May 9, 2023

High feed prices among factors for US pork producers' tight margins

A variety of factors continue to tighten margins for US pork producers — and one of these challenges is an extended period of high grain prices, according to Josh Maschhoff, director of the Illinois Pork Producers Association.

"Feed costs make up 70% of the cost of production for these protein animals. So, when you couple that with the weaker than normal summer demand that we're seeing right now, the margins get really tight," Maschhoff said. He added that cooler weather has slowed the start of the grilling season.

"We don't see everybody outside on their patio grilling and then you can kind of see some of that domestic demand not coming along," he noted. "It's really squeezing these producers to having some negative margins in the time period where they're not normally expecting to have negative margins."

Packers also continue to get a larger portion of the profit.

"The average everyday farmer doesn't recognise a huge margin. They get a very small percentage of the retail cost that a consumer pays in the supermarket," Maschhoff pointed out.

He said inflationary pressure has also increased the price of building materials, limiting expansion and improvement projects on swine operations.

Pork producers and supporters were at the Illinois capitol on May 3 for the declaration of the day as Illinois Bacon Day. Maschhoff told Brownfield it was a day to celebrate the fourth largest pork producing state in the United States, but also an opportunity to discuss these issues with legislators.

- Brownfield Ag News