by Malinda Geisler, content specialist, AgMRC, Iowa State University, malindag@iastate.edu.

Profile updated August 2008.

Supply

The United States is the world’s second-largest producer of pork. China is the world’s largest pork producer with 48 percent of the world's total production. As of June 1, 2008, USDA estimated 67.7 million hogs were in the United States. Of that, 61.1 million were market hogs.

Demand

Since 1970, per capita pork consumption has remained relatively steady at about 50 pounds per year. U.S. pork consumption was nearly 50 pounds in 2005, on a retail weight basis. Per capita pork consumption is projected to remain at 50 pounds per person over the next 10 years.

The largest weekly slaughter in U.S. packing plants occurred in December 2001 at 2.167 million hogs, close to the packer capacity level of 2.2 million hogs per week.

Processing

Commercial hog slaughter during 2006 was an estimated 104.7 million hogs. The five largest pork processing firms account for 63 percent of the total U.S. slaughter capacity. The nation’s top five firms are as follows:

1. Smithfield Foods

2. Tyson Foods (IBP)

3. Swift & Co.

4. Hormel Foods Corporation

5. Cargill Meat Solutions (Excel Corp.)

Competition

Pigs from Canada are partly supplying growth in U.S. pork consumption. Pigs are then finished and processed in the United States where the feed prices are favorable and processing costs are lower. Pork cuts are sourced by large wholesale and retail buyers where prices are attractive. USDA is also seeing pork production cross the border more than once. For example, a U.S. processor imports Canadian bone-in hams for boning. The boneless hams are exported back to Canada for final sale or further processing.

Pork continues to compete with beef and poultry at retail meatcases. Pork marketed directly to consumers will also be affected by the growing trend of more meals consumed outside of the home. Expenditures on away-from-home food now account for nearly 50 percent of total U.S. food expenditures.

USDA estimates an increase in per capita consumption of fruits, nuts, eggs, poultry and fish in the coming years based on current consumption patterns and the increasing diversity of the U.S. population.

Value-added Pork Opportunities

Producers are tailoring their operations to meet consumer demands for pork products. Some are adjusting production systems to raise pork that can be labeled natural or organic or have other specific attributes. Another related way is by raising pork through a verification process. Other producers are taking proactive approaches at selling their own products directly to customers and foodservice operators. Some are involved with their own product processing.

Direct Marketing

Several producers have turned to direct marketing their pork enterprises by developing and expanding on the niche to market pork directly to consumers, bypassing traditional marketing channels.

An affordable method to market new products directly to consumers is for producers to establish their own Web sites. Pork that is sold over the Internet must be processed in federally inspected plants. If the meat is processed in a state-inspected facility, it can only be legally sold within that state.

Direct marketing to consumers using farmers’ markets continues to grow in the United States. According to the USDA, there were more than 4,385 farmers’ markets in 2006, up from 3,706 markets in 2004. Farmers’ markets are beneficial to farm operations that have less than $250,000 in annual receipts. The markets provide an outlet to consumers interested in purchasing products directly from growers.

Please see Direct Marketing Pork for additional information.

Foodservice

Foodservice offers a growing market segment for pork and pork products. U.S. consumers spend 49 percent of their total food expenditures on food consumed away from home. The United States has more than 935,000 foodservice eating establishments.

Government statistics indicate that as incomes rise, U.S. consumers increase their expenditures on more expensive fresh foods, more processed food and more dining away from home.

Please see the Foodservice Pork page for additional information.

Natural

According to USDA’s Economic Research Service, increased sales of organic and natural food products are being driven by health-conscious consumers. Natural foods supermarkets and other specialized retailers are benefiting from this trend. Food products offered by natural foods supermarkets tend to be less processed and frequently are free of preservatives, hormones and artificial ingredients.

The term natural does not have the same strict interpretation as organic does. According to the U.S. Food Safety and Inspection Service, "natural" may be used when products contain no artificial ingredients and are no more than minimally processed. Examples of minimally processed foods include those that are smoked, roasted, frozen or ground.

Pigs raised for the production of natural pork products are handled using humane treatment. They are allowed to move freely in their living environment and, in many cases, have access to the outdoors.

Please see the Natural Pork page for additional information.

Organic

USDA standards for organic food were implemented in October 2002. Organic pork is raised in a production system that promotes and enhances biodiversity and biological cycles. It is based on minimal use of off-farm inputs. Pigs are raised without the use of antibiotics and growth hormone stimulants. Pigs intended for meat products must be raised organically from the last third of gestation. In general, organic foods are minimally processed with artificial ingredients or preservatives.

According to the USDA, certified organic means "agricultural products have been grown and processed according to specific standards of various state and private certification organizations." Certifying agents review farm applications and qualified inspectors conduct annual on-site inspections. Farm records track all management practices and materials used in organic production.

More U.S. land is being converted to organic production. As of 2005, the United States had 2.3 million acres of certified organic pasture and rangeland, and 1.7 million acres of certified organic cropland. In 2005, 10,018 hogs and pigs were certified organic. Iowa had 4,566 certified organic hogs followed by Indiana with 2,000 certified hogs. 

