Sign up to save your podcasts
Or
Share Hog Talk – August 14, 2024
Share to email
Share to Facebook
Share to X
Share to email
Share to Facebook
Share to X
Or
Hog Talk – August 14, 2024
In the latest edition of the Hog Talk podcast from Ever.Ag Insights, we lay out the current market drivers, look ahead to the fall fundamentals, and highlight the storied career of Dr. Steve Meyer. For three decades, Dr. Meyer served in the industry following production trends, producer and processor profitability and helped the industry move forward with what’s known as Mandatory Price Reporting.
Listen in on where the industry has been, where it is now, and where it could be going in the future.
Questions or comments? Topics you’d like to hear us discuss? Contact us at [email protected].
Show Transcript(Transcript auto-generated)
00;00;00;10 – 00;00;08;21
VOICEOVER
Future trading involves risk and is not suitable for all investors. Content provided in this segment is meant for educational purposes and is not a solicitation to buy or sell commodities.
00;00;08;23 – 00;00;31;16
MIKE
Hello and welcome to Hog Talk, brought to you by Ever AG Insights. Each week we talk with subject matter experts on news and topics affecting the hog markets. I’m your host, Mike McGuinness, and we get started today with a review of the markets. Today is Wednesday, August 14th, 2020 4th October. Lean hog futures contract is up 1% at 7365 for 100 weight, down from a recent high of 7820.
00;00;31;16 – 00;00;40;05
MIKE
We turn to our guest this week. It’s our privilege to have Doctor Steve Meyer, senior economist of ever AG’s livestock division. I want to thank Doctor Meyer for joining us today. Good morning.
00;00;40;06 – 00;00;41;17
STEVE
Morning. I good to be with you.
00;00;41;17 – 00;00;57;16
MIKE
Well, thank you. And the first question is your take on the current market outlook near-term, you know, what’s pressuring this market? Is it the readily available supplies seasonally? Also, if you could comment on that, the market usually what turns the page about Labor Day that may mean price headwinds. What going into the winter?
00;00;57;16 – 00;01;14;20
STEVE
Well, we’re certainly looking at seasonal increases in slaughter over the next few weeks. And that’s nothing unusual for the middle of August. I mean, we’re at the point where we start getting more hogs, and then, of course, we’re going to get fresh corn in some of these hogs and it tastes better, and they’re going to eat better, and they’re going to grow faster.
00;01;14;20 – 00;01;31;10
STEVE
And so they’re going to make it mark a little quicker. And that’s a big part of the reason we get hogs bunched up in the fourth quarter. And the weather cools off and they start growing better. And so a lot of reasons. But these hog supplies have been almost precisely what we expect. Based on the June hogs report, slaughter is within 1% of what that report would have suggested.
00;01;31;10 – 00;02;00;04
STEVE
So I can’t say that we have any surprise on supplies. And if we look at home prices historically, they’re very good hog price. The trouble is, the cost of production are so high that they’re not making very much money. And we’re certainly looking at losses again in the fourth quarter very quickly here. And so it’s still a dicey situation for producers in which we’ve been saying for well over a year that one or more of three things had to get better in order to improve this, and that’s cost had to go down, demand had to increase or supplies had to be reduced.
00;02;00;04 – 00;02;15;16
STEVE
And so the first two have happened. They just haven’t happened enough to get us in the black rice, our lower, no question about it. And the prospect of lower cost yet is said is very real with this crop developing as well as it is. I mean, we saw 183 forecast for the national yield this week from USDA on corn.
00;02;15;16 – 00;02;31;10
STEVE
And so that would say we’re going to have plenty of corn and we’re going to have plenty of beans as well. and yet here we are with $80 plus costs. And those aren’t going away anytime soon because of the markets for those two key feed ingredients. Plus other costs are higher than they once were. And so costs have come down, but not enough to get us in.
00;02;31;10 – 00;02;51;19
STEVE
The black demand has improved from where it was the first half of last year, which it was pretty soft. And so that’s a positive. But again, even with growing demand that hasn’t gotten us into the black and we haven’t put hogs wise at all, we’re actually up on pig slaughter. It looks like we’re going to be up on the pig crop as far as we can see here because of productivity growth.
00;02;51;19 – 00;03;12;07
STEVE
Mainly we’ve reduced the this by 400,000 plus since 2000 2019. But yet we we’re slaughtering many pigs. We have since 2020. And so it’s kind of a sticky wicket that we’re in. As we kept the breeding herd, we got 100,000, 200,000 sales over the last two years, and we still haven’t reduced pig supplies because productivity growth. So it’s not a good situation.
00;03;12;07 – 00;03;30;09
STEVE
We got losses on the docket for this year on average on our model and for next year. And that comes on top of record large losses, at least on paper. Last year, those producers that did effective risk management didn’t lose that much money. And some of the men that lost our VAT. But still, we don’t have a good way of tracking that on the industry wide based.
