Commentary: Drought recovery will be long and slow
Similar to the buildup of the drought, the recovery will be slow and drawn out.
Livestock and poultry producers have begun to cut herds and that will continue for some time. After all, the feed outlook will not change substantially until mid-2013 at best. USDA has been slow to respond to this sector, but has agreed to purchase protein products for food programs to lighten the burden this fall.
Pork producers are facing record-high breakeven costs, and culling of less-productive sows has begun. It’s not uncommon to have to wait two or three weeks for an opening to sent sows to the packer. There are rumors of $5-per-head or even free weaned pigs available. (Free pigs can still cost you dearly.) One can expect slaughter weights to trend lighter—to the point that packers will allow.
Losses of $10 to $15 per head are projected to follow producers through this year and into next. There will be herd reductions, but the actual degree is hard to measure because you don’t know if you’re hearing about the same 200 sows going to market over and over. The September Hogs & Pigs Report will offer the most concrete insight as the numbers will be collected as the crop harvest reality sets in. Some are estimating a breeding herd reduction of 2 percent. The fact is many producers raising hogs today will ride it out longer, because pork production is their dominant business. The summer 2013 hog futures contracts have been trading high enough to maintain some interest in the longer term, if you can ride it out.
Once cooler temperatures set in and rain (and snow) returns, most people’s lives will move beyond the drought of 2012. However, it will take a long time for agriculture to recover and many in animal agriculture will be forever changed.