Phil Borgic touched the low point of the pork industry in the late 1990s. It feels even worse today, he said.
“I’ve been in this business 50 years, and I’ve never seen this kind of volatility and uncertainty,” said the Montgomery County pork, Ill., producer.
The market enjoyed an unexpected rally recently, but Borgic and other pig farmers are whistling past the graveyard. At least two variables — disease and tariffs — could send pork prices skyrocketing. Or plummeting.
African swine fever is a wild card. The disease has spread to Asia and, though it has not reached American shores, the possibility of an outbreak here is an unsettling prospect.
The presence of the disease in other countries could provide a much-needed boost in U.S. exports by reducing production in those regions. But if it reaches these shores, things could change in a hurry.
“With swine fever in parts of the world, we could one day be looking at record profits and the next day we could have to figure out what to do with all this pork that we can’t export,” said Borgic, who oversees a network of 35 farms producing 230,000 market hogs annually.
Mike Haag, president of the Illinois Pork Producers Association, also points to the lack of stability in the market.
“There’s a lot of uncertainty out there in the marketplace with the numbers, where products are going and the diseases,” said Haag, who operates a 17,000-head wean-to-finish hog operation in Livingston County, Ill. “A lot of it is completely out of our hands.”
China is a big question mark. The world’s largest producer is also a major importer. It is sitting on good pork supplies. But tariff talks and the possibility of the spread of African swine fever could swing things either way.
“China has quite a bit of pork in that country already,” Haag said. “I don’t think they’re going to need a lot of pork as soon as we settle (trade talks). If the disease affects the numbers, that could be very good for our exports. But if it comes here, it’s not going to be good. That could go both ways. That’s where the uncertainty is.”
Bradley Wolter, president of Carlyle-based The Maschhoffs, is keeping a wary eye on the prospect of disease reaching American shores.
“If African swine fever is discovered in the U.S., there really aren’t going to be any winners in that scenario,” Wolter said. “As an industry, we have to be committed to working cooperatively through this challenge should it present itself.”
U.S. production has risen steadily over the past few years. The USDA projects a slight drop from its earlier 2018 estimate, but that number is still up from previous years.
“The past few years, production has been strong,” Borgic said. “Our industry has been profitable and we’ve had a lot of new packing capacity come in. Export markets have been growing steadily for the last several years.”
He sees a different atmosphere than existed in 1998, when prices hit rock bottom and many producers went out of business.
“In ’98 we had a clear path: We had to reduce numbers,” Borgic said. “I felt that all I had to do is hang on long enough and I was going to be OK. This year, with the reality of diseases and tariffs upsetting export markets, there are a whole lot more variables. I can’t lay out a path on how to get back to prosperity.”
Haag doesn’t even want to think about 1998.
“I don’t like to compare anything to that,” he said. “That was a scare that I never want to experience again.”
The Maschhoffs — the largest family-owned pork company in North America — is focusing on things it can control. The company markets about 5 million market hogs annually through farms spread across nine states.
“In this uncertain market environment, we are focusing intently on our controllable costs,” Wolter said. “In addition to costs, we’re also committed to continuing to deliver excellent customer service to our packer customers.”