Pork checkoff: Top trends to watch

Analysis reveals important trends that will assist Pork Board's strategic planning initiative.

ECONOMISTS Dr. Daniel Sumner with the University of California-Davis and Dr. Steve Meyer with Paragon Economics identified trends in economics and food production to assist the National Pork Board's (NPB) strategic planning for the future of the pork industry.

"Our overarching objective is to assess the role the pork checkoff plays in an ever-changing world and to identify strategic opportunities for us to help move the pork industry forward," said Chris Novak, chief executive officer of NPB. "This may mean developing programs that increase consumer trust and comfort in purchasing pork."

Meyer told Feedstuffs that three prevalent trends are important to recognize.

For pork producers, lower feed costs will be the most important factor in 2014. It will cost $30-35 less to feed each hog this year compared to the previous year, which will mean more profits for pork producers, Meyer said.

Unfortunately, the supply of hogs is low as a result of losses from porcine epidemic diarrhea virus, the true effect of which is still unknown. Any growth advances anticipated for 2014 probably will be hindered by the recovery from those disease losses.

On the bright side, demand for animal protein, especially pork, is robust.

"Real per capita expenditures are very strong, with individual pork demand at its highest levels since 2004," said Meyer, who noted that the percentage growth in pork sales in the past year is the highest among all meat products, including pork, beef, poultry and lamb.

Last year through November, pork exports were down 9% from the previous year; domestic demand, however, has filled the gap.

"Domestically, people are spending more on meat even while per capita income fails to grow," Meyer said. "Following a year where animal activism increased its pressure through the release of undercover videos and the use of social media, people not only continued to buy meat but, in fact, bought more meat and paid significantly more for it."

With wholesale prices for beef going through the roof over the past three weeks, it will take time before the higher prices get passed along to consumers.

However, "when it starts hitting the retail level, we should see an increase in pork demand," Meyer added.

Furthermore, Sumner said global income and population growth continue to drive pork demand.

"On a global basis, the need for increased pork production over the next decade is very real," Sumner said. "The U.S. pork industry must keep up — and even outperform past history — in order to meet increasing demand in both wealthy countries and those developing countries with rapidly growing per capita incomes."

Overall, pork producers have increased average productivity, with a rise in both pigs per litter and the average market hog weight. As a result, the amount of pork entering the market today has increased 2.6%.

As NPB sets its course for 2015 through 2020, the organization's strategic planning task force, which met for the first time in December, will utilize the presented analysis to better understand trends that are most likely to affect the pork checkoff program.

"We set goals to protect a farmer's freedom to operate, to reposition fresh pork with consumers and to make U.S. pork producers more competitive in the global marketplace," Novak said. "Today, we must also focus on the issues important to society. That's what this planning process will uncover."

Strategic planning is not foreign territory for NPB; past action has lent to the strong, steady demand for pork.

Meyer explained that several proactive steps in 2013 have sustained consumer demand for pork. Those actions included adjusting the cooking temperature recommendation to 145 degrees F with three minutes of rest, which can improve the quality of pork muscle cuts.

Additionally, renaming certain cuts of pork to be similar to the names of cuts of beef made it easier for consumers to substitute pork for beef. Further, last summer's "grill pork chops like a steak" promotion reinforced those name changes.

"Pork is well-positioned as an alternative to beef," Meyer concluded.

Still, it is important not to ignore the major topics of interest among consumers today, which are food safety, the environment and animal welfare.

"Consumer needs regarding food safety and transparency and producer needs to protect the environment and provide the best possible animal care will be front and center," Novak said.

Throughout 2014, the pork checkoff and the food industry leaders comprising its strategic planning task force will continue to review research, market data and the opinions of agriculture's top economists and other experts in an effort to set a strategic vision to carry the organization from 2015 through 2020.

Volume:86 Issue:04

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