00;03;30;10 – 00;03;53;13
MIKE
While Doctor Meyer, you’ve been on somewhat of a farewell tour this year as you get set for your retirement, you’ve been in the hog industry for a number of years, and for our listeners out there that may not be aware, you will be soon retiring. And so with that, we wanted to take a look at some of the highlights of your career and really actually look into some of the things that you’ve seen over the years that you’ve been in the hog industry.
00;03;53;13 – 00;04;12;18
MIKE
I’m going to name a few. You can pick out the ones that you remember, and maybe they’re not on my list, and if not, you can add to it. But certainly over the time that you’ve been in the industry, we’ve had vertical integration South, great controversies, diseases and repopulation measures, pork export expansion record, low markets. At one point hogs were selling for next to nothing right?
00;04;12;19 – 00;04;33;22
MIKE
Production efficiencies, pork demand growth with the whole famous advertising campaign of the other white meat. Foreign ownership of U.S. pork companies. And I’m sure there are more, but that’s just a short list that I pieced together, because I know that in the time over those years that you’ve been in the industry, you’ve certainly had to face and deal and react to all of those.
00;04;33;24 – 00;04;53;17
STEVE
Yeah, it’s been a litany of things. You’ve been a lot of change. And I really started miss around the industry back in the 80s. I came to the National Pork Producers Council in 1993, so 31 years ago. And so since that time, there’s certainly been a lot of changes, most for the better. Some were quite painful. And you pointed to the 1998 price debacle was one of the real painful times in this business.
00;04;53;17 – 00;05;11;08
STEVE
And and that was painful because it represented a sea change of structure in the industry. I mean, we had had a lot of people involved in the pork industry before that time. A lot of them were on part time basis. You know, the pig operation was part of a diversified farm, and they raised grain and they had paid some cattle and they had some hogs.
00;05;11;08 – 00;05;32;18
STEVE
And what happened was we came along with these specialized producers that were very, very, very good at what they did, and they had new technology and new kinds of buildings. And we got caught in this huge structural change at the same time that we had a massive consolidation of packing capacity. And so that was probably for sure the most painful time that I’ve seen in the work industry.
00;05;32;18 – 00;05;51;10
STEVE
On the other hand, we’ve had romantic growth and exports that have provided us great opportunities to raise pigs in the United States. And one of the reasons we raise more pigs than we used to. And we exported about 26% of our production this year, and we’re going to once again be the largest exporter in the world. We’ve been behind the EU for five years and they’ve contracted.
00;05;51;10 – 00;06;09;22
STEVE
And so we’re going to take over the leadership spot on that. So that’s a positive demand that we’ve struggled with demand for a long time. Pork. The other white meat campaign actually came along a few years before I started here. But it was one of those necessities that we had to get ourselves positioned as a healthier alternative in the meat protein base, and we probably stuck with it too long.
00;06;09;23 – 00;06;28;27
STEVE
And one of the things we did was we convinced the consumers that pork was another white meat, and now they want to go out and select products that you probably can’t cook and keep right. As far as loin cuts go. And so, you know, we’ve learned from that. But still we’ve had the demand surge of 21, 22, which was really driven by stimulus payments from the government.
00;06;28;27 – 00;06;51;22
STEVE
But yet our domestic demand is higher than it was during the early 2000. And so I think demand is in pretty good shape on a historical basis right now, especially when you look at exports and the domestic market. So that’s a positive. I think the watchword, though, really during all of this has been efficiency. And, you know, when I started in 1993, the Holy Grail at production was 20 pigs per year.
00;06;51;22 – 00;07;15;12
STEVE
I mean, that was really the goal. Everybody wanted to get to 20. Well, now 30 is the standard and we have entire production systems that are producing more than 30 pigs per year. And so that efficiency is a two edged sword. It’s a positive one individual operation obviously, that you can produce more pigs for sale and spread cost over more pigs, but you have to account for that in the marketing impacts of all those pigs going.
00;07;15;12 – 00;07;33;21
STEVE
So, you know, there’s been lots of changes and we should be proud of what we’ve done. I think the changes around production technologies created gestation was part of that efficiency. I think we can probably do better. We can do as well from an efficiency standpoint without those. And we certainly had pressure from culture in general to go away from that.
00;07;33;21 – 00;07;50;26
STEVE
We’re producers are very, very creative and very, very adaptable. And so I think they’re going to find a way to do that. And we’ll probably raise pigs much different ten years from now than what we do right now. You know, probably one of the things that I was involved in early on was, you know, this cry for market information, and we needed better pricing and those kind of things.
00;07;50;26 – 00;08;06;27
STEVE
And so one of the lasting things that I was involved in, we still do, we still have with us today was mandatory reporting, and we put in a lot of time and a lot of thought trying to get that thing right. And, you know, what we have today doesn’t look very much different than the first one that came out in 2001.
00;08;06;28 – 00;08;16;03
STEVE
And I’m pretty proud of that. And I think we’ve designed something that has served producers well. It has its warts. You know, it’s not that it’s perfect. I’m pretty proud of what we were able to accomplish on that.
