork export volumes fell 10% from the year before as China began rebuilding its hog population.
During the Trump administration’s trade war with China, Beijing raised tariffs on U.S. pork. China trimmed tariffs on all frozen pork in 2020 to fill its supply deficit arising from the hog disease, according to the USDA, but the tariffs were restored in 2022 as China’s supplies recovered.
Current tensions between the two countries haven’t helped, according to industry officials, and the U.S. has looked to ship its pork to other Asian markets. A strong U.S. dollar has also made American pork more expensive abroad, meatpacker executives have said. Smithfield has said its ownership by China’s WH Group has helped it weather the export decline.
With less U.S. pork shipped overseas, more remains at home, where demand has stagnated. Domestic pork sales were down slightly over the 52 weeks that ended April 23, according to market research firm Circana.
Wholesale pork values fell below $1.50 a pound in April, according to federal data. Pork officials say the retail value of pork, which has remained around $5 a pound since the start of 2022, has been too high to attract more customers. Officials say that they expect retail prices to start ticking down in the coming weeks, and that more consumers might turn to pork as beef prices rise.
Smithfield’s Mr. Smith said the end of pandemic-era food-stamp benefits earlier this year also has cut into U.S. shoppers’ pork purchases.
Smithfield in early May began closing about three dozen of its sow farms, used to breed hogs, as Smith said the company looks at ways to improve its supply chain.
For the three months that ended March 31, WH Group posted an operating loss of $218 million for its U.S. and Mexico pork unit, swinging from a year-earlier profit of $50 million.
JBS said its latest quarterly adjusted earnings for U.S. pork fell 81%. Meanwhile, Tyson Foods reported its pork revenue fell 9% to $1.4 billion for the three months that ended April 1, and the division lost $33 million for the period.
Tyson CEO Donnie King said this month the company is evaluating whether its pork business should own more of the hogs in its supply chains, rather than buying most of them from independent farmers on the open market. Smithfield and JBS have said they own roughly half of the hogs in their supply chains.
Some processors have started to close shop. Canada-based Hylife Foods said last month it plans to close its pork processing plant in Windom, Minn., which employs about 1,000 workers.
Pork producers also are contending with a recent Supreme Court decision to uphold a California law setting animal-welfare standards for pork sold within the state. The law, known as Proposition 12, requires at least 24 square feet of space for a pig, which is about 10 square feet more than the current industry norm.
“The timing couldn’t be worse,” said Mogler, the Iowa hog farmer. He said it cost nearly $9 million to change the facilities at a South Dakota farm, in which he is a minority owner, to be compliant with the law.
Prop 12-related compliance costs, on top of the challenging market, will drive some smaller producers out of business, said Christine McCracken, analyst for agricultural lender Rabobank.
Ron Prestage, president of Prestage Farms, which raises pigs and runs a pork-processing plant in Iowa, said he plans to reduce his company’s supply of sows by about 10% over the next few years to make room for the changes required by Prop 12.
While Prestage said he disagrees with the law, shrinking hog farms to comply could help resolve the pork industry’s oversupply problem.
“If everybody cut back a little, it would be a good thing for the industry,” he said.
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