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Hog Talk: Special Interview · Professional Ag Marketing Podcast

• 0:16
  SPEAKER_00: Remember to visit swineweb.com, an excellent resource for information in the pork industry where you can also find this podcast.
• 0:25
  SPEAKER_00: This is your host, Mike Minor.
• 0:26
  SPEAKER_00: Let's crow.
• 0:28
  SPEAKER_00: Alright, uh, today is January 15th, and I've got Holly here with us.
• 0:32
  SPEAKER_00: Can you give me a little bit of your background so I don't mess up your intro too bad, Holly, on where you come from and what some of your main tasks are that you do for all of us pork producers here in the Midwest?
• 0:45
  SPEAKER_01: Sure.
• 0:45
  SPEAKER_01: Well, thanks for having me on the podcast, Mike.
• 0:47
  SPEAKER_01: I'm Holly Cook Anderson, economist on staff with the National Pork Producers Council.
• 0:52
  SPEAKER_01: Been on the team for going on five years now.
• 0:54
  SPEAKER_01: I'm grew up on a hog farm in Iowa, proud Iowa State graduate, and I work out of our public policy office in Washington, D.C.
• 1:02
  SPEAKER_01: So as the economist on the team, I support our staff out there, our lobbyists and subject matter experts on all of the various policy issues that are impacting pork producers, so providing that economic support, and then also have the great privilege of being able to, you know, kind of travel around our top hog producing states, visit with producers, and just like today here at the South Dakota Pork Congress, provide an update on you know what the economic situation is looking like in the pork industry.
• 1:27
  SPEAKER_00: Well, it looks pretty good these days, doesn't it?
• 1:29
  SPEAKER_00: I mean, after a tough couple of years, we finally got into a pretty decent margin situation here in the hog industry, which has been welcome.
• 1:37
  SPEAKER_00: Uh so really the livestock sector in general has been sitting pretty well here lately.
• 1:42
  SPEAKER_00: So I was just curious on how you think we're uh building capital and if expansion's coming up ahead of us at some point.
• 1:48
  SPEAKER_00: What do you see in the current margin environment and what opportunities that's giving us for you know a tough couple years that we had in 19 through 23 or so?
• 1:57
  SPEAKER_01: Yeah, I mean absolutely.
• 1:58
  SPEAKER_01: And on paper, you know, you look at the string of profit opportunities that our industry has had since really middle to early of 2024, and that's been really important in terms of rebuilding that capital, as you mentioned, you know, re-establishing a more healthy financial situation for the industry.
• 2:13
  SPEAKER_01: And I know things look a little bit different on every farm, but as we head into 2026, a lot of those opportunities are there too.
• 2:19
  SPEAKER_01: And so if you average out, you know, Iowa State's got that model where they publish profitability estimates every month.
• 2:24
  SPEAKER_01: Um, if you average out from the beginning of 2023 till now, we're kind of just finally at more of a break-even as an industry.
• 2:31
  SPEAKER_00: Which I think that's a little surprising to people.
• 2:33
  SPEAKER_00: Like even myself, I keep thinking, oh boy, here comes uh, you know, the expansion again.
• 2:37
  SPEAKER_00: But it's like, gosh, we just kind of made up for what we lost there over those couple of years, and we've got some high inflation, just makes it a little bit tougher to expand in the industry these days, doesn't it?
• 2:46
  SPEAKER_01: Yeah, absolutely.
• 2:47
  SPEAKER_01: And I think you know, there's always risk and uncertainty in our industry, but I think that's never been more true than it is today.
• 2:53
  SPEAKER_01: There's all kinds of different fronts that you know producers got to be thinking about when making decisions for their farm.
• 2:57
  SPEAKER_01: And and you asked about data a minute ago.
• 2:59
  SPEAKER_01: I mean, if you just look at sow slaughter and the percentage of the breeding herd, that's not necessarily in a territory that is evidence of breeding herd expansion at this point.
• 3:07
  SPEAKER_00: Yeah, very, very true.
• 3:08
  SPEAKER_00: It's just basically another percent or two, it looks like, maybe supply going up next year based on what weight productivity from that sow.
