High feed prices, economic recession, and persistent drought conditions have combined to reduce producer returns and lower production incentives in the livestock industry over the past several years. As a result, beef and pork production is projected to decline into 2013. However, if you get out of the current short-term assessment and look toward the future it is useful to make note of USDA’s 10-year projections.1
Despite improved returns for cow-calf producers in 2011 and 2012, drought over the past two years will prevent producers from expanding beef cow inventories until 2014. Lower beef cow inventories and increases in heifer retention are expected to lead to declines in beef production through 2015. Beef production is then expected to increase over the remainder of the projection period as returns support herd expansion. Likely increases in slaughter weights will also contribute to the long-term increases in beef production. The long-term increases in beef production will likely be accompanied by increases in per capita consumption and increases in exports to traditional (Japan, Canada, and Mexico) and growing (Africa, Middle East, and Asia) markets.
Significant positive returns to hog production in 2010 and 2011 brought about expansion in breeding herd inventory and market hog numbers that were realized in 2012. The record high feed costs last summer and the increased sell-off of hog inventories in the latter part of 2012 are projected to slightly decrease hog inventories and pork production in 2013. As feed costs are projected to decline further into the projection period, pork producers are expected to increase farrowings, with pork production expected to increase over the next decade. Production increases will likely also be supported by productivity gains in the breeding herd (pigs/litter, pigs/sow/year) and increased slaughter weights.
Production efficiency in the U.S. pork sector enhances the industry’s global competitiveness. Longer-term U.S. pork export gains will be determined by costs of production in the U.S. relative to competitors’ costs. USDA projects U.S. pork exports to grow by 14.5 percent from 2013 to 2022. Japan accounted for 25.6 percent of the U.S. pork export market in 2012 and is projected to grow slightly during the coming decade; however, with Japan’s aging and declining population, its imports are not projected to rise significantly. Mexican pork imports (21.6 percent of the U.S. pork export market in 2012) may increase significantly between 2013 and 2022 due to increases in income and population. China and Hong Kong may also provide significant export growth potential for U.S. pork. The U.S. increased pork exports to Hong Kong by 189.1 percent from 2009 to 2010 and increased pork exports to China 328.2 percent from 2010 to 2011.
Source: Lee Schulz
1 The full report can be found at: http://www.ers.usda.gov/publications/oce‐usda‐agricultural‐projections/oce131.aspx.