00;08;16;08 – 00;08;36;02
MIKE
Let’s take a look at the future. And what does the hog industry look like to you in the future? Let me mention one note that struck me recently. Areas of the world that are adding population and are expected to add population are not hotspots for pork consumption. In other words, Middle East and Africa, to name a few. What might this mean for the future pork industry?
00;08;36;02 – 00;08;42;07
MIKE
And then also talk about what evolutions that you might see. And what does the hog industry look like to you in the future?
00;08;42;13 – 00;08;57;29
STEVE
Well, I think there’s always going to be a pork industry, and if there’s always a pork industry is always going to be a US pork industry, because we can do this better than anybody in the world. All right. So we have a very good competitive position. We have large masses of land that is generally isolated from the rest of the world.
00;08;57;29 – 00;09;13;28
STEVE
And we’ve been able to keep diseases out of here that other people have it. We have a grain production sector that is marvelously efficient. So we have plenty for we have space, we have brains, we have people, we have no house. So I think we’re going to have a very good competitive position as far as world markets go.
00;09;13;28 – 00;09;28;16
STEVE
I mean, that’s something that we’ve obviously tapped into a lot of these export markets with free trade agreements and those kinds of things. And Mike, you you bring up, you know, population growth in the Middle East. That doesn’t count for us. We’re not going to so much for Africa is a different story. Parts of Africa are generally Muslim.
00;09;28;16 – 00;09;50;00
STEVE
And so that wouldn’t be. But from Central Africa southward, we’ve got masses of people that are hungry and that pork is not a problem, but we’re they just don’t have any money. And this has been the problem with Africa for years. And so, you know, how can we get Africa so that they can generate enough income per person to raise their level of nutrition and to include meat, protein?
00;09;50;00 – 00;10;09;28
STEVE
I’ll go back and remind everyone. You know, there was a question in the early part of my career was who was going to feed China? Lester Brown sold a million books with that title. Well, that’s not a problem now, because China’s economy provided them a way to feed themselves by purchasing high quality protein and quality food ingredients. So we’ve dealt with these things in a world situation in the past.
00;10;09;28 – 00;10;24;17
STEVE
And right now, the whole situation of Africa seems kind of intractable to me. But I can tell you that it seemed intractable that we were going to be able to do that with Asia at one time, and now we’ve got China. Vietnam is the fifth largest producer in the world, you know? And so I think there’s real hope on that.
00;10;24;17 – 00;10;41;22
STEVE
And I think we’re going to have a very good competitive position in supplying that product when and if we can get the people of Africa and other poor areas lifted out of this level of poverty, and the only way you can do that is with some stable governments, the rule of law and all those kinds of things that we enjoy so richly here in the United States.
00;10;41;27 – 00;10;57;22
MIKE
Well, I’m going to pick your brain on a couple of other things. One is, do you see old things becoming new again? In other words, do you ever see for the future of the hog industry, the smaller hog operations coming back, or have we passed the point long ago that that just is not possible anymore?
00;10;57;23 – 00;11;16;21
STEVE
It’s possible on a limited scale. There are features that the small operation can bring to the marketplace. That large operations can’t very well. Okay. The whole thing with rearing method, I mean, you can’t raise large numbers of hogs outdoors. You can raise some. And there are consumers that will pay you a premium. Prices for some of us okay.
00;11;16;21 – 00;11;37;18
STEVE
But that’s not consumers with a capital C it’s consumers with a small C. There’s a reason they call them niche markets. One of the definitions of niche is small okay. And so I think there’s a place for that. Now I think we’re going to have different levels of production. You’re going to have high welfare, culturally oriented production in small operations.
00;11;37;18 – 00;11;54;23
STEVE
And then you’re going to have efficient production that’s there to feed the masses at the lowest possible cost. And the marketplace will take both of those. But I don’t think we’re going to see 350 million Americans with hogs raised out. Door number one is I’ve raised hogs outdoors, and I know it’s pain, and I know how much work it is.
00;11;54;23 – 00;12;11;10
STEVE
And I don’t think we have very many citizens that are willing to do that. Okay. There are some and God bless them and more power to him. I hope they’re successful, but I just don’t think we have enough to feed 350 million Americans, much less a good chunk of the world. And so I can see all of these coexisting at the same time.
00;12;11;10 – 00;12;33;10
STEVE
I do think that our commercial size will raise pigs differently. We’ve been under intense pressure about this great issue, and what we’ve discovered is you can you don’t have to have grates. Now, I would argue that the best welfare for the animal is to put her in a stall. I’d argue that without a doubt, but we can still be quite efficient in gestation, and prop 12 is over the top in square footage requirements and some of the things.
00;12;33;10 – 00;12;45;27
STEVE
And it bans one of the technologies. It’s best for social welfare. And that’s the breeding crate. I would hope at some point we can find a middle ground on this that is as close to best as we can get for the animal and still addresses some of these cultural concerns.
00;12;46;00 – 00;12;51;29
MIKE
And finally, can you give us your perspective on the state of the state condition of the current hog industry?
