From farmers to packers, the pork industry is seeing red as profits evaporate under decades-low pricing and slowing demand.
Last Friday, the U.S. Department of Agriculture announced a $50 million purchase of pork loin, authorized through a Great Depression-era commodity buying program.
The health of the underlying market has reversed from the high-demand days of the pandemic. Iowa State University agriculture Prof. Lee Schulz, taking a break from the World Pork Expo in Des Moines, told the Star Tribune on Wednesday that the purchase will help, though not resolve, the problem.
"It's been an abrupt change," Schulz said. "2023 will possibly go down as the worst year in pork production ever, from a profitability perspective."
In April, pork farmers lost $57 a head on hogs, Schulz said. Such losses haven't been seen since the late 1990s.
Lori Stevermer, president-elect of the National Pork Producers Council, raises pigs with her husband south of Easton, Minn., and said Minnesota farmers may be feeling pinched by the down-trending market even more due to the loss of HyLife Foods in Windom — a regional slaughterhouse that closed earlier this month, citing unfavorable market conditions.
"Now, there's one less place to take pigs," Stevermer said. "You may push the pigs to a different market, but they may already have what they need, so [the new markets] don't want to bid up higher prices."
Industry officials place blame on a range of factors, from high feed costs to low demand, precipitated by rising prices on bacon in the consumer market. Last week, Jim Snee, CEO of Austin, Minn.,-based Hormel, invoked the company's efforts to limit "commodity exposure" in the pork supply chain.
The per-head price on hogs is flat this year, around $80, compared to more than $100 a hundredweight last year. The National Pork Producers estimates the industry lost $1.4 billion between November and March.
Farmers are "hunkering down," said Stevermer, noting a few larger operations have announced culls to their sow herds.
The packing industry has also seen job losses. More than 1,000 workers are out of a job as of last Friday, after HyLife's Windom plant closed. Global Foods Processing in Sioux City, Iowa, will lay off close to 100 workers by the end of the month.