US pork producers in 2023 see least profitable year on record

It’s no secret that Americans love bacon. In one US survey, more than 20% of respondents said they’d be happy to eat bacon every day for the rest of their lives. But love only goes so far.

US consumers’ demand for pork has waned dramatically over the past year. Even as pork prices edged down in November, demand fell further. And pork producers are feeling the punch.

Americans are buying less pork

Pork demand fell about 10% in the third quarter from the same time last year, according to data analyzed in a recent pork industry webinar by Lee Schulz, an economist and professor at Iowa State University. Even though pork prices are no longer rising, they remain at historic highs that consumers aren’t willing to pay.

American consumers’ wages also buy them significantly less pork than it did before the pandemic—11% less ham, 12% less pork chops, and 6% less bacon, to be exact. That’s even with wages rising faster than inflation.

High prices will continue to dampen demand into 2024.

“As we approach 2024, the Meat Demand Monitor continues to signal that the vast majority of US households are worried about their finances, and this is weighing on domestic meat demand,” Glynn Tonsor, a professor of agricultural economics at Kansas State University, told Quartz. “I anticipate these macroeconomic forces to continue being a headwind for domestic meat demand at least early in 2024.”

Pork producers are paying the price

Pork producers are losing money—an average loss of $32 per hog is projected for US hog growers in 2023. That trend will also continue into next year, according to economists.

“Profitability as we look at 2023 and 2024 is going to be potentially the worst two-year stretch ever for pork producers,” Iowa State’s Schulz says.

Last week, Smithfield Foods, the world’s largest hog producer and pork processor, announced that it would shut down 26 of its contracted hog operations in Utah, which employed 210 people.

“Our industry and company are experiencing historically challenging hog production market conditions,” Shane Smith, president and CEO of Smithfield, said in a statement Dec. 5, citing the industry’s oversupply of pork and weak consumer demand.

Smithfield shuttered a pork plant in Charlotte, North Carolina and closed 35 hog farms in Missouri earlier this year.

Can Canada and South Korea save the day?

US pork prices have stayed high partly thanks to growing pork exports. Between 2022 and 2023, export volumes to South Korea and Canada, two major consumers of US pork, have grown 13% and 30%, respectively, according to Schulz.

Meanwhile, exports surged a whopping 89% to Chile, 68% to Guatemala, and 59% to the Philippines. Although these countries make up a smaller portion of the American export market for pork, their growing demand is still notable.

This good news for pork producers is bad news for consumers. Strong exports are part of the reason prices of pork chops, ham, and bacon at grocery stores have remained high.

“[Pork] prices…could be much lower if we hadn’t had this supportive overall export market,” Schulz said.

Strong global demand for US pork—particularly from Canada, the Philippines, and South Korea—will persist next year, according to Schulz.