LUBBOCK, TX (RFD News) — The U.S. pork industry may face a longer-term economic reset as high capital costs, low margins, and rising volatility pressure wean-to-finish production. International swine consultant Todd Thurman says those three forces together make the current model harder to sustain.
Thurman says wean-to-finish production costs have increased since 2002, while profit margins have narrowed. At the same time, volatility in both input costs and revenue has increased.
The industry has managed those pressures through consolidation and contract production. But Thurman says consolidation has leveled off and may be showing signs of reversing.
New contract production is also harder to justify. He estimates debt service on a new barn is now around $46 to $47 per space, while typical contract payments near $41 per space would leave producers losing money.
Thurman says risk management remains important, but current tools may not be enough unless the industry improves margins, reduces volatility, or finds a way to lower capital pressure.