00;12;51;29 – 00;13;14;02
STEVE
I think we’re in a very precarious position just because of the financial losses that we’ve incurred last year and the potential for those losses this year and next. I believe there are a lot of operations that financially are kind of on the precipice here. And the banks that loan money to them are in a tough spot because if they start liquidating these operations, the asset values of the rest of their loan portfolio will go down.
00;13;14;02 – 00;13;30;26
STEVE
And it causes some of them to approach insolvency as well. And so it is a very difficult situation. And the other part is we have these single use buildings out here that when one operation goes bankrupt, they don’t get taken out of production very well. It’s a very difficult thing to find a way that we get from here.
00;13;31;02 – 00;13;48;28
STEVE
Right sized industry that can keep prices above cost of production. I don’t think we’re going to get much of a break in cost of production. Some I mean, we went from 97 last year. We’re probably going to be in the mid to low 80s this year. I don’t see a lot more downside on that. And so we have to adapt to cover those costs long run.
00;13;48;28 – 00;14;11;09
STEVE
And if we keep adding efficiency and litter sizes and litters for breeding animal, I think we’re going to have to have significantly fewer breeding animals in the United States. And the only way to get there is economic pain and financial pain. For some producers. So if they exit the business. I hate to talk about way I really do, but I think we probably need maybe a million fewer breeding animals.
00;14;11;09 – 00;14;18;08
STEVE
And what we have right now, long term, that’s 5 to 10 years down the road. We’re not going to get there very quickly, though, and it’s going to be a difficult process.
00;14;18;12 – 00;14;23;13
MIKE
Well, again, as you head into retirement, we can leave those problems and those issues for someone else to solve.
00;14;23;13 – 00;14;37;12
STEVE
Right. Well, yeah, I kind of hate to be that way, but I’m afraid that’s going to be it. But, you know, one of the things I will say is I don’t believe this with any real concern, because I know there are some really good people out there that are going to address these issues and do it with a clear mind and a true heart.
00;14;37;12 – 00;14;40;16
STEVE
And I’m very concerned in the people that are involved here and what they can do.
00;14;40;19 – 00;14;48;07
MIKE
Well, very good. And again, we want to wish you a happy retirement and hopefully that you have some really great plans for the next chapter of your life. Doctor.
00;14;48;11 – 00;14;50;23
STEVE
Yeah, I got a whole lot of nothing to do. I’ll. You.
00;14;50;25 – 00;14;52;18
MIKE
Okay, well, good luck doing nothing.
00;14;52;19 – 00;14;53;01
STEVE
Yeah, yeah.
00;14;53;03 – 00;15;07;11
MIKE
Thank you, Doctor Meyer. Thank you again for your time. We appreciate it. And thank you for joining us today. If you’ve enjoyed listening to Hog Talk, be sure to tell a friend or to and subscribe to us wherever you listen to your podcast. Thank you to the Ever AG Insights Crew for their work on today’s show.
—
The following music was used for this media project:
Music: Funky Intro 29 by TaigaSoundProd
Free download: https://filmmusic.io/song/9520-funky-intro-29
License (CC BY 4.0): https://filmmusic.io/standard-license
Artist website: https://linktr.ee/taigasoundprod
© Ever.Ag 2023, confidential and proprietary.
Disclaimer: TRADING FUTURES AND OPTIONS ON FUTURES INVOLVES SIGNIFICANT RISK OF LOSS AND MAY NOT BE SUITABLE FOR EVERYONE. THEREFORE, CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION. PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THE INFORMATION AND COMMENTS CONTAINED HEREIN ARE PROVIDED BY EVER.AG AS GENERAL COMMENTARY OF MARKET CONDITIONS. THIS INFORMATION SHOULD NOT BE INTERPRETED AS TRADING ADVICE OR RECOMMENDATION WITHOUT FURTHER DISCUSSION WITH YOUR EVER.AG ADVISOR. THIS IS A MATTER OF SOLICITATION.
EVER.AG INSURANCE SERVICES IS A LICENSED INSURANCE AGENCY AND AN AFFILIATE OF EVER.AG. INFORMATION CONTAINED HEREIN IN THIS WEBSITE IS COMPILED FOR THE CONVENIENCE OF THE USER. INFORMATION IS OBTAINED FROM SOURCES BELIEVED TO BE RELIABLE AND IS FURNISHED WITHOUT RESPONSIBILITY FOR ACCURACY OR CONTENT. MARKET DATA IS SUBJECT TO CHANGE AT ANY TIME. Ever.Ag is a licensed insurance agency in the following states: AZ, CA, CO, CT, FL, GA, ID, IL, IN, IA, KS, KY, LA, ME, MD, MA, MI, MN, MO, MT, NE, NV, NH, NM, NY, NC, ND, OK, OH, OR, PA, RI, SD, TN, TX, UT, VT, VA, WA, WV, WI, WY.
The post Hog Talk – August 14, 2024 appeared first on .
View all episodes
By Ever.Ag
5
55 ratings
In the latest edition of the Hog Talk podcast from Ever.Ag Insights, we lay out the current market drivers, look ahead to the fall fundamentals, and highlight the storied career of Dr. Steve Meyer. For three decades, Dr. Meyer served in the industry following production trends, producer and processor profitability and helped the industry move forward with what’s known as Mandatory Price Reporting.