Please see the Organic Pork page for additional information.

Niche

Niche marketing is targeting a product or service to a small market segment that is not being served or in which demand has not exceeded supply. A market niche can be identified as a geographical area, a specific industry, ethnic group or a particular age group. An example of a market niche is the segment of the U.S. population referred to as “baby boomers.”

The U.S. ethnic foods market is estimated at $75 billion in annual sales. An ethnic market is a group of consumers that share a common cultural background. Many times an ethnic market has a distinctive geographic area. An example is the U.S. Latino population.

The U.S. population is older, wealthier, more educated and more ethnically diverse than ever before. According to USDA projections, the U.S. population is expected to add between 50 and 80 million people by 2020. There will be greater proportions of Blacks, Asians and Latinos.

Please see the Niche/Ethnic Pork page for additional information.

Certified/Verified

Traceability, in which the product is tracked from its origin through processing, is becoming a competitive advantage to today’s meat suppliers. Product quality attributes and/or the actual manufacturing process is verified or certified by a third party.

Such programs may become increasingly important as the food industry makes further attempts to appeal to the social consciousness of consumers. According to USDA, the top three U.S. restaurant franchises place restrictions on how animals used in the companies’ foods are produced, accounting for approximately 35 percent of franchised restaurant sales.

Please see the Certified/Verified Pork page for additional information.

Pork Processing

Processing a product that is unique in the marketplace can create a market niche. Producers who run their own processing plant are involved in product development. This is a way for some producers to capture markets that are not being served by larger meat processors, while earning a larger percentage of the food dollar.

Producer-owned processing businesses may also use other value-added methods such as direct marketing. These processors may sell products directly from their locations or use a Web site. Marketing may also involve sales to foodservice and specialty retail outlets.

Please see the Pork Processing page for additional information.

World Markets - Imports

The United States imported 968 million pounds of pork valued at $825 million in 2007. Canada accounts for the majority of total U.S. pork imports. Live hog imports totaled 10 million head in 2007, less than the previous year. USDA reports about 66 percent of the live imports are typically feeder pigs. The remaining percent are slaughter-ready animals.

USDA says the influx of Canadian feeder pigs into the United States is due to the growing irrelevance of the U.S.-Canada border. Pigs are finished and processed in the United States where the feed prices are favorable and processing costs are lower. The May 2003 case of bovine spongiform encephalopathy (BSE) in Canada also contributed to an increased flow of market hogs to the United States. Imports are also being influenced by U.S. consumer demand for pork loins, ribs and bellies.

The depreciated U.S. dollar is affecting the U.S. demand for imported pork products. Imported pork products tend to be more expensive when the U.S. dollar depreciates against foreign currencies such as the Canadian dollar and Danish krone.

World Markets - Exports

About 11 percent of U.S. pork production is exported. In 2007, 3.1 billion pounds (carcass weight equivalent) of pork worth $2.4 billion were exported, the largest quantity exported on record.
 

Japan is the largest customer of U.S. pork. It accounted for about 33 percent of U.S. pork exports. Other key export locations for U.S. pork are Mexico and Canada. The Pacific Rim and Mexico will remain key long-term growth markets for U.S. pork exports.
 

International Market Competition

The United States competes with Canada for export sales to Mexico and Pacific Rim nations. The United States also competes with Brazil and the European Union in international markets.

Another factor affecting foreign consumer demand is the presence of meat animal diseases. According to the USDA, BSE, Avian Influenza throughout Asia and Porcine Cirovirus (PCV) in Taiwan translate into lower traded supplies of beef and poultry. The lower valued U.S. dollar also helps make U.S. pork attractive to foreign buyers.

Please see the International Markets page for additional information.

 

Sources
China, People's Republic of, Agricultural Situation, World's Largest Farm Producer Now a $6 Billion Market for the United States, Foreign Agricultural Service (FAS), USDA, 2005.

Farmers Markets, AMS, USDA.

Food CPI, Prices and Expenditures, Briefing Room, Economic Research Service (ERS), USDA.

Hendrickson, Mary and William Heffernan, Concentration of Agricultural Markets, University of Missouri, 2002.

Hogs & Pigs, National Agricultural Statistics Service (NASS), USDA.

Livestock and Poultry World Markets, FAS, USDA.

Livestock, Dairy and Poultry Outlook, ERS, USDA.

Livestock Slaughter Annual Summary, NASS, USDA.
 
Livestock and Poultry Facts 2006, American Meat Institute, Washington, D.C.
 

Organic Production, Briefing Room, ERS, USDA.

Restaurant Industry Facts, National Restaurant Association.

Safety of Fresh Pork … From Farm to Table, Food Safety and Inspection Service, USDA.

USDA Agricultural Baseline Projections

U.S. 2003 and 2004 Livestock and Poultry Trade Influenced by Animal Disease and Trade Restrictions, ERS, USDA, 2004.