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U.S. pork producers have “tapped the brakes” on expansion for the moment but have high hopes for 2020 exports, says Bill Even, CEO of the National Pork Board, in an exclusive interview with Successful Farming magazine during National Pork Industry Forum in Kansas City.
All agricultural products are caught in a geopolitical game with China at the moment, with coronavirus making it worse, he explains, but the pork industry is “betting on the come.” The industry is leaning into the potential for sales to China later this spring and summer.
“We are the only nation that can scale quickly and has the wherewithal, the feed supply, and the shipping and logistics into Asia,” says Even. “We are ready for that.”
The pork industry is already seeing record exports, he says. The Pork Board is expecting China to take 11% of U.S. pork production in 2020, “and that doesn’t even begin to fill what they really need.”
However, that doesn’t mean market hog prices at the farm level are reflecting the export bounce. “We are moving the product, we are creating the pigs, we have record exports, but we are not seeing the price lift up,” says Even. “The banks and producers are saying, let’s tap the brakes and see what 2020 looks like.”
Coronavirus in China had kept workers away from ports, and some pork shipments stalled. “China is slowly starting to go back into business,” says Even, “but when you shut a major importer down for three to four weeks, stuff is stacked to the rafters and everything is backed up.”
The Federal Reserve cut interest rates a half a percent this week, which is helpful for producers, says Even. “You can wait some of those out as long as your equity burn isn’t that great.”
Producers are wondering more about 2021, says Even. “The election will be over, and you could still be sitting with a lot of supplies and trade tensions.”
The coronavirus has thrown a monkey wrench into global logistics, he says. “Right at the very time we had the Phase One China deal signed and everybody is excited, we have backlogs logistically in the ports and the inability to get that stuff worked through the chain.”
The global exchange markets are working against U.S. producers, he says. Everybody is buying the dollar. “The dollar has really increased in value. That raised a hurdle for us to be in the export market.”
Not to worry long, he says. “Q 1 of every year is usually low hog prices. What you are hoping for and looking for is that seasonal upturn that you get in April and head out into the summer.”