United States Pork Industry Research
Roland Filler, January 29, 2021
Sources: IBISWorld, National Pork Producers Council, USMEF
Industry Overview and External Drivers:
The hog and pig farming industry in the United States facilitates feeder pig farming, hog feedlots, hog and pig farms, farrow-to-finish operations and weaning pig operations, with primary outputs being market hogs, feeder pigs, cull stock and breeding stock. The industry has low concentration and increasing globalization, however, suffers from high revenue volatility and capital intensity.
External drivers in the industry include a -1.5% annual decrease in demand from meat, beef and poultry processing, 1.0% increase in per capita pork consumption as well as a -0.3% decrease in the price of feed.
Jobs and Economic Contribution:
The US pork industry supports over 550,000 jobs ranging from pork producers and meat processors to transport and businesses. There are over 60,000 pork producers marketing over 115 million hogs annually, providing a total gross income exceeding $20 billion. The production has an estimated gross output of $23.4 billion directly from hog slaughtering and processing sectors, however the sales, transportation costs, input purchases and other services are worth approximately $122 billion.
The NPPC estimates that $22.3 billion of personal income is supported by the US pork industry, contributing $39 billion to the country’s GDP.
Looking only at hog and pig farming activities, 2020 revenue totaled $18.5 billion, an annual decline of -3.6% since 2015. Profits have seen marginal (0.1%) annual growth and have remained constant at approximately $1.7 billion, with a profit margin of 9.3%.
25,351 businesses employ 53,236 workers in the hog and pig farming sector, paying wages of $698.3 million, however this figure has been declining at an annual rate of -3.2%.
US pork exports exceed 2.2 million metric tons annually and represent over 26% of the country’s production. The exports increase the value of marketed hogs by nearly $62 each and jobs related to the exports of hogs support approximately 110,000 jobs nationwide.
Hog and pig farming in the US benefits from high revenues per employee, high profits compared to sector averages, as well as low import volume. The industry is highly volatile, with high capital requirements and a high product/service concentration, however opportunities exist with the increases in per capita pork consumption. Threats to the industry consist of low historical revenue growth, low projected revenue growth and a recent decline in the price of red meat by -3.8%.
Trends to look out for in the industry include the price of feed, as it is one of the biggest determinants of the price of pork, alongside the possibility of consumers panic-buying meat, leading to an increase in price. Demand for pork is expected to rise due to low prices, however, recent declines in the prices of red meat have pushed pork producers to further reduce their prices, affecting industry revenues.