Listen in on where the industry has been, where it is now, and where it could be going in the future.
Questions or comments? Topics you’d like to hear us discuss? Contact us at [email protected].
Show Transcript(Transcript auto-generated)
00;00;00;10 – 00;00;08;21
VOICEOVER
Future trading involves risk and is not suitable for all investors. Content provided in this segment is meant for educational purposes and is not a solicitation to buy or sell commodities.
00;00;08;23 – 00;00;31;16
MIKE
Hello and welcome to Hog Talk, brought to you by Ever AG Insights. Each week we talk with subject matter experts on news and topics affecting the hog markets. I’m your host, Mike McGuinness, and we get started today with a review of the markets. Today is Wednesday, August 14th, 2020 4th October. Lean hog futures contract is up 1% at 7365 for 100 weight, down from a recent high of 7820.
00;00;31;16 – 00;00;40;05
MIKE
We turn to our guest this week. It’s our privilege to have Doctor Steve Meyer, senior economist of ever AG’s livestock division. I want to thank Doctor Meyer for joining us today. Good morning.
00;00;40;06 – 00;00;41;17
STEVE
Morning. I good to be with you.
00;00;41;17 – 00;00;57;16
MIKE
Well, thank you. And the first question is your take on the current market outlook near-term, you know, what’s pressuring this market? Is it the readily available supplies seasonally? Also, if you could comment on that, the market usually what turns the page about Labor Day that may mean price headwinds. What going into the winter?
00;00;57;16 – 00;01;14;20
STEVE
Well, we’re certainly looking at seasonal increases in slaughter over the next few weeks. And that’s nothing unusual for the middle of August. I mean, we’re at the point where we start getting more hogs, and then, of course, we’re going to get fresh corn in some of these hogs and it tastes better, and they’re going to eat better, and they’re going to grow faster.
00;01;14;20 – 00;01;31;10
STEVE
And so they’re going to make it mark a little quicker. And that’s a big part of the reason we get hogs bunched up in the fourth quarter. And the weather cools off and they start growing better. And so a lot of reasons. But these hog supplies have been almost precisely what we expect. Based on the June hogs report, slaughter is within 1% of what that report would have suggested.
00;01;31;10 – 00;02;00;04
STEVE
So I can’t say that we have any surprise on supplies. And if we look at home prices historically, they’re very good hog price. The trouble is, the cost of production are so high that they’re not making very much money. And we’re certainly looking at losses again in the fourth quarter very quickly here. And so it’s still a dicey situation for producers in which we’ve been saying for well over a year that one or more of three things had to get better in order to improve this, and that’s cost had to go down, demand had to increase or supplies had to be reduced.
00;02;00;04 – 00;02;15;16
STEVE
And so the first two have happened. They just haven’t happened enough to get us in the black rice, our lower, no question about it. And the prospect of lower cost yet is said is very real with this crop developing as well as it is. I mean, we saw 183 forecast for the national yield this week from USDA on corn.
00;02;15;16 – 00;02;31;10
STEVE
And so that would say we’re going to have plenty of corn and we’re going to have plenty of beans as well. and yet here we are with $80 plus costs. And those aren’t going away anytime soon because of the markets for those two key feed ingredients. Plus other costs are higher than they once were. And so costs have come down, but not enough to get us in.
00;02;31;10 – 00;02;51;19
STEVE
The black demand has improved from where it was the first half of last year, which it was pretty soft. And so that’s a positive. But again, even with growing demand that hasn’t gotten us into the black and we haven’t put hogs wise at all, we’re actually up on pig slaughter. It looks like we’re going to be up on the pig crop as far as we can see here because of productivity growth.
00;02;51;19 – 00;03;12;07
STEVE
Mainly we’ve reduced the this by 400,000 plus since 2000 2019. But yet we we’re slaughtering many pigs. We have since 2020. And so it’s kind of a sticky wicket that we’re in. As we kept the breeding herd, we got 100,000, 200,000 sales over the last two years, and we still haven’t reduced pig supplies because productivity growth. So it’s not a good situation.
00;03;12;07 – 00;03;30;09
STEVE
We got losses on the docket for this year on average on our model and for next year. And that comes on top of record large losses, at least on paper. Last year, those producers that did effective risk management didn’t lose that much money. And some of the men that lost our VAT. But still, we don’t have a good way of tracking that on the industry wide based.
00;03;30;10 – 00;03;53;13
MIKE
While Doctor Meyer, you’ve been on somewhat of a farewell tour this year as you get set for your retirement, you’ve been in the hog industry for a number of years, and for our listeners out there that may not be aware, you will be soon retiring. And so with that, we wanted to take a look at some of the highlights of your career and really actually look into some of the things that you’ve seen over the years that you’ve been in the hog industry.
00;03;53;13 – 00;04;12;18
MIKE
I’m going to name a few. You can pick out the ones that you remember, and maybe they’re not on my list, and if not, you can add to it. But certainly over the time that you’ve been in the industry, we’ve had vertical integration South, great controversies, diseases and repopulation measures, pork export expansion record, low markets. At one point hogs were selling for next to nothing right?