• 3:17
  SPEAKER_00: What can you tell us about that bigger picture?
• 3:20
  SPEAKER_01: Yeah, we just got a hogs and pigs report again right before Christmas, and so it showed us a trend we've seen for a couple years now, which is a smaller breeding herd than we had last year.
• 3:28
  SPEAKER_01: But at the same time, USCA's got us up about 2.3% for production this year.
• 3:32
  SPEAKER_01: And so, as you mentioned, that's not because we have more sows, but we have a very productive breeding herd.
• 3:37
  SPEAKER_01: We've been putting more weight on pigs, so that leads even if slaughter's flat and you've got a heavier animal, that's more production.
• 3:42
  SPEAKER_01: And then also the farrowing intentions down the road, which of course are subject to change, but that's kind of what's shaping that forecast at this point in time.
• 3:49
  SPEAKER_00: Is there anything else you want to touch on with supply before we kind of get tied demand into all this?
• 3:54
  SPEAKER_01: I mean, I love talking about demand, so yeah, I know demand's the fun one.
• 3:58
  SPEAKER_00: Supply is the little bit more boring one in the room and not quite as fun, right?
• 4:03
  SPEAKER_00: I mean, we've had some, sure, we've had some production issues and things, but uh nothing changing dramatically on supply, a little bit greater year over year.
• 4:12
  SPEAKER_00: But uh any final thoughts of supply before we get to demand?
• 4:16
  SPEAKER_01: I mean, I think you covered it well, and I think maybe why demand's more fun to talk about is because when supply is down, it's not usually for a good, you know, reason.
• 4:22
  SPEAKER_01: Yeah, that's you've got disease problems, you know, if there's fewer people in the industry or you know, fewer animals, that's usually come from some pain that we've had to endure as as an industry.
• 4:31
  SPEAKER_01: So I would just yeah.
• 4:32
  SPEAKER_00: Yeah, so demand is it seems like it's been king.
• 4:36
  SPEAKER_00: I mean it's been super strong here lately, especially from the domestic side, which I feel like makes it even more exciting.
• 4:41
  SPEAKER_00: We're not so reliant upon exports, but where do you want to start with uh with the demand side?
• 4:47
  SPEAKER_01: Yeah, I mean there's a lot, a lot of places we could go with this.
• 4:49
  SPEAKER_01: I think you know, we saw we were talking a lot about domestic demand kind of right after the pandemic with um payments and consumers had more money to do that.
• 4:57
  SPEAKER_00: Yeah, I mean I bought a smoker.
• 4:58
  SPEAKER_00: That that really pushed my limits, but hey, I was in that category too.
• 5:02
  SPEAKER_01: Yeah, and that was a huge turning point.
• 5:04
  SPEAKER_01: And we saw, you know, when that year over year, the real income and we had high inflation, you know, that kind of brought things back down.
• 5:09
  SPEAKER_01: But I think we saw some real bright spots in 2025, not for the same reasons.
• 5:14
  SPEAKER_01: You know, that was probably not an event we can expect to repeat itself.
• 5:16
  SPEAKER_01: Of course.
• 5:17
  SPEAKER_01: But there's been a lot of a lot of good momentum, I think, on the demand front.
• 5:20
  SPEAKER_01: You know, pork is very competitively priced and affordable.
• 5:23
  SPEAKER_01: Uh we've got now a lot of momentum just on the protein front in general, and Americans really focusing more on incorporating protein in their diet.
• 5:32
  SPEAKER_00: Can you tell me about the the correlation between beef price and pork price?
• 5:36
  SPEAKER_00: Because we saw such a run-up in box beef values, but it seemed like pork struggled to really get the pork cutout to go up with it at that extreme of a rate, right?
• 5:44
  SPEAKER_00: Um, what can you tell us about those two and the relationship they've had lately?
• 5:49
  SPEAKER_01: Yeah, well, not to be technical or anything, but box beef and pork cutout are calculated differently.
• 5:54
  SPEAKER_01: So to compare them one for one, there's you know some nuances there just in terms of the way USDA approaches that methodology.
• 6:00
  SPEAKER_01: But even if you look at retail and you know other wholesale metrics and things like that, beef prices have been so strong and the demand has been there, and so that's been so in very strong momentum on that front.
