Pork production declined 2.5% in 2022, according to the United States Department of Agriculture, which predicts growth in pork production for 2023.
That decline may have had something to do with the cost of raising pigs, which increased by 21% from the previous year, and 43% from 2020. Retail pork prices increased, but only by 1.5% overall.
Those were among the market insights released by the National Pork Producers Council Feb. 14 in its latest pork industry economic update. It summarized key pork industry market indicators through January 2023.
The report found that pork production has declined for two straight years following record production in 2020, due to a smaller U.S. hog herd. Declining real incomes, due to inflation and growing cost of other household items has contributed to slightly weakening demand for pork. USDA reports in January projected a 1.8% increase in pork production for 2023, with much of that growth coming in the fourth quarter.
Labor shortages
The report highlighted “severe” labor shortages as an important reason for the decline. Labor market conditions and changing demographics are exacerbating the rural labor shortage, according to the NPPC. A recent report from the Bureau of Labor Statistics shows that average weekly wages on hog farms increased nearly 10 percent from 2021 to 2022, but employment declined 2.6 percent. Projections indicate that the existing U.S. workforce will not be able to offset pork industry shortages. NPPC urged Congress to make ag visa reform a top priority this year, including making the H-2A visa program available for year-round agriculture.
The breakeven price level for hogs is roughly $100 per hundredweight, and despite experiencing some profitable months this summer, producers lost an average of $20 per head in December. With continued market volatility and competing demand for feed inputs, breakeven price levels are likely to remain elevated in 2023. Despite those higher costs, the U.S. pork industry remains competitive on the world market, the report says.
“The U.S. pork industry is a pillar of the U.S. economy, supporting jobs, sales, and value-added activity throughout the pork supply chain,” said Lori Stevermer, NPPC vice president and pork producer from Easton, Minnesota. “It is important to raise awareness of the economic contributions made by pork production and highlight the current economic and policy issues impacting producer success.”
To learn more about the impact of pork production on the U.S. economy, visit nppc.org/the-pork-industry/.