00;04;12;19 – 00;04;33;22
MIKE
Production efficiencies, pork demand growth with the whole famous advertising campaign of the other white meat. Foreign ownership of U.S. pork companies. And I’m sure there are more, but that’s just a short list that I pieced together, because I know that in the time over those years that you’ve been in the industry, you’ve certainly had to face and deal and react to all of those.
00;04;33;24 – 00;04;53;17
STEVE
Yeah, it’s been a litany of things. You’ve been a lot of change. And I really started miss around the industry back in the 80s. I came to the National Pork Producers Council in 1993, so 31 years ago. And so since that time, there’s certainly been a lot of changes, most for the better. Some were quite painful. And you pointed to the 1998 price debacle was one of the real painful times in this business.
00;04;53;17 – 00;05;11;08
STEVE
And and that was painful because it represented a sea change of structure in the industry. I mean, we had had a lot of people involved in the pork industry before that time. A lot of them were on part time basis. You know, the pig operation was part of a diversified farm, and they raised grain and they had paid some cattle and they had some hogs.
00;05;11;08 – 00;05;32;18
STEVE
And what happened was we came along with these specialized producers that were very, very, very good at what they did, and they had new technology and new kinds of buildings. And we got caught in this huge structural change at the same time that we had a massive consolidation of packing capacity. And so that was probably for sure the most painful time that I’ve seen in the work industry.
00;05;32;18 – 00;05;51;10
STEVE
On the other hand, we’ve had romantic growth and exports that have provided us great opportunities to raise pigs in the United States. And one of the reasons we raise more pigs than we used to. And we exported about 26% of our production this year, and we’re going to once again be the largest exporter in the world. We’ve been behind the EU for five years and they’ve contracted.
00;05;51;10 – 00;06;09;22
STEVE
And so we’re going to take over the leadership spot on that. So that’s a positive demand that we’ve struggled with demand for a long time. Pork. The other white meat campaign actually came along a few years before I started here. But it was one of those necessities that we had to get ourselves positioned as a healthier alternative in the meat protein base, and we probably stuck with it too long.
00;06;09;23 – 00;06;28;27
STEVE
And one of the things we did was we convinced the consumers that pork was another white meat, and now they want to go out and select products that you probably can’t cook and keep right. As far as loin cuts go. And so, you know, we’ve learned from that. But still we’ve had the demand surge of 21, 22, which was really driven by stimulus payments from the government.
00;06;28;27 – 00;06;51;22
STEVE
But yet our domestic demand is higher than it was during the early 2000. And so I think demand is in pretty good shape on a historical basis right now, especially when you look at exports and the domestic market. So that’s a positive. I think the watchword, though, really during all of this has been efficiency. And, you know, when I started in 1993, the Holy Grail at production was 20 pigs per year.
00;06;51;22 – 00;07;15;12
STEVE
I mean, that was really the goal. Everybody wanted to get to 20. Well, now 30 is the standard and we have entire production systems that are producing more than 30 pigs per year. And so that efficiency is a two edged sword. It’s a positive one individual operation obviously, that you can produce more pigs for sale and spread cost over more pigs, but you have to account for that in the marketing impacts of all those pigs going.
00;07;15;12 – 00;07;33;21
STEVE
So, you know, there’s been lots of changes and we should be proud of what we’ve done. I think the changes around production technologies created gestation was part of that efficiency. I think we can probably do better. We can do as well from an efficiency standpoint without those. And we certainly had pressure from culture in general to go away from that.
00;07;33;21 – 00;07;50;26
STEVE
We’re producers are very, very creative and very, very adaptable. And so I think they’re going to find a way to do that. And we’ll probably raise pigs much different ten years from now than what we do right now. You know, probably one of the things that I was involved in early on was, you know, this cry for market information, and we needed better pricing and those kind of things.
00;07;50;26 – 00;08;06;27
STEVE
And so one of the lasting things that I was involved in, we still do, we still have with us today was mandatory reporting, and we put in a lot of time and a lot of thought trying to get that thing right. And, you know, what we have today doesn’t look very much different than the first one that came out in 2001.
00;08;06;28 – 00;08;16;03
STEVE
And I’m pretty proud of that. And I think we’ve designed something that has served producers well. It has its warts. You know, it’s not that it’s perfect. I’m pretty proud of what we were able to accomplish on that.
00;08;16;08 – 00;08;36;02
MIKE
Let’s take a look at the future. And what does the hog industry look like to you in the future? Let me mention one note that struck me recently. Areas of the world that are adding population and are expected to add population are not hotspots for pork consumption. In other words, Middle East and Africa, to name a few. What might this mean for the future pork industry?
00;08;36;02 – 00;08;42;07
MIKE
And then also talk about what evolutions that you might see. And what does the hog industry look like to you in the future?