• 6:10
  SPEAKER_01: Um, I do think here recently, even in the last six months, that just retail ratio between beef and pork has grown even more.
• 6:16
  SPEAKER_01: I mean, it's the highest in decades.
• 6:18
  SPEAKER_01: And so I think for certain cuts that have more of that substitutability factor with beef, you're seeing some support there, at least in the data.
• 6:25
  SPEAKER_00: That makes sense, and it does it seem like the real benefactor to this has been poultry, probably so far, after box beef values have gone up so much that the poultry side's been really taking advantage of that.
• 6:37
  SPEAKER_01: You tend to see growth in uh poultry consumption year over year, kind of no matter what's happening.
• 6:42
  SPEAKER_01: I think the the production's there and you just see that that real per capita number has grown a lot in recent years, yeah.
• 6:48
  SPEAKER_00: And this week, here I guess this last week, we got a new food pyramid.
• 6:52
  SPEAKER_00: What can you tell us about this and what implications it has, right?
• 6:56
  SPEAKER_00: Because uh do you do you think this actually will matter down the road?
• 6:59
  SPEAKER_01: Yeah, I think there's a lot to unpack with the new dietary guidelines, and so with that rollout, we see the new food pyramid, which kind of flipped the old way of thinking on its head.
• 7:08
  SPEAKER_01: We've got meat at the top, and as a priority, um, and I think that is a tremendous opportunity for livestock industries, for meat industries.
• 7:15
  SPEAKER_01: I know MPBC, you know, very involved in providing input and ensuring that you know real food, real pork is has a place in that.
• 7:22
  SPEAKER_01: And the dietary guidelines are important because that's kind of the guiding cornerstone for a lot of different government programs.
• 7:28
  SPEAKER_01: Um, you know, USDA buys products for their feeding programs, they buy pork, and you know, they have to take into consideration what the official federal guidance is.
• 7:36
  SPEAKER_01: So I think this is a great opportunity.
• 7:38
  SPEAKER_00: Definitely.
• 7:39
  SPEAKER_00: So pork demand's been pretty great lately.
• 7:41
  SPEAKER_00: Do you think that has some sustainability to it?
• 7:43
  SPEAKER_00: Like, can we sustain great demand in the pork industry to help uh hold some of these margins decent for a while?
• 7:50
  SPEAKER_01: I mean, I think in the short term there's no factor that sticks out as a major threat to what we've seen so far.
• 7:55
  SPEAKER_01: Um, you know, you look at the macroeconomic situation and the health of the US consumer does really matter in all of this, and there's you know been some headwinds there, but inflation is is way down from where it was.
• 8:05
  SPEAKER_01: Um, you know, real wages, real disposable incomes are looking okay.
• 8:08
  SPEAKER_01: Consumer sentiment has been pretty low now for a while, but you know, just when we look at kind of the relative affordability and things like that, I think pork sits in a pretty good spot.
• 8:16
  SPEAKER_00: Consumer sentiment, particularly, what impact do you think that has on the price of pork?
• 8:21
  SPEAKER_00: Because like if uh if if I feel poor, right, I I'm probably not gonna want to spend as much money on a steak, for example.
• 8:29
  SPEAKER_00: So i if we start to see beef prices fall or start to see consumers that have a tight budget, how much will that impact pork prices, you think?
• 8:39
  SPEAKER_01: I mean there's no perfect, there's no one answer.
• 8:41
  SPEAKER_01: Yeah, there's no one answer, right?
• 8:42
  SPEAKER_01: Um I think first I would highlight, you know, there's significant variance across different pork cuts in the impact that certain beef, you know, action might have, for example, bacon.
• 8:50
  SPEAKER_01: The data shows that that's actually more tied in the same direction as beef prices.
• 8:54
  SPEAKER_01: Maybe there are more compliments than you know substitutes.
• 8:56
  SPEAKER_01: But yeah, I think any if the beef prices are coming down, that ratio is gonna get smaller, and maybe those are just a more comparable option for consumers at the grocery store.
