Monday, February 04, 2008

Not Looking Good for Pork in 2008

Lately my father-in-law has been saving his issues of the "Iowa Farm Bureau Spokesman" for me. He keeps up with my blog pretty regularly (probably will read this) and thought that some of the articles would be interesting and make good fodder for my blogging. Well, he was right! I enjoy thumbing through them and seeing what is going on in the industrial, conventional, local, worldwide, and even small scale farming worlds. The latest issue that he dropped off had an article about the 2008 outlook for pork farmers that really drew my interest.

The title of the article is, "Pork farmers facing difficult 2008 due to high feed costs; soft market". I think the title says it all... Recently the Iowa Pork Congress was held in Des Moines and much of the time was spent tying to work out some solutions to the possible coming crisis. This quote from the article wouldn't give me much hope though: "But based on current analyst forecasts and predictions for 2008, there may not be any good short-term solutions." And, one analyst, Dr. Steve Meyer, said, "It could actually get worse".

For many pork farmers the best solution may be just to break even or even have just a small loss. How in the world can we keep propping up a system thats best solutions ever 10-20 years is to, "break even or have a small loss"! The article continues with no real recommendations other than to do your best and feed any stored grain you have. And then just to make everyone feel even better they throw out the possibility of a drought coming to the Midwest this summer. Yep, just a real good time to have hogs.

But, is it all bad news? The prices that they conventional farmers are being paid are heading down and the grain prices are heading up ... but, the prices at the store are staying relatively even. There is the good news. For farmers who are not tied to the commodity market they may find a bit of insulation from these drastic ups and downs. Not that the direct marketer will feel the pinch from the growing grain prices, but they have more room to move and hopefully more dedicated customers.

It is amazing reading through these articles. The margins are so razor thin in the commodity and conventional markets that if there is even slight movement one way or another it can literally make or break the year. On the other had a diversified farmer who takes the time to connect and market directly with the consumer can weather some of the storms ... it doesn't mean it is easy, but it does make it more bearable.

So, after reading this article I'm still ready to have some hogs. Now we just need to figure out what works best for us...


sugarcreekfarm said...

I read this article, too, and had the same reaction. Oh boy, the best they can hope for is to break even or a "small" loss?

Worse yet, a representative of a niche pork company (I won't name names) said recently that his company was not raising their floor price. Hog farmers had enjoyed a number of years of profits and they were just going to have to live on that through this period of loss. Not an exact quote, but that's the gist of it. I was incredulous, as were representatives of 2 other niche pork companies that were also present, both of whom had already raised floor prices to their producers. (The first company did recently raise their floor price after all.)

Mellifera said...

Once upon a time I did some consulting for, we'll call them a health-oriented fruit drink company who got all their fruit from Tahiti. I got into the country, was supposed to interview farmers, and I soon realize they're all pissed about something and want some answers. Huh? Gee, bosses, it would have been nice to tell me there was something going down before you SENT ME TO THIS @#*$& COUNTRY BY MYSELF.

Come to find out they'd been advertising heavily on TV and other media outlets telling farmers to plant more noni. So they did, and of course there was a market glut and they weren't buying very much of the crop and since that fruit is basically worthless except to hyped-over Americans they couldn't sell it to anyone but that company. Not to mention that this being a multi-level marketing company, they made the farmers buy equipment from them before they could sell fruit. Oh wait! That's not MLM, that's just agribusiness in America.

The bosses' response? "Glut on the market? Man. Well, that's just economics for you." And the weird thing was, they really were all nice folks. They just plain didn't get it, or were good at lying to themselves.

Kramer said...

Niche markets are where it is at. I just got back from a Texas Organic Farmers Growers Association (TOFGA) conference. There are very few growers of pastured pork in Texas, and those that do it, always have a waiting list for their products. I know this means more land needed, but hogs have always been the fastest return on investment livestock since the early 1900's. There has to be a way to continue this. You can't do it the same way as a commercial farm so you have to be different. I don't know what that means, but in farming these days, you have to appeal to all senses of you customers. Not just taste.

Ethan Book said...

Sugar Creek ... that is too bad that even the niche companies are starting to think and work like that. It just goes to show that regardless of the company direct may be the best for everyone involved.

Mellifera ... thanks for the insight. It is true that this just isn't happening in the US or in agriculture. It is becoming part of our culture ... hopefully one that we can slowly begin to change.

Kramer ... great thoughts! I would love to hear more about your conference. Are you going to write about it on your blog?

Yeoman said...

Re the article, I'd tend to somewhat discount it.

Not that it is inaccurate. It's likely accurate. Rather, it's not news, or at least not news in a truly new sense.

That may sound like an odd reason to take heart, but it sort of is. Basically, the farm economy in general (omitting certain sections of it, which would be the exception to the rule at various points in time) has been sick since about 1919. Or, rather, it was really healthy from about 1910 to 1919, and had been sick from about 1870 to 1910, and became sick again in 1919. Why would we take heart at that? Just this, farmers manage to keep on keeping on anyhow.

Now, that does tell us something needs to be done. But, having said that, for all the talk of "change" in this election season, I don't see any big changes to address this problem coming on.

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