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A DEEPER LOOK AT WHY PORK PRODUCERS ARE LOSING SO MUCH MONEY
by Patrick Thomas, Wall Street Journal

The American pork industry has a problem: It makes more tenderloin, ham, sausage and bacon than anybody wants to eat.

From giant processors to the farmers who supply them, they are in a predicament largely of their own making. They made production so efficient that demand can't keep up with supply. Their long-running advertising campaign touting pork as "the other white meat" was remarkably effective at reaching consumers--but wasn't actually the best way to market the product, some in the industry now argue, because it drew a direct comparison with chicken, which is typically more affordable.

And much of the American public thinks pork needs to be cooked to high temperatures that leave the meat tough and unappetizing, thanks to food-safety messaging that was highly successful but no longer relevant or necessary, the industry now says. Younger Americans are still gobbling up chicken sandwiches and burgers, but they don't buy as much pork as older consumers do, a bad sign for the future.

People can't agree on how to fix this.

Some think cultivating new overseas markets is the ticket. Others are trying to repackage pork as an affordable, easy-to-prepare alternative to beef. Yet another camp thinks the solution is to encourage people not to overcook pork and to breed some fat back into the meat.

At Carnico Foods, a small pork-processing plant in Litchfield, Mich., Scott Ferry is a fan of the more-fat approach. Ferry buys a hog-farming neighbor's livestock and sells meat from fattier breeds, called Berkshire pigs, to upscale restaurants.

His neighbor is also crossbreeding Berkshires with leaner Duroc swine to create what they call "Buroc" pigs. Ferry uses the Burocs, which need less feed than Berkshires but still yield perfectly marbled pork, for fattier, more flavorful bacon products.

U.S. demand for pork is 9% less than what it was 20 years ago, according to estimates from Kansas State University. U.S. farmers produce 25% more pork than they did two decades ago.

The resulting glut has shrunk U.S. pork producers' profit margins to their lowest levels since 1998, according to the American Bankers Association. Players big and small in the more than $50 billion pork industry are feeling the pain. Major processors like Tyson Foods TSN -2.58%decrease; red down pointing triangle lost millions of dollars on their pork operations last year. Farmers lost roughly $30 on every hog, according to Iowa State University estimates.

If pork producers can't attract more young consumers, annual consumption will decline by 2.2 pounds per capita over the next 10 years, according to the Pork Board's research, from 50.2 pounds last year.

"We are losing consumption, that's a fact," said David Newman, senior vice president for market growth for the National Pork Board, an industry-funded group charged with boosting pork's position in the American diet. "We need to make pork relevant with the future consumer."

Andrew Rasmussen, a 27-year-old health inspector in Chicago, is the kind of person pork producers hope to win over. During a recent trip to the supermarket, Rasmussen said he eats steak and burgers when they fit his budget and picks chicken when trying to save on his grocery bill.

"Pork is kind of a third thought," he said.

To read the entire article click here.


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