Skyrocketing costs derailing expansion plans for U.S. pork producers

U.S. pork producers are facing an increasingly challenging economic environment that is likely to persist through the remainder of 2023. The combination of elevated operating costs and depressed hog values are evaporating producer returns and limiting overall industry growth. While hog prices have risen this summer, they have not kept pace with skyrocketing costs for feed, labor, construction, and other expenses, a new report from CoBank’s Knowledge Exchange notes.

According to the report, feed costs in 2022 alone were up 19% year over year, but hog values were up just 14% and came under pressure during the first six months of 2023. Over the long run, the disparity between hog prices and feed costs is even larger. The report pointed out that during the 12 months ended June 2023, live basis negotiated purchases of barrows and gilts averaged $67.00/cwt., up 45% from the average from 2016-2020. Comparatively, corn and soybean prices were up 78%.