• 9:04
  SPEAKER_01: But you know, as of right now, if you're a consumer, um, you know, and the we've got studies that show if you're feeling better about things, you eat more beef, pork, and chicken.
• 9:12
  SPEAKER_01: And so, you know, if you're making that decision, price is a factor, but also preferences, which can be hard to predict and control for.
• 9:18
  SPEAKER_00: Definitely.
• 9:20
  SPEAKER_00: Going into 2026 here, we just started out.
• 9:23
  SPEAKER_00: What are a few things you're following and looking for for an outlook?
• 9:26
  SPEAKER_01: Yeah, great question.
• 9:28
  SPEAKER_01: I mean, there's a lot to be paying attention to.
• 9:30
  SPEAKER_01: We talked a lot about trade in 2025.
• 9:33
  SPEAKER_01: Exports, of course, are critical to that whole total demand picture for US pork, and so there's a little bit of an increase expected for this year.
• 9:40
  SPEAKER_01: I think US pork remains very competitive in that global marketplace.
• 9:43
  SPEAKER_01: I know at MPPC, you know, continuing to work really hard to expand that market access.
• 9:48
  SPEAKER_01: And so that'll be very topical this year as well.
• 9:50
  SPEAKER_01: We've got USMCA up for review, that's a big priority.
• 9:54
  SPEAKER_01: Um, and if we're kind of on that policy front, you know, we're still continuing to push for some certainty for producers on issues like Crop 12 and a solution that prevents us from having to worry about every state having their own demands for what production looks like.
• 10:08
  SPEAKER_01: Um but to maybe then turn it back a little bit more to the economics, I think what's going to be a big determinant and where we end up in terms of profitability will be that supply situation, you know, what the disease situation is this year, and you know how many ultimately how many things we have coming to market later this year.
• 10:26
  SPEAKER_00: Building on that a little bit, do you see some different risks going into 26 this next year that you should highlight?
• 10:32
  SPEAKER_01: There's no shortage of risk, that's for sure.
• 10:35
  SPEAKER_01: I mean, um, you know, talk a little bit about you know purse challenges, but of course animal health always at the forefront.
• 10:40
  SPEAKER_01: You've got an ASF, you know, is in Spain.
• 10:43
  SPEAKER_00: Which has made some news, I think.
• 10:45
  SPEAKER_00: So we've got some wild boars, obviously, in the United States that is at, uh are we tracking that?
• 10:51
  SPEAKER_00: Are we trying to what are we doing on that front, I guess, with you know the borders been very open the last couple of years uh to Mexico?
• 10:58
  SPEAKER_00: Uh what can you tell us about ASF right now?
• 11:02
  SPEAKER_01: I mean, there's been a lot of work that's been done in the US in the last couple of years when that ASF showed up in the Dominican Republic.
• 11:09
  SPEAKER_01: That certainly was alarming.
• 11:11
  SPEAKER_01: And so there's been, we've NPPC's fought for significant funding that's been put in place for not just precautionary but also you know preparation measures so that worst case scenario happens, we're prepared for you know what that's not a good situation, but you know, to have to have a plan in place, and so I think that's but when you see it pop up in another country, it is certainly a reminder that underscores.
• 11:33
  SPEAKER_00: Well, it's been a while since we talked about it, hasn't it?
• 11:36
  SPEAKER_00: So it it's been a while.
• 11:37
  SPEAKER_01: But it's still at the forefront for sure as far as uh diligence.
• 11:40
  SPEAKER_00: Yeah.
• 11:41
  SPEAKER_00: Alright, well, thank you for joining us today.
• 11:43
  SPEAKER_00: I'd like to give you the opportunity to send us off, anyways, if you have any final thoughts for our listeners.
• 11:48
  SPEAKER_01: Or just thank you for having me on today.
• 11:50
  SPEAKER_01: Thanks to the listeners and um looking forward to you know the opportunities that 2026 presents.
• 11:56
  SPEAKER_00: Thank you so much for joining us today.
• 11:57
  SPEAKER_00: I've had a great time at the show, had a great time listening to you speak here earlier.
• 12:01
  SPEAKER_00: You did a fantastic job, and uh thank you for being such an advocate for the pork industry.
• 12:06
  SPEAKER_01: Thank you.