The COVID-19 pandemic continues to hammer the U.S. hog industry.
Steve Meyer, an economist with Kerns & Associates, said the industry stands to potentially lose close to $5 billion this year, based on futures prices on March 1 and July 1.
“We’re looking at a $4.7 billion decline in value given those numbers,” Meyer said at a teleconference hosted by NPPC July 20.
Additional money is being lost due to euthanization, disposal and donation of pigs. Meyer said the $5 billion loss represents a loss of roughly $37 per head relative to what income was projected to be in 2020.
The industry began 2020 optimistically after two years that Meyer called more or less break-even. The pandemic eventually shut down or slowed down many packing plants as those companies deal with a shrinking workforce due to illness.
Meyer said the packing capacity is still about 5% less than it was before COVID-19, adding he doubts the industry will get those numbers back due to changes required to deal with the pandemic.
He said the latest USDA Hogs & Pigs report indicated huge numbers of pigs weighing 180 pounds or more. Producers have been feeding pigs to maintain weight, rather than to gain weigh. That number of pigs could create additional issues as the fourth quarter nears.
Meyer said roughly two million hogs are still backed up on U.S. farms. He estimates between 300,000 and 400,000 market ready pigs have been euthanized, although those numbers have been small in recent weeks.
Based on the USDA report, Meyer estimates about 1 million younger pigs were also destroyed due to lack of space.
He said losses are likely to continue into 2021, adding any future packing plant closures or slowdowns would further weaken the industry. Meyer said it is likely some producers will be forced to declare bankruptcy.
The food service industry continues to struggle, with a surge in COVID-19 cases slowing the re-opening progress for restaurants.