Talks of pulling out of the North American Free Trade Agreement (NAFTA) is sending ripples through the pork industry, which has seen impressive demand so far this year.
The U.S. pork industry is still in expansion mode, partially enticed by new processing plants coming online.
Brad Blonde, a farmer from Litchfield, Mich., is in the middle of a major expansion project, laying the foundation for a new opportunity in farming. In January, Blonde bought his father out and decided he wouldn’t own pigs after 20 years.
Selling the 2,000 head of hogs wasn’t a decision that happened overnight. Instead, they decided to invest in infrastructure. Before, Blonde had space for 3,500 hogs, but soon they’ll have 12,000 head space.
This big investment will allow him to finish out 32,000 head of pigs a year for once producer.
“We’re actually a contract grower,” said Blonde. “We own the buildings, someone else puts the pigs in, we take care of them [for the supplier], and we get paid on a per-head pace.”
Blonde’s driving factor is a new processing plant that will be 15 miles from his farm in Coldwater, Mich. The plant is set to be up and running by Sept. 5, a plant Clemens Food Group’s CEO Doug Clemens says is one of a kind.
“[The facility] is over 650,000 square feet of plant, and this plant was designed to be the most efficient, producing the highest quality pork we can find on the market today,” said Clemens.
Clemens says with a plant of this size, processing capacity will grow over time.
“It will be ramped up slowly over time and we expect by Feb. 2018 to be at full capacity,” he said.
With required permits in hand, Clemens says they’ll process 10,000 head a day by February. The facility is built to handle a double shift, meaning as many as 22,000 head could go through the doors every day within the next three to five years.
A producer vision brought Clemens Food Group together to make the plant a reality, according to Clemens.
Technology was another driving factor, wanting to make the plant as fully-automated as possible. A similar plant in size, according to Clemens, would require 1,000 employees. With labor a potential challenge, Clemens says technology is reducing that number to more than 800.
“We spent a lot of time researching some of the opportunities we had to not only make it efficient, but to actually incorporate as many robotics as we could into this plant and also to make it very food safety friendly,” said Clemens.
Clemens says it’s the first time in the company’s 122-year-old history is using this technology, which is mostly from Europe. While the tech is used inside the plant, it’s also helping wean any biosecurity concerns.
“We will be requiring any trailer that leaves here will be washed and disinfected before it leaves the site,” said Clemens.
Animal welfare is a key concern to Clemens Food Group as well. Holding pens for close to 5,000 live hogs to destress for at least two hours, a design inspired by Dr. Temple Grandin.
“45 degree angles were completely eliminated from this design for freer animal flow, and in turn, higher meat quality,” said Clemens.
While this site is set to open in September, a plant in Sioux City, Ia. could be online as early as August.
“Neither one of those probably will be up to their full capacity of about 10,000 head per day by the end of the year, but they are sure going to help out a lot,” said Steve Meyer, vice president of EMI Analytics.
Meyer says that’s helping solve last year’s problems with processing capacity.
“We were very tight last fall,” he said. “We were right at or exceeded slaughter capacity in about 9 weeks during that fall.”
That pressured pork, pushing prices lower in 2016, but not enough capacity could soon be too much.
“We’re talking 9 to 10 percent increase in capacity over a 3-year period and that’s a rapid growth rate,” said Meyer.
Then there’s the question of demand.
“We will eat all that we produce—the question is at what price will we get it done,” said Meyer.
He says while seasonal demand could push pork prices higher during the second and third quarter of the year, the outlook isn’t as bright in quarter four.
For Blonde, this means he no longer has to ride the waves of commodity markets, an opportunity he thinks will help bring home the bacon.