The tough financial conditions facing pork producers will probably last another six months, forcing more decreases in U.S. pork production, according to Brian Buhr, an economist with the University of Minnesota Extension.
Consumers, who are also under economic distress, will ultimately be impacted by “disorderly and extreme liquidations in the swine industry, and retail pork prices that could increase by as much as 30%,” says Buhr, head of the Department of Applied Economics at the University of Minnesota.
Buhr says 2009 is turning out to be worse than 2007 and 2008 for pork producers, with losses averaging almost $31/head. This marks the longest period of continuous losses for the modern pork industry.
Conditions should improve for pork producers by July 2010. In the meantime, Buhr says these public policy responses could help pork producers weather the short-term crisis:
—Providing capital or loan guarantees to agricultural lenders to support competitive pork producers.
—Providing mediation for pork producers. There is a real need to train and attract more professionals to serve as farm mediators, he says. University of Minnesota Extension offers one means of hope to help financially stressed pork producers make good decisions at http://www.extension.umn.edu/community/Mediation/.
—Expanding educational programs in marketing and business planning. Many producers with the necessary marketing skills have succeeded, but those who don’t have those skills have faced large losses.
—Instigating pork purchasing programs for school lunch and food shelf aid. “At a time of high demand for food assistance programs, it would seem natural to purchase pork to help support unprecedented needs based on 10% unemployment rates and declining personal incomes,” Buhr concludes.
6. The Swine Industry is at a Crossroads