Purdue: Pork industry recovery will take weeks

01-05-2009 | |

It could take weeks – or longer – before US pork producers recover from export restrictions tied to a worldwide influenza outbreak, Purdue University agricultural economist, Chris Hurt has said.

“This couldn’t get much worse for the pork industry,” Hurt said. “You’ve got other countries starting to follow the lead of Russia and China by limiting their import of our pork. Then there are the consumers worldwide who are linking the word ‘swine’ to pork, even though this influenza strain did not come from swine. And then there’s the world economy in general.”

Pork industry feels the brunt
Although no cases of the new H1N1 strain have been reported in pigs and properly handled and cooked pork is safe to eat, the pork industry is feeling the brunt of public misunderstanding about the virus, Hurt said.

“China and Russia represented 27.4% of our pork exports in 2008. Any loss of those sales to those important markets will lower pork prices,” Hurt said. “May lean hog futures have fallen 8% since Friday (April 24), closing at about $63.30 per hundredweight, or more than $5 lower.

“This is, in essence, the market anticipation of what this flu event means over the next few months. The concerns are that ‘swine’ flu could reduce US pork exports, that US consumers could reduce pork consumption and, more broadly, that the flu could cause a slowing of world economic growth, which would reduce demand for food products in general.”

Latest setback for pork producers
H1N1 fallout is just the latest setback for pork producers, Hurt said. “The pork industry has been losing money since the fall of 2007,” he said. “Producers are near break-even right now. We had hoped that producers would return to profitability by May, but that isn’t likely to happen now.”

The flu outbreak is the third major shock to the pork industry in the past 18 months, Hurt said. Hog farmers were beset by sharply rising feed prices in late 2007 and 2008 and the global financial crisis this past fall, he said.

As bad as it is for the pork industry, Hurt doubts that hog farmers will be hit as hard by the H1N1 outbreak as beef producers were by the US mad cow disease cases in late 2003 or the poultry industry by avian influenza in 2005-06.

“Pork producers should not panic. The immediate reaction of humans and markets to situations like we have now is often more severe in the short term than the long term.”