The pork sector, especially in Canada, is facing a challenging road to profitability in 2023 due to several adverse conditions. These include declining domestic demand, reduced export opportunities, and potential U.S. animal welfare regulations that could lead to lower prices. In this interview with RealAg Radio host Shaun Haney, Christine McCracken, Rabobank’s senior analyst for animal protein, says pork producers are currently incurring losses of $40 to $50 per head. Although there has been a slight improvement in feed costs, the high cost of production and price pressure could necessitate moves to reduce production.
The industry, after experiencing high demand during the Covid-19 pandemic, is now dealing with decreased consumption and oversupply in a post-pandemic environment. McCracken states that supply is currently outpacing demand and this imbalance will take time to correct.
Export markets do not seem to offer significant relief for the oversupply of pork, with McCracken doubting that consumers will switch their protein preferences significantly. Despite strong exports driven by reduced pork production in regions like China and Europe, global economic issues, such as inflation and economic slowdown, could reduce the demand for pork.
California’s Prop 12 animal welfare initiative could also disrupt domestic markets. Given that a significant amount of current pork production is not compliant with these new rules, the industry could be flooded with excess pork that isn’t eligible for export or for shipment into California. This could lead to additional challenges for producers.
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