00;08;42;13 – 00;08;57;29
STEVE
Well, I think there’s always going to be a pork industry, and if there’s always a pork industry is always going to be a US pork industry, because we can do this better than anybody in the world. All right. So we have a very good competitive position. We have large masses of land that is generally isolated from the rest of the world.
00;08;57;29 – 00;09;13;28
STEVE
And we’ve been able to keep diseases out of here that other people have it. We have a grain production sector that is marvelously efficient. So we have plenty for we have space, we have brains, we have people, we have no house. So I think we’re going to have a very good competitive position as far as world markets go.
00;09;13;28 – 00;09;28;16
STEVE
I mean, that’s something that we’ve obviously tapped into a lot of these export markets with free trade agreements and those kinds of things. And Mike, you you bring up, you know, population growth in the Middle East. That doesn’t count for us. We’re not going to so much for Africa is a different story. Parts of Africa are generally Muslim.
00;09;28;16 – 00;09;50;00
STEVE
And so that wouldn’t be. But from Central Africa southward, we’ve got masses of people that are hungry and that pork is not a problem, but we’re they just don’t have any money. And this has been the problem with Africa for years. And so, you know, how can we get Africa so that they can generate enough income per person to raise their level of nutrition and to include meat, protein?
00;09;50;00 – 00;10;09;28
STEVE
I’ll go back and remind everyone. You know, there was a question in the early part of my career was who was going to feed China? Lester Brown sold a million books with that title. Well, that’s not a problem now, because China’s economy provided them a way to feed themselves by purchasing high quality protein and quality food ingredients. So we’ve dealt with these things in a world situation in the past.
00;10;09;28 – 00;10;24;17
STEVE
And right now, the whole situation of Africa seems kind of intractable to me. But I can tell you that it seemed intractable that we were going to be able to do that with Asia at one time, and now we’ve got China. Vietnam is the fifth largest producer in the world, you know? And so I think there’s real hope on that.
00;10;24;17 – 00;10;41;22
STEVE
And I think we’re going to have a very good competitive position in supplying that product when and if we can get the people of Africa and other poor areas lifted out of this level of poverty, and the only way you can do that is with some stable governments, the rule of law and all those kinds of things that we enjoy so richly here in the United States.
00;10;41;27 – 00;10;57;22
MIKE
Well, I’m going to pick your brain on a couple of other things. One is, do you see old things becoming new again? In other words, do you ever see for the future of the hog industry, the smaller hog operations coming back, or have we passed the point long ago that that just is not possible anymore?
00;10;57;23 – 00;11;16;21
STEVE
It’s possible on a limited scale. There are features that the small operation can bring to the marketplace. That large operations can’t very well. Okay. The whole thing with rearing method, I mean, you can’t raise large numbers of hogs outdoors. You can raise some. And there are consumers that will pay you a premium. Prices for some of us okay.
00;11;16;21 – 00;11;37;18
STEVE
But that’s not consumers with a capital C it’s consumers with a small C. There’s a reason they call them niche markets. One of the definitions of niche is small okay. And so I think there’s a place for that. Now I think we’re going to have different levels of production. You’re going to have high welfare, culturally oriented production in small operations.
00;11;37;18 – 00;11;54;23
STEVE
And then you’re going to have efficient production that’s there to feed the masses at the lowest possible cost. And the marketplace will take both of those. But I don’t think we’re going to see 350 million Americans with hogs raised out. Door number one is I’ve raised hogs outdoors, and I know it’s pain, and I know how much work it is.
00;11;54;23 – 00;12;11;10
STEVE
And I don’t think we have very many citizens that are willing to do that. Okay. There are some and God bless them and more power to him. I hope they’re successful, but I just don’t think we have enough to feed 350 million Americans, much less a good chunk of the world. And so I can see all of these coexisting at the same time.
00;12;11;10 – 00;12;33;10
STEVE
I do think that our commercial size will raise pigs differently. We’ve been under intense pressure about this great issue, and what we’ve discovered is you can you don’t have to have grates. Now, I would argue that the best welfare for the animal is to put her in a stall. I’d argue that without a doubt, but we can still be quite efficient in gestation, and prop 12 is over the top in square footage requirements and some of the things.
00;12;33;10 – 00;12;45;27
STEVE
And it bans one of the technologies. It’s best for social welfare. And that’s the breeding crate. I would hope at some point we can find a middle ground on this that is as close to best as we can get for the animal and still addresses some of these cultural concerns.
00;12;46;00 – 00;12;51;29
MIKE
And finally, can you give us your perspective on the state of the state condition of the current hog industry?
00;12;51;29 – 00;13;14;02
STEVE
I think we’re in a very precarious position just because of the financial losses that we’ve incurred last year and the potential for those losses this year and next. I believe there are a lot of operations that financially are kind of on the precipice here. And the banks that loan money to them are in a tough spot because if they start liquidating these operations, the asset values of the rest of their loan portfolio will go down.
00;13;14;02 – 00;13;30;26
STEVE
And it causes some of them to approach insolvency as well. And so it is a very difficult situation. And the other part is we have these single use buildings out here that when one operation goes bankrupt, they don’t get taken out of production very well. It’s a very difficult thing to find a way that we get from here.
