US pork sector on road to recovery

 

 

The pork industry is on its way back after taking hard hits in 2009 from high feed-grain prices, the H1N1 outbreak and a poor economy, according to a Purdue University agricultural economist.

 

The economist Christ Hurt said that grain prices went up in 2007 and stayed there until 2009, but they're finally on their way back down, also noting that people also are starting to get over the AH1N1 scare as well as a more improved economy.

 

Good news for producers is that pork supplies are down. Since some suppliers had to leave the industry last year, production has already dropped 4% in 2010, Hurt said. The lower pork supplies will help prices stay strong, especially through the summer.

 

But the strong prices will be costly to consumers, he said. During the first four months of this year, retailers were selling pork at 5 cents less per pound than they were at the same time in 2009. Retail prices likely will increase in the coming months. Pork likely will reach a record high price of US$3.10 per pound this summer, Hurt said.

 

He estimated profits at US$21 per head for the remainder of 2010, and US$10 for 2011. It will take this next year and the next just to recover from the past two years of losses, which were about US$11 per head in 2008 and US$24 in 2009, he said.

 

Expansion in breeding herds is not expected until early 2011. Although profits should be strong for producers in 2010, bankers are looking for producers' balance sheets to improve before financing expansions.