"Stop being farmers and become marketers!" - says Genesus CEO
In order to gain value rapidly and to reduce costs, the US pig industry must reshape, says Jim Long, CEO and President of Genesus Inc. The conclusion comes after several discussions between the industry's representatives at the National Pork Industry Conference (NPIC). The event was held online as the coronavirus pandemic has blocked the usual meetings in a virtual environment.
"Appears from a couple of the speakers they believe hogs are still backed up in the millions. Steve Meyer with the Brokerage Firm Kerns and Associates projects an increase in hog slaughter in 2021 vs. 2020. (2020 = 130,646 vs 2021 = 131,739). Steve Weiss one of the principles of NPIC (Century 21) and CEO Nutriquest indicates their data has breakeven top 25% producers 63-65¢ lb. lean (upper Midwest). Steve Meyer said that the extra sow slaughter this year of 220,000 more year to date, does not indicate significant sow herd reduction. Meyer’s spoke of Maxwell Foods 54,000 sows and Hitch Pork 15,000 sows being liquidated. Meyer’s explained CME average price for 2021 is currently 68.37. Kerns and Associates believe the average price in 2021 will be 56-59. Meyer recommended producers consider some hedging", explained Jim Long in a short briefing of the event.
On the other hand, he also presented a different point of view for the industry. "Projecting more hogs in 2021 than 2020, that's an interesting perspective. We don’t agree, liquidation is underway. Sow slaughter since first of year up 7,500 a week from a year ago. Sow herd on June 1st was down nearly 150,000 from Dec 1st. There has been continued liquidation since then, ie. Maxwell Foods and Hitch - they alone are 1% of the U.S. sow herd. We believe higher sow mortality due to the weaker genetics that has been introduced from Europe is also contributing to liquidation as gilt retention has declined. We believe without hesitation the U.S. will have fewer hogs in 2021 compared to 2020. How much less is too early to project as the sow herd continues to liquidate. Financial losses have been significant and continue," said Mr. Long.
Frim his perspective, the American pig industry must focus on what the consumer is asking. "As an industry we are obsessed with costs, not necessarily a bad thing. What we see very rarely, if any talk, on how to grow our business by increasing per capita consumption, where chicken industry has relentlessly increased consumption and stayed mostly profitable, the pork industry profit seems to come only when we cut cost production. Every consumer survey shows taste, flavour, and eating experience are the main driver of consumer satisfaction and repeat purchasing. Instead, we focused on the stupid White Meat Program that drove us to produce Pork that tasted like cardboard. Is it any wonder bellies, ribs, and shoulders (most fat) now dominate the cut-outs while loins and hams lag in value.
The solution is not using a so-called Duroc; it is using Durocs or whatever breed that has marbling-colour–PH that will deliver the best eating experience. Some so-called Durocs will never deliver the eating experience as they themselves have been bred to be really lean and have no better eating attributes then the synthetic breeds the other White Meat Program spawned.
We need to stop being farmers and become marketers, we need to produce a better eating product that will drive price and demand. Playing only the cost game is why per capita consumption for pork has flatlined for 25 years while total meat consumption has increased. We have lost market share. There is a calculation that if every American ate pork one more time a month that is equivalent to 7 million hogs per year. We as an industry pine for more exports maybe the answer is producing a better tasting product and growing our domestic market," explained Jim Long.
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