A report issued this week notes retail pork prices are rising, but not industry profits. Economists with Iowa State University, North Carolina State University and the National Pork Producers Council (NPPC) says prices are rising due to increased transportation costs, supply bottlenecks and delays and increased labor costs throughout the pork chain. Those factors were either caused or exacerbated by the COVID-19 pandemic.
Other factors that have affected prices up and down the pork chain over the past 18 months, the report noted, include a 2.5 percent loss in pork packing capacity that resulted from a federal court order stopping faster harvesting line speeds, higher energy costs, rising feed costs and, most importantly, a shortage of workers, which has hindered productivity and caused wages to increase.
The report also found the farm-to-wholesale price spread, the difference between what producers receive for hogs from packers and what packers receive for pork from retailers, has remained relatively constant over the past two years aside from a spike in May 2020 when some packing plants shut down because of COVID illnesses among their workforce. But, the wholesale-to-retail spread has significantly widened over the past few months as the farm-to-wholesale price spread has declined.
The long-term outlook for labor, which according to the report is a critical factor in easing supply chain challenges and high prices, is dependent on future immigration policy and agricultural labor reform and, if not addressed, “will continue to be a limiting factor in food and pork production for the foreseeable future,” the report concluded.
NPPC has been urging lawmakers to address the agricultural labor shortage by expanding the existing H-2A visa, which allows temporary seasonal foreign farmers workers into the country, to year-round agricultural laborers.
To read the report on retail pork prices, click here.