Pork producers are finally seeing some black ink

www.agrinews-pubs.com
Whitney Cole
2010-05-18

INDIANAPOLIS — After a couple of tough years, pork producers are starting to see checks coming to them instead of only sending them out.

The pork markets were in bad shape, as producers were losing several dollars per animal they shipped out. But finally, after a whole host of changes in the economy, the market has slightly rebounded.

Indiana Pork Executive Director Mike Platt said it was nice to see his comrades with a look of relief on their faces.

“After an incredibly difficult and trying couple of years, it is great to see pork producers smiling again,” he said.

Platt added that demand is up, supply is down and profitability is again a word that is entering the vocabulary of producers.

“But despite the good news, which is much needed, it is a reality that it will be a long time before pork producers regain the equity they have lost since November 2007,” he lamented.

First Farmers Bank and Trust senior commercial agriculture lender Ken Perkins said he, and many other bankers, are just as happy to see the markets creep back up as pork producers are.

“Cash prices are considerably higher today than they were just six months ago,” he said. “And that’s helped everyone.”

The downside to a smaller inventory of pigs around the country is that some producers didn’t make it through the low prices.

“But the good news is that everyone who is still standing are outstanding producers,” Perkins said. “Animal care has improved, and that has improved productivity. If animals are not contented, they will not be productive.”

“The U.S. hog farmer is the best hog farmer in the world,” he added.

While the sun is beginning to shine on the pork industry, the forecast still is a bit cloudy. Perkins said bankers are cautiously optimistic.

“Prices are in the black. Things have significantly improved, but they aren’t rosy yet,” he said.

The lender said many producers are trying to get caught up on past-due loans and payable accounts now.

“Producers are still juggling a lot of balls in the air,” he said.

Perkins forecasted that producers will need a continued stretch of about eight to 10 months of black-ink profitability before they — or the bankers — will have any breathing room.

Platt said consumers will need to continue buying pork products, even as the meat case prices begin to reflect the lower demand.

“Consumers will definitely be seeing higher prices at the supermarket for pork,” he said. “They have been getting a great bargain for the last year or so, and now prices have adjusted so that everyone in the chain can make a profit they can live on.”

Perkins added that producers will need to keep an eye on foreign currency as an indicator of how the U.S. markets will do.

“We live in a global economy, and what happens around the world affects us here,” he said.




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