00;13;31;02 – 00;13;48;28
STEVE
Right sized industry that can keep prices above cost of production. I don’t think we’re going to get much of a break in cost of production. Some I mean, we went from 97 last year. We’re probably going to be in the mid to low 80s this year. I don’t see a lot more downside on that. And so we have to adapt to cover those costs long run.
00;13;48;28 – 00;14;11;09
STEVE
And if we keep adding efficiency and litter sizes and litters for breeding animal, I think we’re going to have to have significantly fewer breeding animals in the United States. And the only way to get there is economic pain and financial pain. For some producers. So if they exit the business. I hate to talk about way I really do, but I think we probably need maybe a million fewer breeding animals.
00;14;11;09 – 00;14;18;08
STEVE
And what we have right now, long term, that’s 5 to 10 years down the road. We’re not going to get there very quickly, though, and it’s going to be a difficult process.
00;14;18;12 – 00;14;23;13
MIKE
Well, again, as you head into retirement, we can leave those problems and those issues for someone else to solve.
00;14;23;13 – 00;14;37;12
STEVE
Right. Well, yeah, I kind of hate to be that way, but I’m afraid that’s going to be it. But, you know, one of the things I will say is I don’t believe this with any real concern, because I know there are some really good people out there that are going to address these issues and do it with a clear mind and a true heart.
00;14;37;12 – 00;14;40;16
STEVE
And I’m very concerned in the people that are involved here and what they can do.
00;14;40;19 – 00;14;48;07
MIKE
Well, very good. And again, we want to wish you a happy retirement and hopefully that you have some really great plans for the next chapter of your life. Doctor.
00;14;48;11 – 00;14;50;23
STEVE
Yeah, I got a whole lot of nothing to do. I’ll. You.
00;14;50;25 – 00;14;52;18
MIKE
Okay, well, good luck doing nothing.
00;14;52;19 – 00;14;53;01
STEVE
Yeah, yeah.
00;14;53;03 – 00;15;07;11
MIKE
Thank you, Doctor Meyer. Thank you again for your time. We appreciate it. And thank you for joining us today. If you’ve enjoyed listening to Hog Talk, be sure to tell a friend or to and subscribe to us wherever you listen to your podcast. Thank you to the Ever AG Insights Crew for their work on today’s show.
—
The following music was used for this media project:
Music: Funky Intro 29 by TaigaSoundProd
Free download: https://filmmusic.io/song/9520-funky-intro-29
License (CC BY 4.0): https://filmmusic.io/standard-license
Artist website: https://linktr.ee/taigasoundprod
© Ever.Ag 2023, confidential and proprietary.
Disclaimer: TRADING FUTURES AND OPTIONS ON FUTURES INVOLVES SIGNIFICANT RISK OF LOSS AND MAY NOT BE SUITABLE FOR EVERYONE. THEREFORE, CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION. PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THE INFORMATION AND COMMENTS CONTAINED HEREIN ARE PROVIDED BY EVER.AG AS GENERAL COMMENTARY OF MARKET CONDITIONS. THIS INFORMATION SHOULD NOT BE INTERPRETED AS TRADING ADVICE OR RECOMMENDATION WITHOUT FURTHER DISCUSSION WITH YOUR EVER.AG ADVISOR. THIS IS A MATTER OF SOLICITATION.
EVER.AG INSURANCE SERVICES IS A LICENSED INSURANCE AGENCY AND AN AFFILIATE OF EVER.AG. INFORMATION CONTAINED HEREIN IN THIS WEBSITE IS COMPILED FOR THE CONVENIENCE OF THE USER. INFORMATION IS OBTAINED FROM SOURCES BELIEVED TO BE RELIABLE AND IS FURNISHED WITHOUT RESPONSIBILITY FOR ACCURACY OR CONTENT. MARKET DATA IS SUBJECT TO CHANGE AT ANY TIME. Ever.Ag is a licensed insurance agency in the following states: AZ, CA, CO, CT, FL, GA, ID, IL, IN, IA, KS, KY, LA, ME, MD, MA, MI, MN, MO, MT, NE, NV, NH, NM, NY, NC, ND, OK, OH, OR, PA, RI, SD, TN, TX, UT, VT, VA, WA, WV, WI, WY.
The post Hog Talk – August 14, 2024 appeared first on .
More shows like The Ever.Ag Podcast
View all
The Ramsey Show
38,986 Listeners
The EntreLeadership Podcast
4,390 Listeners
AgriTalk
153 Listeners
AgriTalk PM
134 Listeners
The Dividend Cafe
580 Listeners
The Business of Agriculture Podcast
124 Listeners
The Milk Check
21 Listeners
Progressive Dairy Podcast
19 Listeners
Dairy Defined
4 Listeners
Grain Markets and Other Stuff
342 Listeners
All-In with Chamath, Jason, Sacks Friedberg
9,807 Listeners
Let's Chat Dairy
16 Listeners
The Dairy Download
27 Listeners
Barn Talk
1,647 Listeners
Dairy Insights: Heard Mentality
8 Listeners