By Jean-Paul MacDonald
The U.S. pork industry is facing tough times as we head into the remainder of 2023. Pork producers are encountering a trio of challenges that are impacting their returns and overall growth. Rising operating costs coupled with lower hog values are squeezing profits, making it difficult for the industry to thrive. The cost of feed, labor, and construction is soaring, while hog prices struggle to keep up.
Adding to the woes are soft domestic demand for pork and uncertainties surrounding U.S. pork exports. High retail prices for pork and a decline in food-at-home spending in the U.S. are limiting domestic consumption.
Meanwhile, global demand for U.S. pork has been affected by China's rebounding hog supplies after the African swine fever outbreak. These combined market challenges, along with increased borrowing costs, are restricting U.S. herd expansion and tightening hog supplies.
U.S. pork consumption per capita has remained stagnant for years, while chicken consumption has seen a significant rise. Although processed pork items like bacon and sausage have fared well, other cuts like pork loins are struggling to compete with popular alternatives such as boneless skinless breast meat or ground beef.
Exports have traditionally been vital for the U.S. pork industry, with China being a major importer. However, China's domestic herd recovery has led to a decline in U.S. pork imports. On a positive note, Mexico has emerged as a bright spot for U.S. pork exports but concerns about China's demand and global economic conditions cast uncertainty on the industry's export prospects.
Despite these challenges, there is hope for the future. As retail pork prices stabilize, domestic demand is expected to recover. Also, the growing trend of backyard barbecuing has boosted the consumption of certain pork cuts that have historically faced difficulties.