Home 5 Ag Stories “Today’s crisis is on the farm, not at the grocery store”

“Today’s crisis is on the farm, not at the grocery store”

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Smithfield Foods this week closed pork processing facilities in Sioux Falls, SD, Martin City, MO, and Cudahy, WI. The abrupt closures will greatly impact United States hog producers, who looked forward to a profitable year.

News of plant closures provoked fear among consumers, who also face economic challenges. However, “Today’s crisis is on the farm, not at the grocery store,” says Nick Giordano, NPPC vice president and counsel, global government affairs.

“It’s real, and if these guys don’t have a lifeline, then the question becomes: ‘How much production are you going to lose?’ That has ramifications for the price of pork domestically and the United States trade balance,” Giordano said.

Dr. Dermot Hayes, economist with Iowa State University, reports no immediate threats to domestic pork supplies and prices.

“In speaking with packers, they have a record large storage of pork right now,” Dr. Hayes said. “This is the product that was destined for food service and has not sold. There are several weeks, possibly months of supply.”

“The number of packing plants that have closed is small relative to the number of plants,” adds Hayes. Consumers should only become concerned if multiple plants close.

“Commonsense will tell you what happens next, if we don’t have pork in storage and plants in operation. But we’re not there yet,” Hayes said.

United States swine producers not only face challenges at home,  but abroad. Demand remains slow, depsite glaring opportunities, according to Giordano.

“We talked about China, (where) we have an unprecedented sales opportunity that we can’t exploit,” Giordano said. “The irony is we have hogs basically at zero value. Farmers are faced with issues here, and the Chinese have all of this demand. It’s tough to see that. But the crisis today is not on the supermarket shelves, it’s on the farm.”

Previous industry forecasts suggested earnings of approximately 10-dollars per hog on average for 2020. Economists now predict hog farmers will lose nearly $37 per hog, or almost $5 billion collectively, for each hog marketed this year.

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