8 June 2023

5 minute read

By: Sarah Mikesell

Jim Long, president and CEO of Genesus Genetics, spoke to The Pig Site’s Sarah Mikesell at the opening day of World Pork Expo in Des Moines, Iowa, USA.

“In the US, it's been it's a terrible economic situation for producers. There are losses of $40 to $50 per head for the last while, and the part of the challenge with that is we had COVID, which we had low prices and then we've had a spike in feed prices that have increased the cost of production,” said Long.

Thus, the last three years have been challenging for many reasons. This is now compounded by the current low prices.

“A reflection of how bad it is, is the amount of liquidation ongoing in  the sow herd. From what we can add up as a genetic company, and we pay attention to this, there's probably a minimum of 300,000 sows already earmarked to be liquidated now in process, and you want to add Canada and Mexico on that, you could probably add another 100,000 sows,” he explained. “If prices don't start improving soon, we'll have more liquidation because the losses will continue. In a bizarre way, I see some optimism because some of the dynamics in the rest of the world. Europe has got the highest prices in history. Part of the reason was they liquidated a million sows and, go figure, less pigs and the price goes up.”

Long said today the price of pigs in Europe is double what it was at the low, and it's gone from an industry that was losing a lot of money to now making money, which is positive to see. He expects that’s what the US will experience after its liquidation.

“China raises half the pigs in the world. Exports to China are down from the rest of the world, but they are still the biggest importing country in the world,” he noted. “We do business as a company in China, and we're seeing losses today of $50 to $70 per head and there's ongoing liquidation.”

Long said China’s market dynamics show they started liquidating in July 2021, and the market went down for a year. The price rebounded from late summer into the fall, then they broke with COVID. They had opened everything up and people got sick, so fewer people were eating pork.

“Then they got hit again by African swine fever, and when they get African swine fever in China, they just send everything to slaughter which puts more tonnage on the market and drives down the price,” he explained. “But what happens? There's no more pork coming after it. When it stops, we're gonna see a huge jump in price, like we saw in 2019. And China is going to need more pork, and that will pull the rest of the world's prices up. It's not a question in my mind of if, it’s just when.”

Long said it's a “terrible situation” in North America, but there's room for optimism. Pig prices have recovered a little bit lately. Slaughter pig numbers are coming down relative to a year ago, especially when you look at the weights.

“Weights of pigs are almost five pounds lower than a year ago, which reflects a very current industry,” he said. “I guess we'll see. I think the price will get over $1 per pound US yet this summer, maybe even higher yet because of demand.”

What’s causing the US market losses?

“It's very interesting because we have prices significantly lower than last year, and we have the same amount of pork supply,” Long noted. “Why? I'm not too sure anybody really understands it. One thing is the retail price went up last summer, and then the retail price never went down. So the retailers are making really good margin on pork.”

He said exports have been a little slow. But US wholesale beef prices are almost four times the price of pork. If beef is a relatively complementary product, why wouldn't people eat more pork?

“Obviously, the price of beef is high because people are prepared to pay for it. So it's really kind of befuddling,” he said. “Other people look at the markets like me, and nobody really understands. It's real but you can't really rationalize it. In my mind, that's part of why it can recover quickly. The retail price is high so that the price can go up within the retail chain and not affect the retailer a whole lot.”

Is creating more flavorful pork an industry game changer?

“It's something that we really believe in. For the last 20 years, US per capita pork consumption has basically flatlined, and at the same time total per capita meat consumption has gone up. So as an industry, we've lost market share,” he said.

As a genetics company, Genesus believes the industry has made pork too lean and destroyed the flavor of loins and hams, which is almost 50% of the carcass. Surveys indicate that the #1 driver for purchasing pork is taste; #2 is taste; #3 is taste, according to Long.

“It's all about taste, and we believe that we need to produce pork that tastes better. As a company, we're producing pork that tastes better. I see our loins at some places are bringing $2 more than others,” he said. “Why? Because people will pay for a better eating experience, but there's got to be consistent predictability. If you're going to have a brand, you've got to deliver it every time. We've worked hard for the last 25 years to do that. We think as an industry, we need to push for a total better eating experience for all consumers.”

World Pork Expo is the world’s largest pork industry-specific trade show brings together pork producers and industry professionals from around the world for three days of education, innovation and networking. Held annually in Des Moines, Iowa, USA, thousands of U.S. and global pork producers, industry professionals and industry experts attend each year.