The National Pork Producers Council's first quarter economic update says labor and input costs will weigh on industry margins even as production is expected to expand this year.
USDA estimates that pork production declined by 2.5% in 2022 but will grow by 1.8% in 2023. Domestic pork consumption, which sat at 51.1 pounds per person in 2022, will be a major driver of the increase, according to NPPC.
A decline in the rural labor force, changing demographics and an increase in the median age of rural workers has placed a strain on the industry workforce. According to the NPPC report, average weekly wages on hog farms increased nearly 10 percent from 2021 to 2022, while employment declined 2.6%. The average unemployment rate among the top 10 hog-producing states is a mere 3.1%.
According to research from Iowa State University, the cost of raising hogs increased by 43% between 2020 and 2022. Feed costs, which account for 60% of production expenses, increased by 24% between 2021 and 2022, while non-feed variable expenses rose 18%.
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Despite the pressures, pork prices remain high, peaking in October 2022 at $5.05 per pound. Higher costs mean that profit margins are under pressure even with stronger-than-average prices.
“The U.S. pork industry is a pillar of the U.S. economy, supporting jobs, sales, and value-added activity throughout the pork supply chain,” said Lori Stevermer, NPPC vice president and pork producer from Easton, Minnesota. “It is important to raise awareness of the economic contributions made by pork production and highlight the current economic and policy issues impacting producer success.”
Based on 2021 levels of production, the pork industry supports approximately 613,000 jobs and $36 billion in personal income nationwide.
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