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Meat and Poultry Demand Struggles Continue
By Steve Meyer, Paragon Economics, Inc., Des Moines, IA
Meat and poultry demand continued to struggle in the second half of 2011, but still stands a chance of being higher for the year. Figure 1 shows annual demand indexes for pork, beef and chicken from 1970 through 2011. The data through 2010 are for calendar years, while the 2011 observation covers December 2010 through November 2011, the last month for which complete data are available. I use the 12-month period to capture the full gamut of seasonal variation in that last observation. Using a year-to-date figure would omit part of that variation which, in most instances, is quite important.
Through November, pork demand had fared better than either of its major competitors, gaining 1.2% from the same period 12 months before. The pork index of 92 says that pork demand is 8% lower than it was in the index’s base period of 1985. Note that all three indexes equal 100 in that year.
Both beef and chicken demand remain on the positive side of the ledger, but just barely so. That is especially true of chicken, which was only 0.3% higher for the December-November period. These struggles continue the pattern of recent years after the demand index for chicken grew from 94.9 in 1982 to 146.2 in 2005. That 23-year period saw 18 positive years vs. only five negative years.
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Can Pork Producers Handle Prosperity Without Expanding?
By Mark Greenwood, AgStar Financial Services, Mankato, MN
I am asked this question by many people. The December 2011 USDA Hog and Pigs report did not show any real expansion. In our view, hog numbers will be about 1 to 1½% higher this year. Almost the entire increase will be accomplished through productivity gains, not through sow expansion. The concern I have is, in the past, when we’ve made money for a period of time, we have had a tendency to expand numbers. The industry has shown very good restraint in the past few months. It will be interesting to see if it continues. Higher feed prices and volatility in the global marketplace have probably helped curb thoughts of expansion. As balance sheets continue to improve, the urge to expand will increase. This trend will be worth watching in 2012.
Investing Profits
Every day, producers ask us where they should invest the money they’ve made. Many have balance sheets that would allow them to expand. The question I pose to them is this: “Where can you put capital to make your business more valuable?” Following are some alternatives to expanding the sow herd:
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Legislation Offered to Reduce Corn Used for Ethanol
By P. Scott Shearer, Bockorny Group, Washington DC
Congressman Pete Olson (R-TX) has introduced the “Domestic Alternative Fuels Act,” which would expand the eligibility requirements within the Renewable Fuels Standard (RFS) to allow ethanol from alternative feedstocks (coal, natural gas, etc.) to compete with corn-based ethanol. His goal is to reduce the amount of corn used to produce ethanol. Congressman Olson said, “It’s long past time for Congress to address the failed RFS. The RFS focus on corn ethanol has translated into higher feed costs for livestock producers and higher food costs for working families. While Congress considers eliminating the RFS altogether, we should in the meantime allow greater participation and competition under the program.” Those supporting the legislation are the National Cattlemen’s Beef Association, National Chicken Council and the Grocery Manufacturers Association. The RFS was passed in 2005 to reduce the United States’ dependence on fossil fuels.
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NPPC Files Comments on EPA's CAFO Rule
By Joe Vansickle, Senior Editor
The National Pork Producers Council (NPPC) on Thursday joined nearly 90 agricultural organizations in filing two sets of comments with the U.S. Environmental Protection Agency (EPA) on the Concentrated Animal Feeding Operation (CAFO) Reporting Rule.
The first set of comments was signed by a coalition of 88 national, state and local agricultural groups. The second set of comments was filed on behalf of NPPC and the American Farm Bureau Federation and concerned the various legal issues the organizations have with the rule and challenges the rule would face if finalized.
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January 25-26:
The Iowa Pork Producers Association (IPPA) will hold the 2012 Iowa Pork Congress Jan. 25 and 26 at the Iowa Events Center in Des Moines
February 2-3:
For the third year in a row, the North Carolina Pork Conference, hosted by the North Carolina Pork Council (NCPC), will be held in conjunction with the Southern Farm Show at the North Carolina State Fairgrounds in Raleigh on Feb. 2-3, 2012. A block of rooms is reserved at the Raleigh Marriott Crabtree Valley for the conference; call (800) 228-9290 or (919) 781-7000.
February 8-9:
The Missouri Pork Expo kicks off Feb. 8 with a talk on Global Markets, Domestic Impact by Joseph Kerns of International Agribusiness Group, LLC, Ames, IA. For more information, contact MPA by phone at (573) 445-8375, e-mail Angela@mopork.com or visit www.mopork.com.
March 19-21: Annual meeting of the Midwestern Sections of the American Dairy Science Association and the American Society of Animal Science, Hy-Vee Hall and Veterans Memorial, Des Moines, IA. For more information contact: http://adsa.asas.org/midwest/2012.asp.
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