Overview of Swine Industry Growth: Packing Facilities and Production Facilities Needed to Support Growth

Packing capacity concerns – plants running at consistently high levels of utilization – has been a major concern for pork producers for the past several years. Seemingly minimal interruptions to processing schedules (snow storms, breakdowns, labor issues, etc) during times of high utilization have resulted in sharp price changes in an environment characterized by inelastic demand and a supply chain noted by a non-storable item – a live hog. A disproportionate share of profits relative to asset investment has favored the packing community, this is resulting in construction of new facilities. Two new, large, modern plants (Triumph, Sioux City, IA; Hatfield, Coldwater, MI) are slated for operation in 2017 with another (Prestage, Eagle Grove, IA) on queue for 2018. The collective capacity of the pork industry will increase by over 10% in the next two years. How will the pork production community respond to this added capacity, what is the rate of expansion needed to fill the shackles? Where will the sows reside and where will the finishers be located? What is the role of Canada in filling some of this added packing capacity? In addition to providing an economic background of pork production, this presentation will attempt to identify potential avenues of success in this and handicap the likelihood of various scenarios.